______________________________________________________________
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1996
___ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 0-8814
PURE CYCLE CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 84-0705083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5650 York Street, Commerce City, CO 80022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number(303) 292 - 3456
_________________________________________________________________
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x]; NO [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity , as of May 31, 1996:
Common Stock, 1/3 of $.01 Par Value 78,439,763
(Class) (Number of Shares)
Transitional Small Business Disclosure Format (Check one):
Yes [ ]; No [x]
_________________________________________________________________
PAGE 1 OF 12
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
INDEX TO MAY 31, 1996 FORM 10-QSB
Page
Part I - Financial Information (unaudited)
Balance Sheets - May 31, 1996 and 3
August 31, 1995
Statements of Operations - For the three months 4
ended May 31, 1996 and May 31, 1995
Statements of Operations - For the Nine months 5
ended May 31, 1996 and May 31, 1995
Statements of Cash Flows - For the Nine months 6-7
ended May 31, 1996 and May 31, 1995
Notes to Financial Statements 8
Management's Discussion and Analysis of 9
Results of Operations and Financial Condition
Part II - Other Information
Item 1 - Legal Proceedings 10
Item 2 - Exhibits and reports on Form 8-K 11
Signature Page 12
PAGE 2 OF 12
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
May 31 August 31
Assets 1996 1995
------ ---------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 242,148 $ 865,803
Marketable securities 3,429 3,429
Note receivable (Note 2) 245,406 119,327
Prepaid expenses and other current assets 10,710 16,037
Total current assets 501,693 1,004,596
Investments in water projects:
Paradise water rights 5,463,984 5,462,457
Rangeview water commercialization
agreement (Rangeview WCA) 5,989,895 5,856,194
Sellers Gulch water rights -- 31,997
Equipment, at cost, net of accumulated
depreciation of $11,527 and $9,514 5,711 5,359
Patents, net of accumulated amortization
of $35,460 and $34,776 in 1996 and 1995,
respectively -- 684
Other assets 22,596 22,596
---------- ----------
$ 11,983,879 $ 12,383,883
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt (Note 3) $ -- $ 185,460
Accounts payable 51,568 60,450
--------- ----------
Total current liabilities 51,568 245,910
Long-term debt payable to related parties,
less current maturities 3,010,203 2,888,296
Other non-current liabilities 125,583 120,228
Minority interest in Rangeview WCA 4,020,630 4,020,630
Stockholders' equity:
Preferred stock, par value $.001 per
share; authorized - 25,000,000 shares:
Series A - 1,600,000 shares issued
and outstanding 1,600 1,600
Series B - 432,513 shares issued and
outstanding 433 433
Common stock, par value 1/3 of $.01 per
share; authorized - 135,000,000 shares;
issued and outstanding 78,439,763
shares 261,584 261,584
Additional paid-in capital 23,615,561 23,615,561
Deficit accumulated during
development stage ( 6,376,911) ( 6,043,987)
Deficit accumulated prior to
September 1, 1986 (12,726,372) (12,726,372)
---------- ----------
Total stockholders' equity 4,775,895 5,108,819
Contingency (Note 4)
---------- ----------
$ 11,983,879 $ 12,383,883
========== ==========
</TABLE>
[FN]
See Accompanying Notes to the Consolidated Financial Statements
PAGE 3 OF 12
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
May 31 May 31
1996 1995
------ ------
<S> <C> <C>
Expenses:
General, administrative
and marketing $( 79,155) $( 90,114)
Interest ( 50,731) ( 51,531)
------- -------
Total Expenses (129,886) (141,645)
Interest income 9,000 9,064
------- -------
Net loss $(120,886) $(132,581)
======= =======
Net Loss per common share $ --* $ --*
======= =======
* less than $.01 per share
</TABLE>
[FN]
See Accompanying Notes to the Consolidated Financial Statements
PAGE 4 OF 12
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Cumulative
May 31 May 31 Sept. 1, 1986 to
1996 1995 May 31,1996
------ ------ -----------
<S> <C> <C> <C>
General and administrative
expenses $(249,403) $(254,959) $(3,749,123)
Other income (expense):
Interest expense (132,530) (145,524) (1,841,723)
Loss on abandonment of
option on water
rights -- -- ( 850,000)
Financing expense on
purchase of water
rights option -- -- ( 200,000)
Financing cost for
issuance of stock
below market price -- -- ( 187,500)
Loss on abandonment
of power plant
equipment -- -- ( 242,500)
Gain from waived put
options -- -- 40,950
Expiration of option to
purchase water rights ( 31,997) -- ( 31,997)
Gain on sale of marketable
securities -- ( 3,611) 24,809
Interest income 32,778 -- 71,019
Other, net -- -- 29,503
------- ------- ---------
Net loss before
extraordinary item (381,152) (404,094) (6,936,562)
Extraordinary gain on
extinguishment of debt
(Note 3) 48,228 -- 559,651
------- ------- ---------
Net loss $(332,924) $(404,094) $(6,376,911)
======= ======= =========
Net Loss per common
share $ --* $ --*
======= =======
* less than $.01 per share
</TABLE>
[FN]
See Accompanying Notes to the Consolidated Financial Statements
PAGE 5 OF 12
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Cumulative
May 31 May 31 Sept. 1, 1986 to
1996 1995 May 31, 1996
------ ------ ----------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $(332,924) $(404,094) $(6,376,911)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization 2,697 3,669 30,982
Amortization of debt
issuance costs -- 4,600 23,000
(Loss)/gain on sale of
marketable securities -- 3,611 ( 24,809)
Accretion of discount
on long-term debt -- 11,750 69,630
Common shares issued as
additional interest
expense -- -- 25,000
Extraordinary gain on
extinguishment of debt ( 48,228) -- ( 559,651)
Loss on abandonment of
option on water rights -- -- 750,000
Financing expense on
purchase of water option -- -- 200,000
Financing costs for
issuance of stock options
below market price -- -- 187,500
Gain on put options waived -- -- ( 40,950)
Loss on abandonment of
power plant equipment -- -- 62,500
Payment for services and
expenses with common stock
donated by President -- -- 298,250
Other unrealized loss on
marketable securities -- -- 1,143
Increase in accrued interest
on note receivable (12,769) ( 784) ( 16,096)
Other -- -- ( 1,065)
Changes in operating assets
and liabilities:
Prepaid expenses and
other current assets 5,327 ( 6,667) ( 5,760)
Accounts payable and
other non-current
liabilities ( 3,527) 13,397 432,418
Accrued interest 127,175 139,800 1,545,294
------- ------- ---------
Net cash used in
operating activities $(262,249) $(234,718) $(3,399,525)
------- ------- ---------
(continued)
PAGE 6 OF 12
</TABLE>
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended Cumulative
May 31 May 31 Sept. 1, 1986 to
1996 1995 May 31, 1996
------ ------ ----------------
<S> <C> <C> <C>
Cash flows from investing
activities:
Investments in water rights $(103,231) $( 84,800) $(2,288,859)
Purchase of marketable
securities -- ( 300,000) (2,000,000)
Proceeds from sale of
marketable securities -- 1,278,289 2,024,809
Increase in note receivable (113,310) 679 ( 229,310)
Purchase of equipment ( 2,365) ( 71,000) ( 17,237)
Increase in other assets -- -- ( 106,595)
------- --------- ---------
Net cash provided by
(used in) investing
activities (218,906) 821,810 (2,617,192)
------- --------- ---------
Cash flows from financing
activities:
Proceeds from issuance
of debt -- -- 2,677,629
Repayments of debt (142,500) -- (1,167,190)
Proceeds from sale of
common stock -- -- 2,900,000
Proceeds from sale of
Series A convertible
Preferred stock -- -- 1,600,000
Proceeds from issuance of
redeemable common stock -- -- 245,000
Proceeds from issuance of
stock options -- -- 100,000
Repurchase of stock
options -- -- ( 100,000)
------- ------- ---------
Net cash provided by
(used in) financing
activities (142,500) -- 6,255,439
------- ------- ---------
Net increase (decrease)
in cash and cash
equivalents (623,655) 587,092 238,722
Cash and cash equivalents
beginning of period 365,803 122,441 3,426
------- ------- ---------
Cash and cash equivalents
end of period $ 242,148 $ 709,533 $ 242,148
======= ======= =========
</TABLE>
[FN]
See Accompanying Notes to the Consolidated Financial Statements
PAGE 7 OF 12
<PAGE>
PURE CYCLE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING PRINCIPLES
The consolidated balance sheet as of May 31, 1996 and August
31, 1995, the consolidated statements of operations for the three
and nine months ended May 31, 1996 and May 31, 1995 and the
consolidated statements of cash flows for the nine months ended
May 31, 1996 and May 31, 1995, have been prepared by the Company,
without an audit. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments necessary to
present fairly the financial position, results of operations and
cash flows at May 31, 1996 and for all periods presented have
been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these consolidated financial statements be
read in conjunction with the financial statements and notes
thereto included in the Company's 1995 Annual Report on Form 10-
KSB. The results of operations for interim periods presented are
not necessarily indicative of the operating results for the full
year.
NOTE 2 - NOTE RECEIVABLE
In April 1995, the Company extended short-term credit to the
Rangeview Metropolitan District. The loan permits borrowings up
to $250,000, is unsecured, bears interest based on the prevailing
prime rate plus 2% and, matures on December 31, 1996.
NOTE 3 - CURRENT MATURITIES OF LONG-TERM DEBT
During January 1996, the Company reached an agreement with a
creditor to retire a note payable, totaling $190,728 with accrued
interest, for payment of $142,500. The difference in the face
value of the note and the cash paid to retire the debt of $48,228
has been reflected as an extraordinary gain on the consolidated
statement of operations for the nine months ended May 31, 1996.
NOTE 4 - CONTINGENCY
In 1988, the Company initiated efforts to acquire approximately
10,000 acre feet of non-tributary ground water rights from the
Rangeview Metropolitan District (the "District"). Since that
time, the Company, together with other investors, has purchased
certain real property, municipal notes and bonds, and options to
purchase water related to this project.
In October of 1994, the Company joined in a lawsuit initiated
by others including the District, against the Colorado State
Board of Land Commissioners (the "Board") seeking a Declaratory
Judgment affirming that the lease between the Board and the
District was valid and binding.
In May of 1996, the parties to the lawsuit agreed to a
settlement (the "Settlement"). The Settlement was subject to
obtaining a final non-appealable order of the trial court
approving the Settlement. The trial court order was signed
subsequent to the end of the quarter on June 14, 1996 and will be
non-appealable on July 29, 1996.
PAGE 8 OF 12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
General and administrative expenses for the nine months ended
May 31, 1996 were approximately $5,555 lower than for the period
ended May 31, 1995, primarily because of a decrease in facility
costs and administrative salaries. Interest expense decreased for
the nine months ended May 31, 1996 by approximately $28,630
compared to the period ended May 31, 1995 due to a lower average
outstanding balance of notes payable in the first nine months of
fiscal 1996 compared to the same period in fiscal 1995. Net loss
for the nine months ended May 31, 1996 decreased approximately
$71,170 compared to the nine months ended May 31, 1995 primarily
because of the combined effects of the recognition of an
extraordinary gain on the extinguishment of debt, higher interest
income and lower interest expense offset by the expiration of an
option to purchase certain water rights.
Liquidity and Capital Resources
At May 31, 1996, current assets exceed current liabilities by
approximately $450,125 and, the Company had cash and cash
equivalents of $242,148.
The Company is aggressively pursuing the sale and development
of its water rights. The Company cannot provide any assurances
that it will be able to sell its water rights. In the event a
sale of the Company's water rights is not forthcoming and the
Company is not able to generate revenues from the sale or
development of its technology, the Company may sell additional
portions of the Company's profit interest pursuant to the WCA,
incur short or long-term debt obligations or seek to sell
additional shares of Common Stock, Preferred Stock or stock
purchase warrants as deemed necessary by the Company to generate
operating capital.
Development of any of the water rights that the Company has, or
is seeking to acquire, will require substantial capital
investment by the Company. Any such additional capital for the
development of the water rights is anticipated to be financed
through the sale of water taps and water delivery charges to a
city or municipality. A water tap charge refers to a charge
imposed by a municipality to permit a water user to access a
water delivery system (i.e. a single-family home's tap into the
municipal water system), and a water delivery charge refers to a
water user's monthly water bill generally based on a per 1,000
gallons of water consumed.
PAGE 9 OF 12
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
In 1988, the Company initiated efforts to acquire approximately
10,000 acre feet of non-tributary ground water rights located in
the four principal aquifers known as the Denver Basin Aquifers
from the Rangeview Metropolitan District (the "District"). Since
that time, the Company, together with other investors, has
purchased certain real property, municipal notes and bonds, and
options to purchase water related to this project.
In October of 1994, the Company joined in a lawsuit initiated
by others including the District, against the Colorado State
Board of Land Commissioners (the "Board") seeking a Declaratory
Judgment affirming that the lease between the Board and the
District was valid and binding. Under the lease, the Board
granted development rights to the ground water located on and
beneath certain land owned by the Board.
In May of 1996, the parties to the lawsuit agreed to a
settlement (the "Settlement"). The Settlement, among other
things, provides for the retirement of all of the District's
outstanding Water Revenue Notes and Bonds, and clarifies the
Board's royalty participation in a new lease of the ground water.
The Company negotiated agreements to acquire the remainder of the
District's outstanding Water Revenue Notes and Bonds not already
owned by the Company with a principal value of $24,914,058 in
exchange for participation interests in the Company's Water
Rights Commercialization Agreement ("WCA"). Commitments with
respect to the WCA will increased from approximately $31,00,000
to approximately $32,026,000 as a result of the Settlement. The
Settlement was subject to obtaining a final non-appealable order
of the trial court approving the Settlement. The trial court
order was signed subsequent to the end of the quarter on June 14,
1996 and will be non-appealable on July 29, 1996.
Pursuant to the Settlement, the Company will deliver all of the
outstanding Notes and Bonds to the District in exchange for
ownership of 11,650 acre feet of tributary and non-tributary
ground water, 12,000 acre feet of surface storage rights, and an
85 year Service Agreement between the District and the Company.
The Service Agreement provides for the Company to design,
develop, operate, and maintain the District's water system which
will deliver water to customers within the District's 24,000 acre
service area. The District has reserved approximately 14,000
acre feet of water to provide water service to future customers
within its service area. The Company will receive approximately
85% of the District's tap fees, user fees, and system development
fees in exchange for the Company's commitments under the Service
Agreement.
The Company is currently negotiating with several Denver area
water providers to sell portions of the 11,650 acre feet of water
and with certain property owners within the District's Service
Area for development of the District's water system
PAGE 10 OF 12
<PAGE>
Item 2 - Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are included herewith.
10.1 Settlement Agreement and Mutual Release, dated
April 11, 1996, by and among the Colorado State
Board of Land Commissioners (the "Land Board"),
Rangeview Metropolitan District ("Rangeview"), the
Company, INCO Securities Corporation ("Inco"), and
Apex Investment Fund II, L.P., Landmark Water
Partners, L.P., Landmark Water Partners II, L.P.,
Environmental Venture Fund, L.P., Environmental
Private Equity Fund II, L.P., The Productivity Fund II,
L.P., Proactive Partners, L.P., Warwick Partners,
L.P., Auginco, Anders C. Brag, Amy Leeds, and D.W
Pettyjohn (collectively the "Bondholders"), and
("OAR"), Willard G. Owens and H. F. Riebesell, Jr.
(collectively the "Owens Group Bondholders").
10.2 Service Agreement, dated April 11, 1996, by and
between the Company and Rangeview.
10.3 Agreement for Sale of Export Water, dated April 11,
1996, by and between the Company and Rangeview.
10.4 Amended and Restated Option and Purchase Agreement,
dated April 11, 1996, by and among OAR, the Company
and INCO.
10.5 Amended and Restated Option and Purchase Agreement,
dated April 11, 1996, by and among the Land Board,
Riebesell, the Company and Inco.
10.6 Second Amended and Restated Closing Escrow
Instructions Willard Owens Transaction, dated
April 11, 1996, by and among OAR, the Company, the
Land Board, H. F. Riebesell, Jr., and Colorado
National Bank.
10.7 Comprehensive Amendment Agreement No. 1, dated April
11, 1996, by and among Inco, the Company, the
Bondholders, Gregory M. Morey, Newell Augur, Jr.,
Bill Peterson, Stuart Sundlun, Alan C. Stormo,
Beverly A. Beardslee, Bradley Kent Beardslee, Robert
Douglas Beardslee, Asra Corporation, International
Properties, Inc., and the Land Board.
(b) The Company has not filed any reports on Form 8-K
during the quarter.
PAGE 11 OF 12
<PAGE>
PURE CYCLE CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
PURE CYCLE CORPORATION
Date:
July 12, 1996 /S/ Thomas P. Clark
- ---------------------- --------------------------
Thomas P. Clark, President
Date:
July 12, 1996 /S/ Mark W. Harding
- --------------------- --------------------------
Mark W. Harding,
Chief Financial Officer
PAGE 12 OF 12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S 10-QSB DATED MAY 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 242,148
<SECURITIES> 3,429
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 501,693
<PP&E> 17,238
<DEPRECIATION> 11,527
<TOTAL-ASSETS> 11,983,879
<CURRENT-LIABILITIES> 51,568
<BONDS> 0
<COMMON> 261,584
0
2,033
<OTHER-SE> 4,512,278
<TOTAL-LIABILITY-AND-EQUITY> 11,983,879
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 249,403
<OTHER-EXPENSES> 31,997
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132,530
<INCOME-PRETAX> (381,152)
<INCOME-TAX> 0
<INCOME-CONTINUING> (381,152)
<DISCONTINUED> 0
<EXTRAORDINARY> 48,228
<CHANGES> 0
<NET-INCOME> (332,924)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
==============
DOCUMENT 10.1:
==============
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
- -----------------------------------------------------------------
This Settlement Agreement and Mutual Release (the
"Agreement") is entered into this 11th day of April, 1996, by and
among the Colorado State Board of Land Commissioners, Robert R.
Mailander, Maxine F. Stewart and John S. Wilkes, III, in their
capacities as Land Board Commissioners, the State of Colorado
ex rel, Gale S. Norton, Attorney General of the State of Colorado
(collectively the "Land Board"), on the one hand, and Rangeview
Metropolitan District ("Rangeview"), Pure Cycle Corporation
("Pure Cycle"), INCO Securities Corporation ("INCO"), Apex
Investment Fund II, L.P., Landmark Water Partners, L.P., Landmark
Water Partners II, L.P., Environmental Venture Fund, L.P.,
Environmental Private Equity Fund II, L.P., The Productivity
Fund II, L.P., Proactive Partners, L.P., Warwick Partners, L.P.,
Auginco, Anders C. Brag, Amy Leeds, and D.W. Pettyjohn
(collectively the "Bondholders"), and OAR, Incorporated,
Willard G. Owens and H.F. Riebesell, Jr. (collectively the "Owens
Group Bondholders"), on the other hand.
RECITALS
WHEREAS, the Land Board and Rangeview are parties to a
lease of the use of water on and under the surface of certain
public school trust land of the State of Colorado known as the
"Lowry Range," which lease and the amendments thereto (the
"Lease"), are more specifically identified in Article 1 of the
Amended and Restated Lease Agreement attached hereto as Exhibit 1
(the "Amended and Restated Lease");
<PAGE>
WHEREAS, Rangeview has issued the following notes and
bonds secured by revenues of Rangeview derived from the sale of
use of the water (collectively, the "Rangeview Notes and Bonds"):
(1) Series 1987 A-L Water Revenue Notes issued August, 1987, in
the aggregate principal amount of $5,000,000; (2) 1988 Series A-L
Water Revenue Notes issued in December, 1988, in the aggregate
principal amount of $2,142,858; and (3) 1988 Series M Water
Revenue Bonds, issued December, 1988, in the aggregate principal
amount of $17,771,200.
WHEREAS, Pure Cycle, INCO, the Bondholders and the
Owens Group Bondholders collectively are the current owners of
all the Rangeview Notes and Bonds except the Allderdice Notes and
Bonds as described in the following paragraph.
WHEREAS, the Land Board is the current owner of the
below listed Rangeview Notes and Bonds (the "Allderdice Notes and
Bonds"):
.1 Certificate or Certificates, issued in the name of
Carlton Allderdice ("Allderdice"), representing Rangeview Bonds
in the principal amount of $1,206,206.00 (including, without
limitation, the Bond identified as Series 1988M);
.2 Certificate or Certificates, issued in the name of
Allderdice, representing Rangeview Notes in the principal amount
of $600,000.00 (including, without limitation, the Note
identified as Series 1988L);
.3 Certificate or Certificates, issued in the name of
Colorado Water Consultants, Inc. ("CWC") (now named Colorado
Financial Consultants, Inc. ("CFC")), representing Rangeview
Notes in the principal amount of $942,858.00 (including, without
limitation, the notes identified as Series 1988A-K, inclusive).
WHEREAS, the Land Board, Rangeview, Pure Cycle, INCO,
the Bondholders, and the Owens Group Bondholders are parties in a
lawsuit pending in the District Court for the City
<PAGE>
and County of Denver, State of Colorado (the "Denver District
Court"), styled Apex Investment Fund II, L.P., et al. v. Colorado
State Board of Land Commissioners, et al., Case No. 94-CV-5405,
Courtroom I (hereinafter referred to as the "Litigation"), in
which the parties have asserted various claims, including damages
claims, relating to the status and validity of the Lease and the
Rangeview Notes and Bonds.
WHEREAS, the parties to this Agreement have agreed to
amicably settle the Litigation and all matters and disputes
between the Land Board and the other parties to the Agreement.
TERMS OF SETTLEMENT AND RELEASES
NOW, THEREFORE, in
consideration of the mutual promises set forth herein and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree to the following
terms of settlement:
Termination of Litigation
by Entry of Consent Judgment. Attached hereto as Exhibit 2 is a
form of consent judgment (the "Consent Judgment") to be signed
concurrently with this Agreement, in which the parties consent to
the entry of a judgment in the Litigation on the terms set forth
in this Agreement and which includes a finding that the Amended
and Restated Lease complies with the requirements of C.R.S.
36-1-118(1)(a). On April 22, 1996, provided the Service
Agreement described in Section 4(l) and the Guaranty Bank Release
described in Section 4(b) are delivered as required, the parties
shall file a joint motion with the Denver District Court to seek
entry of the Consent Judgment. The parties shall use their best
efforts to obtain the Denver District Court's entry of the
Consent Judgment.
Effective Date. This
Agreement shall be binding on the date it is fully executed and
delivered by the parties hereto subject only, as a condition
subsequent, to entry of the final non-appealable order of the
Denver District Court in the Litigation in conformance with the
Consent Judgment. The Effective Date of this Agreement shall be
the date on which the Denver District Court has entered a
judgment in the Litigation in conformance with the Consent
Judgment and all applicable appeal periods have run such that the
Consent Judgment is final and non-appealable.
Consent Judgment. Each
party agrees that upon entry of the Consent Judgment, such party
will not appeal or seek to vacate, alter, amend or modify the
Consent Judgment or take any action inconsistent with the Consent
Judgment.
Closing Documents.
Concurrent with the execution and delivery of this Agreement and
the Consent Judgment (unless a later date is specified herein),
the following items (the "Closing Documents") shall be delivered
to Davis, Graham & Stubbs LLP (the "Escrow Agent") to be held in
trust for distribution on the Effective Date:
.1 The Land Board shall deliver a copy of the assignment
executed by CFC and Allderdice assigning the Allderdice Bonds and
Notes to the Land Board (the "Allderdice Assignment").
.2 The Land Board shall deliver a release executed by
Guaranty Bank and Trust Company (the "Guaranty Bank Release")
releasing the security interest in the Allderdice Bonds and Notes
pursuant to Loan No. 2660412-001 (formerly 2660400-001) by
April 19, 1996.
.3 An assignment in the form attached hereto as Exhibit 4
shall be executed and delivered by INCO (the "INCO Assignment").
.4 The amended and restated option and purchase agreement
in the form attached hereto as Exhibit 5 shall be executed and
delivered by OAR, INCO and Pure Cycle (the "OAR Option
Agreement").
.5 The amended and restated option and purchase agreement
in the form attached hereto as Exhibit 6 shall be executed and
delivered by the Land Board, Riebesell, INCO and Pure Cycle (the
"CWC Option Agreement").
.6 The amended escrow instructions in the form attached
hereto as Exhibit 7 (the "Amended Escrow Instructions") which
supplement the Escrow Agreement among Colorado National Bank
("CNB"), INCO, OAR, CWC, and others dated August 12, 1991 (the
"Escrow Agreement"), shall be delivered by all of the parties set
forth on the signature page of such Amended Escrow Instructions.
.7 The assumption agreement in the form of Schedule 3 to
the Amended Escrow Instructions shall be executed and delivered
by Pure Cycle (the "Assumption Agreement").
.8 The instruction letter to CNB (the "Instruction
Letter") required by paragraph C of the Amended Escrow
Instructions shall be executed and delivered by the Escrow Agent
and the Attorney General of the State of Colorado (the "Attorney
General").
.9 The comprehensive amendment agreement in the form
attached hereto as Exhibit 8 (the "Comprehensive Amendment
Agreement") executed by all of the parties set forth on the
signature pages thereto shall be delivered by Pure Cycle.
.10 Releases in the form of Exhibit A attached to the
Comprehensive Amendment Agreement executed by all parties to the
Comprehensive Amendment Agreement (other than the Land Board)
shall be delivered by Pure Cycle. Pure Cycle and Rangeview
represent and warrant that the Releases delivered pursuant to
this subsection (j) cover all record owners of the outstanding
Rangeview Notes and Bonds except the Allderdice Notes and Bonds.
.11 The Amended and Restated Lease shall be (i) executed
and delivered by the State of Colorado, acting by and through the
Land Board and by Rangeview, acting by and through its water
activity enterprise (the "Enterprise") established by a duly
adopted resolution of Rangeview on September 11, 1995, and
(ii) approved of as to form by the Attorney General of the State
of Colorado.
.12 The service agreement in the form set forth as
Exhibit B to the Amended and Restated Lease, with such revisions
as are consistent with the Lease and agreed to by the Land Board,
Rangeview and Pure Cycle, shall be executed and delivered by
Rangeview, acting by and through the Enterprise, and Pure Cycle
(the "Service Agreement") by April 19, 1996.
.13 The agreement for sale of export water in the form set
forth as Exhibit C to the Amended and Restated Lease shall be
executed and delivered by Rangeview, acting by and through the
Enterprise, and Pure Cycle (the "Export Water Agreement").
.14 All Rangeview Bonds and Notes not currently held by CNB
pursuant to the Escrow Agreement shall be delivered by Pure Cycle
along with an assignment of all such Rangeview Bonds and Notes in
the form attached to the Export Water Agreement as Exhibit D (the
"Bond Assignment").
.15 All documents required to be delivered by any Exhibit
hereto shall be delivered by the parties as required by such
Exhibit.
Delivery.
.1 On the Effective Date, the Escrow Agent shall deliver
The Closing Documents as follows:
(a) An original of the Amended and Restated Lease shall be
delivered to each of the Land Board and Rangeview.
(b) Copies of the Allderdice Assignment shall be delivered
to INCO, Pure Cycle and CNB.
(c) The original INCO Assignment shall be delivered to Pure
Cycle and copies shall be delivered to OAR, Riebesell, the Land
Board and CNB.
(d) An original of the OAR Option Agreement shall be
delivered to each of OAR, INCO and Pure Cycle.
(e) An original of the CWC Option Agreement shall be
delivered to each of the Land Board, Riebesell, INCO and Pure
Cycle.
(f) The Instruction Letter, the Amended Escrow Instructions
and the Guaranty Bank Release shall be delivered to CNB.
(g) An original of the Assumption Agreement shall be
delivered to OAR, Riebesell, the Land Board and CNB.
(h) An original of the Comprehensive Amendment Agreement
shall be delivered to each of the parties thereto.
(i) The releases delivered pursuant to paragraph 4(j) shall
be delivered to the Land Board.
(j) An original of the Service Agreement and the Export
Water Agreement shall be delivered to each of Rangeview and Pure
Cycle.
(k) The Rangeview Bonds and Notes delivered pursuant to
paragraph 4(n) and the Bond Assignment shall be delivered to
Rangeview.
(l) Any document delivered pursuant to an Exhibit hereto
shall be delivered in accordance with the instructions in such
Exhibit.
.2 If the Agreement is terminated, the Escrow Agent shall
return the Rangeview Bonds and Notes to Pure Cycle or, if
applicable, to the party who delivered such bonds and notes to
Pure Cycle pursuant to the Comprehensive Amendment Agreement, OAR
Option Agreement or CWC Option Agreement. The Guaranty Bank
Release and the Allderdice Assignment shall be returned to the
Land Board. The Escrow Agent shall destroy all other Closing
Documents.
Cancellation of Bonds and
Notes. On the Effective Date, after receipt of the Rangeview
Bonds and Notes, Rangeview shall cancel all of the Rangeview
Bonds and Notes without any payment or consideration to any prior
holder of the Rangeview Bonds and Notes except (1) the conveyance
to Pure Cycle of the Export Water as this term is defined in
Article Six of the Amended and Restated Lease Agreement pursuant
to the Export Water Agreement, and (2) issuance of the Service
Agreement to Pure Cycle. Rangeview hereby represents and
warrants to the Land Board that its outstanding debt, other than
the Rangeview Bonds and Notes, is less than Five Hundred Thousand
Dollars ($500,000).
Real Property Transfer.
At the option of the Land Board, at any time after the Effective
Date the Land Board may designate an individual to become a
landowner within the boundaries of Rangeview. If the Land Board
exercises this option, subject to the conditions set forth below,
Pure Cycle shall grant or cause to be granted to such individual
an interest in the land within the boundaries of Rangeview for a
cost not to exceed One Hundred Dollars ($100.00). The designated
individual must agree, at the time of acquiring the property, to
be bound by the tenancy in common agreement pursuant to which the
current holders of land within the boundaries of Rangeview hold
such land and the right of first refusal agreement on such land
granted to INCO (which as of the Effective Date shall be assigned
to Pure Cycle). Provided the designated individual meets the
legal requirements to serve as a member of the board of
Rangeview, Pure Cycle shall take all lawful actions within its
power, at no cost to Pure Cycle, to promote the election of the
individual designated by the Land Board to the board of
Rangeview.
Release of Land Board
Claims. As of the Effective Date, the Land Board fully, finally
and irrevocably releases the Bondholders, Rangeview, Pure Cycle,
INCO, and the Owens Group Bondholders and their parents,
subsidiaries, affiliates and all other related companies and
their past and present shareholders, officers and directors,
partners, employees, agents, attorneys, successors and assigns
from any and all claims, controversies, actions, causes of
action, suits, demands, obligations, debts, losses, damages, or
liabilities which may exist in law or equity, whether known or
unknown, fixed or contingent, asserted or unasserted, presently
existing or arising in the future, based on acts or omissions to
date, of any kind or nature whatsoever arising out of or in any
way connected with (1) any matters that were or could have been
raised in the Litigation, and (2) any matters arising out of or
in any way related to the Lease, the Rangeview Notes and Bonds,
the Lowry Range, or the Rangeview Metropolitan District, except
that this Release shall not release any party hereto from its
obligations and duties pursuant to this Agreement (including the
Exhibits hereto). The Land Board covenants to the Bondholders,
Rangeview, Pure Cycle, INCO, and the Owens Group Bondholders that
it will never institute any lawsuit or proceeding, at law or in
equity, or otherwise assert any claim against such parties on
account of any such claims or controversies. This covenant may
be pleaded by the Bondholders, Rangeview, Pure Cycle, INCO, and
the Owens Group Bondholders, or any of them, as a complete
defense to any action or proceeding, including third party
claims, that may be brought or instituted by the Land Board in
breach of this Agreement.
Release of Claims of the
Bondholders, Rangeview, Pure Cycle, INCO and the Owens Group
Bondholders. As of the Effective Date, the Bondholders,
Rangeview, Pure Cycle, INCO, and the Owens Group Bondholders, on
behalf of themselves, their parents, subsidiaries, affiliates and
all other related companies and their past and present
shareholders, officers and directors, employees, agents,
partners, successors and assigns, fully, finally and irrevocably
release the Land Board and all present and prior Land Board
Commissioners, its and their attorneys, agents, successors and
assigns, from any and all claims, controversies, actions, causes
of action, suits, demands, obligations, debts, losses, damages,
or liabilities which may exist in law or equity, whether known or
unknown, fixed or contingent, asserted or unasserted, presently
existing or arising in the future, based on acts or omissions to
date, of any kind or nature whatsoever arising out of or in any
way connected with (1) any matters that were or could have been
raised in the Litigation, and (2) any matters arising out of or
in any way related to the Lease, the Rangeview Notes and Bonds,
the Lowry Range, or the Rangeview Metropolitan District, except
that this Release shall not release any party hereto from its
obligations and duties pursuant to this Agreement (including the
Exhibits hereto). The Bondholders, Rangeview, Pure Cycle, INCO,
and the Owens Group Bondholders covenant to the Land Board that
they will never institute any lawsuit or proceeding, at law or in
equity, or otherwise assert any claim against the Land Board on
account of any such claims or controversies. This covenant may
be pleaded by the Land Board as a complete defense to any action
or proceeding, including third party claims, that may be brought
or instituted by any of the Bondholders, Rangeview, Pure Cycle,
INCO or the Owens Group Bondholders in breach of this Agreement.
Release of Claims among
the Bondholders, Rangeview, Pure Cycle, INCO and the Owens Group
Bondholders. As of the Effective Date, each of the Bondholders,
Rangeview, Pure Cycle, INCO, and each of the Owens Group
Bondholders, on behalf of himself, herself or itself, as
applicable, any such entity's parents, subsidiaries, affiliates
and all other related companies and past and present
shareholders, officers and directors, and his, her or its
employees, agents, partners, successors and assigns, fully,
finally and irrevocably release each of the other parties
enumerated in this Section 10 and his, her or its respective past
and present shareholders, officers and directors, partners,
employees, agents, attorneys, successors and assigns, from any
and all claims, controversies, actions, causes of action, suits,
demands, obligations, debts, losses, damages, or liabilities
which may exist in law or equity, whether known or unknown, fixed
or contingent, asserted or unasserted, presently existing or
arising in the future, based on acts or omissions to date, of any
kind or nature whatsoever arising out of or in any way connected
with (1) any matters that were or could have been raised in the
Litigation, and (2) any matters arising out of or in any way
related to the Lease, the Rangeview Notes and Bonds, the Lowry
Range, or the Rangeview Metropolitan District, except that this
Release shall not release any party hereto from its obligations
and duties pursuant to this Agreement (including the Exhibits
hereto). Each of the Bondholders, Rangeview, Pure Cycle, INCO,
and each of the Owens Group Bondholders covenant to each other
that he, she or it will never institute any lawsuit or
proceeding, at law or in equity, or otherwise assert any claim
against the others on account of any such claims or
controversies. This covenant may be pleaded by each of the
parties enumerated in this Section 10 as a complete defense to
any action or proceeding, including third party claims, that may
be brought or instituted by any of the Bondholders, Rangeview,
Pure Cycle, INCO or the Owens Group Bondholders in breach of this
Agreement.
Indemnity. Pure Cycle
agrees to hold Rangeview, the Land Board, the Land Board
Commissioners, and the attorneys, agents, employees, successors
and assigns of each of them, harmless from and indemnify them
against any and all claims, and all costs including without
limitation, all attorneys' fees, expert witness fees, and all
other costs which may be incurred by such indemnitees, which may
be brought by any person or entity which does not execute and
deliver a release as provided in paragraph 4(j) but which claims
an interest in any of the Rangeview Notes and Bonds (other than a
claim asserted by or through Allderdice or CFC). The parties
acknowledge and agree that the Land Board has an interest in
Rangeview's being indemnified under this paragraph and therefore
agree that Rangeview may not waive such indemnification without
the Land Board's written consent.
Settlement and
Compromise. This Agreement is entered into by the parties for
the sole purpose of settling and compromising claims and disputes
between them and does not constitute, and should not in any way
be construed to constitute, admissions of wrongdoing or liability
by any party.
Costs and Attorneys'
Fees. Except as may otherwise be agreed in writing among
individual parties, each party agrees to bear and pay his/her/its
own costs and attorneys' fees, incurred in connection with the
Litigation and this Agreement. However, in the event any party
fails to comply with the provisions of this Agreement, any other
party taking action to enforce compliance with this Agreement
shall be entitled to recover costs and attorneys' fees incurred
in connection with such enforcement activity from the defaulting
party.
Termination. This
Agreement will automatically terminate if (i) the Guaranty Bank
Release and the Service Agreement are not delivered by April 19,
1996, or (ii) the Consent Judgment is not entered by June 21,
1996, unless a later date is agreed to by all of the parties.
Effect of Termination.
Upon termination, this Agreement shall be null and void ab initio
and shall have no force and effect. Such termination shall be
without prejudice to the rights and contentions of the parties in
the Litigation.
Escrow Agent.
.1 The Escrow Agent undertakes to perform only such duties
as are specifically set forth in this Agreement. The Escrow
Agent shall not be liable for any acts or omissions by it of any
kind unless caused by its own misconduct, bad faith or gross
negligence, and shall be entitled to rely upon written notice,
instrument or signature reasonably believed by it to be genuine
and to have been signed or presented by the proper party or
parties duly authorized to do so. The Escrow Agent shall have no
responsibility for the contents of any writing submitted to it
under this Agreement and shall be entitled reasonably to rely in
good faith upon the contents thereof.
.2 The parties, jointly and severally, agree to indemnify,
to the extent permitted by law, the Escrow Agent and to hold it
harmless against any and all liabilities incurred by it under
this Agreement, except for liabilities incurred by the Escrow
Agent resulting from its own misconduct, bad faith or gross
negligence.
.3 The Escrow Agent may resign at any time by giving
notice of such resignation to the other parties hereto specifying
a date not less than ten (10) business days following the date of
such notice when such resignation shall take effect. Upon such
notice, a successor escrow agent shall be appointed by mutual
agreement of the Land Board and Rangeview, such successor escrow
agent to become the Escrow Agent hereunder upon the resignation
date specified in such notice. If the Land Board and Rangeview
do not appoint a successor escrow agent prior to the resignation
date, the Escrow Agent may appoint as successor escrow agent any
entity to which the Land Board consents, and in which Rangeview
concurs, which consent and concurrence shall not be unreasonably
withheld. The Land Board and Rangeview (with each other's
concurrence which shall not be unreasonably withheld) may at any
time appoint a new escrow agent by giving notice thereof to the
Escrow Agent then acting. The Escrow Agent shall continue to
serve until its successor accepts such appointment and receives
the Closing Documents.
.4 Upon disposition of the Closing Documents in accordance
with this Agreement, this Agreement shall be deemed terminated
with respect to the Escrow Agent and the Escrow Agent shall be
released and discharged from any further obligations hereunder.
If any dispute arises under this Agreement with respect to the
delivery, ownership or right of possession of the Closing
Documents or any portion thereof, the Escrow Agent may deposit
the same with the clerk of the Denver District Court, interplead
the parties hereto, and upon so depositing the documents held by
it hereunder and filing its complaint in interpleader it shall be
relieved of all liability hereunder, and furthermore, the parties
hereto for themselves, their respective successors and assigns do
hereby submit themselves to the jurisdiction of such court.
Press Releases/Other
Communications. Each party shall limit any comments to the
public or the press regarding the Litigation, this Agreement or
the exhibits hereto to the terms and benefits of this Agreement.
Entire Agreement. This
Agreement, including the exhibits hereto, sets forth the entire
agreement and understanding of the parties with respect to its
subject matter and supersedes all prior discussions or
negotiations in connection therewith and there are no
understandings or agreements, oral or written, relating to the
subject matter of this Agreement, except as specifically provided
herein. This Agreement shall not be modified, amended or
supplemented except by written agreement of the parties.
Authority. Each party to
this Agreement represents to every other party that (i) he/she/it
has full authority to enter into and perform his/her or its
obligations hereunder, (ii) with respect to a party who is an
individual, such party is of lawful age and is competent,
(iii) with respect to a party who is an entity, the persons
signing this Agreement and the exhibits hereto on their behalf
have full authority to do so and that no additional resolution or
action, other than those which have been obtained, is needed in
order for them to execute and legally bind the parties to the
terms of this Agreement and the exhibits hereto, (iv) he/she/it
has obtained the advice of counsel of his/her/its choice, or has
had the opportunity for such consultation, with respect to the
terms of this Agreement and the exhibits hereto, (v) he/she/it
fully understands this Agreement and the exhibits hereto
applicable to he/she/it, has sufficient information to make an
informed decision about this Agreement and the exhibits hereto,
and agrees to be bound by its terms, (vi) this Agreement and the
exhibits hereto applicable to him/her/it are binding and
enforceable against him/her or it in accordance with their terms
and (vii) this Agreement and the exhibits hereto do not and will
not violate any other agreement, court order or law to which
he/she/it or his/her/its property is subject; provided, however,
the Land Board does not represent that it has the authority to
amend the agreements amended by the Comprehensive Amendment
Agreement with respect to agreements amended thereby to which it
is not a party, the CWC Option Agreement and the Amended Escrow
Instructions, except to the extent such authority may exist by
virtue of its ownership of the Allderdice Notes and Bonds.
Binding Effect. This
Agreement shall be binding upon and inure to the benefit of all
parties and their respective heirs, successors, executors, legal
representatives, assigns, insurers, and all persons claiming by,
through or under any of them.
Governing Law. This
Agreement shall be construed as though it were equally drafted by
each party to the Agreement. It shall be governed by and
interpreted in accordance with the laws of the Colorado.
Execution in
Counterparts. This Agreement may be executed in counterparts,
with each counterpart being an original document, and all
counterparts together constituting a single agreement.
Further Assurances. Each
party to this Agreement agrees to execute and deliver to the
other parties hereto all such other and additional instruments,
releases, and documents and to do all other acts and things
consistent with the terms and conditions hereof, as any party may
reasonably deem necessary to carry out the intent of this
Agreement, and to cooperate at any hearing seeking entry of the
Consent Judgment, and to provide such information or testimony as
is necessary to provide the factual basis for such judgment.
Consent to Jurisdiction.
All parties consent to, and waive all objections to jurisdiction
and venue in the Denver District Court for purposes of enforcing
the terms of this Agreement.
Severability. If any
provision of this Agreement is held to be illegal, invalid or
unenforceable, said holding shall not affect the enforceability
of any other provision of this Agreement, and the parties agree
that in such event, in lieu of each clause or provision of the
Agreement which is illegal, invalid or unenforceable, there shall
be added as a part of this Agreement a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause
or provision as may be possible and be legal, valid and
enforceable.
IN WITNESS WHEREOF, this Settlement Agreement and
Mutual Release has been executed on behalf of each of the parties
hereto as of the day and date first above written.
STATE OF COLORADO STATE BOARD OF
LAND COMMISSIONERS
---------------------------------
President
RANGEVIEW METROPOLITAN DISTRICT
By:_________________________________
Title:________________________________
<PAGE>
PURE CYCLE CORPORATION,
a Delaware corporation
By:
Title:
INCO SECURITIES CORPORATION,
a Delaware corporation
By:
Title:
APEX INVESTMENT FUND II, L.P.,
a Delaware limited partnership
By: Apex Management Partnership, L.P.,
General Partner of Apex Investment
Fund II, L.P.
By:
George Middlemas, General
Partner
LANDMARK WATER PARTNERS, L.P.
By: COMPTON CAPITAL, LTD.,
its general partner
By: _________________________
Earl A. Samson, III, President
<PAGE>
LANDMARK WATER PARTNERS II, L.P.,
a Delaware limited partnership
By: COMPTON CAPITAL PARTNERS,
INC., its general partner
By: __________________________
Earl A. Samson, III, President
THE ENVIRONMENTAL VENTURE
FUND, L.P., a Delaware limited partnership
By: Environmental Venture Management, L.P.,
General Partner of The Environmental
Venture Fund, L.P.
By: First Analysis Corporation,
General Partner of Environmental Venture
Management, L.P.
By: __________________________
Bret Maxwell, General Partner
THE ENVIRONMENTAL PRIVATE EQUITY
FUND II, L.P., a Delaware limited partnership
By: Environmental Private Equity
Management II, L.P., General
Partner of The Environmental
Private Equity Fund II, L.P.
By: First Analysis EPEF
Management II, L.P., General Partner
of Environmental Private Equity
Management II, L.P.
By: First Analysis Corporation,
General Partner of First Analysis
EPEF Management II, L.P.
By:______________________________
Bret Maxwell, General Partner
PRODUCTIVITY FUND II, L.P.,
a Delaware limited partnership
By: First Analysis Management
Company II, L.P., General Partner of
Productivity Fund II, L.P.
By: First Analysis Corporation,
General Partner of First Analysis
Management Company II, L.P.
By: _____________________________
Bret Maxwell, General Partner
PROACTIVE PARTNERS, L.P.,
a California limited partnership
By:________________________________
Charles McGettigan, General
Partner
WARWICK PARTNERS, L.P.,
a Delaware limited partnership
By: PROVIDENCE PARTNERS, L.P.,
its general partner
By: PACIFIC EQUITY LIMITED,
its general partner
By:_______________________________
Herbert A. Denton, authorized
officer
AUGINCO,
a Colorado general partnership
By: ______________________________
Harrison H. Augur, general
partner
___________________________________
Anders C. Brag
___________________________________
Amy Leeds
____________________________________
D. W. Pettyjohn
OAR, Incorporated,
a Colorado corporation
By:_________________________________
Willard G. Owens, President
_____________________________________
Willard G. Owens
_____________________________________
H. F. Riebesell, Jr.
For purposes of paragraphs 4, 5 and 16:
DAVIS, GRAHAM & STUBBS LLP
By:________________________________
Wanda J. Abel, Partner
<PAGE>
APPROVED AS TO FORM:
DUFFORD & BROWN
_________________________________
Gregory A. Ruegsegger, #9936
1700 Broadway, Suite 1700
Denver, CO 80290-1701
GALE A. NORTON
Attorney General
STEPHEN K. ERKENBRACK
Chief Deputy Attorney General
TIMOTHY M. TYMKOVICH
Solicitor General
__________________________________
RICHARD A. WESTFALL, #15295*
Special Deputy Solicitor General
1525 Sherman Street, 5th Floor
Denver, CO 80203
Telephone: (303) 866-5334
*Counsel of Record
ATTORNEYS FOR THE STATE DEFENDANTS
SENN, LEWIS, VISCIANO, & STRAHLE, P.C.
_________________________________________
Frank W. Visciano, #7274
1801 California Street, Suite 4300
Denver, CO 80202
ATTORNEYS FOR PLAINTIFFS
<PAGE>
HALIGMAN AND LOTTNER
a Professional Corporation
__________________________________________
Richard I. Brown, #5195
633 Seventeenth Street, Suite 2700
Denver, CO 80202-3635
ATTORNEYS FOR RANGEVIEW
METROPOLITAN DISTRICT
DUNCAN, OSTRANDER & DINGESS, P.C.
__________________________________________
Donald M. Ostrander, #12458
7800 East Union Avenue, Suite 200
Denver, CO 80237
ATTORNEYS FOR PURE CYCLE AND INCO
HOPPER AND KANOUFF, P.C.
__________________________________________
Dennis A. Graham, #6773
Robert R. Marshall, #2851
1610 Wynkoop, Suite 200
Denver, CO 80202
ATTORNEYS FOR WILLARD G. OWENS
AND OAR, INC.
___________________________________________
H.F. Riebesell, Jr., #719
5290 DTC Parkway, Suite 150
Englewood, CO 80111
PRO SE'
GALE A. NORTON
Attorney General
STEPHEN K. ERKENBRACK
Chief Deputy Attorney General
TIMOTHY M. TYMKOVICH
Solicitor General
RICHARD A. WESTFALL, #15295*
Special Deputy Solicitor General
1525 Sherman Street, 5th Floor
Denver, CO 80203
Telephone: (303) 866-5334
*Counsel of Record
ATTORNEYS FOR THE STATE DEFENDANTS
HALIGMAN AND LOTTNER
a Professional Corporation
By:
Richard I. Brown, #5195
633 Seventeenth Street, Suite 2700
Denver, CO 80202-3635
Telephone: (303) 292-1200
ATTORNEYS FOR RANGEVIEW METROPOLITAN
DISTRICT
<PAGE>
SENN, LEWIS, VISCIANO, & STRAHLE, P.C.
By:
Frank W. Visciano, #7274
1801 California Street, Suite 4300
Denver, CO 80202
Telephone: (303) 298-1122
ATTORNEYS FOR PLAINTIFFS
DUNCAN, OSTRANDER & DINGESS, P.C.
By:
Donald M. Ostrander, #12458
7800 East Union Avenue, Suite 200
Denver, CO 80237
Telephone: (303) 779-0200
ATTORNEYS FOR PURE CYCLE AND INCO
HOPPER AND KANOUFF, P.C.
By:
Dennis A. Graham, #6773
Robert R. Marshall, #2851
1610 Wynkoop, Suite 200
Denver, CO 80202
Telephone: (303) 892-6000
ATTORNEYS FOR WILLARD G. OWENS AND
OAR, INCORPORATED
H.F. Riebesell, Jr., #719
5290 DTC Parkway, Suite 150
Englewood, CO 80111
PRO SE
<PAGE>
Exhibit 1 Amended and Restated Lease
Exhibit 2 Consent Judgment
Exhibit 3 Intentionally Omitted
Exhibit 4 INCO Assignment
Exhibit 5 OAR Option Agreement
Exhibit 6 CWC Option Agreement
Exhibit 7 Escrow Instructions
Exhibit 8 Comprehensive Amendment Agreement
EXHIBIT 1 OF DOCUMENT 10.1
==========================
AMENDED AND RESTATED LEASE AGREEMENT
between
STATE OF COLORADO, ACTING BY AND THROUGH THE
STATE BOARD OF LAND COMMISSIONERS, LESSOR
and
RANGEVIEW METROPOLITAN DISTRICT, LESSEE
Lease No. S-37280
TABLE OF CONTENTS
ARTICLE 1 Definitions 1
ARTICLE 2 Preliminary Matters 5
ARTICLE 3 Effective Date 5
3.1 Effective Date of This Agreement 5
3.2 Amendment 5
3.3 Objectives of This Agreement 5
3.4 Rangeview 6
ARTICLE 4 Leased Premises 6
4.1 General Description of Water Subject to This
Agreement 6
ARTICLE 5 Grant of Lease 6
5.1 Grant 6
5.2 Term 7
5.3 Effect of Expiration of the Agreement 7
5.4 Land Board's Legal Right to Water 7
5.5 Sale of Land 8
ARTICLE 6 Right to Sell Water 8
6.1 Rangeview's Conveyance of Export Water 8
6.2 Right to Artificially Recharge 10
6.3 Water Available to Export 13
6.4 Sale of Use of Water on the Lowry Range 13
6.5 Quality of Water 14
6.6 Termination of Export Water 14
ARTICLE 7 Rent and Royalty Payments to Land Board 15
7.1 Annual Rent 15
7.2 Royalty for Export Water 15
7.3 Royalties for On-site Use 18
7.5 Payment of Royalty 19
7.6 Reporting 20
ARTICLE 8 Development of Infrastructure
and Water Service on the Lowry Range 21
8.1 Rangeview Shall Serve 21
8.2 Water Fees and Rates 21
8.3 Substitution of Facilities 21
8.4 Right to Use Transmission Lines; Infrastructure 22
8.5 Title to Equipment and Improvements 23
8.6 Future Leases 23
8.7 Rangeview District Boundaries 23
8.8 Development of Lowry Range 23
8.9 Reserves 23
ARTICLE 9 Service Provider Contract 24
9.1 Service Provider for Rangeview 24
ARTICLE 10 East Cherry Creek Valley
Water and Sanitation District 26
10.1 Terms and Revenue 26
10.2 Title Reversion 26
ARTICLE 11 Rights-of-Way 26
11.1 Master Plan 26
11.2 Fee for Right-of-Way 27
11.3 License to Service Provider 27
ARTICLE 12 Bonding Requirements 27
12.1 Bond 27
12.2 Bond of Contractors 27
ARTICLE 13 Default and Remedies 28
13.1 Events of Default 28
13.2 Remedies 29
13.3 No Waiver 30
13.4 Land Board's Right to Cure Rangeview's Breach 30
ARTICLE 14 Improvements 31
14.1 Transfer of Improvements 31
14.2 Abandonment of Export Water Facilities 31
ARTICLE 15 General Provisions 31
15.1 Assignment by Rangeview 31
15.2 Work Requirements 32
15.3 Third Party Beneficiaries 33
15.4 Notice 33
15.5 Construction 34
15.6 Entire Agreement 34
15.7 Authority 34
15.8 Copies 34
15.9 Amendment 34
15.10 Compliance with Law 34
15.11 Binding Effect 35
15.12 Severability 35
15.13 Optimum Long-Term Revenue 35
15.14 Further Assurance 35
15.15 Governing Law 35
15.16 Arbitration 35
15.17 Litigation 36
15.18 Duty of Good Faith and Fair Dealing 36
15.19 Force Majeure 36
<PAGE>
EXHIBITS
Exhibit A Water Previously Conveyed
Exhibit B Service Agreement
Exhibit C Export Water Contract
Exhibit D Master Plan of Well Field and Rights-of-Way
Exhibit E Pipe Sizes
Exhibit F Right-of-Way Grant Form
Exhibit G Service Provider Right-of-Way License
Exhibit H Export Water Contractor Right-of-Way License
AMENDED AND RESTATED LEASE AGREEMENT
THIS AMENDED AND RESTATED LEASE AGREEMENT is by and between
the State of Colorado, acting through its State Board of Land
Commissioners and Rangeview Metropolitan District, a state quasi-
municipal corporation and political subdivision of the State of
Colorado, acting by and through its water activity enterprise.
NOW, THEREFORE, in consideration of the promises hereinafter
stated, to be kept and performed by the Parties, their successors
and assigns, the Parties agree as follows:
1. Definitions
"Agreement" shall be defined to mean this Amended and
Restated Lease Agreement, Lease No. S-37280, dated April __,
1996.
"Annual Rent" shall be defined as set forth in Section 7.1.
"Construction" shall be defined as set forth in Section 5.1.
<PAGE>
"Delivered Basis" shall be defined as set forth in
Section 7.2(d)(2).
"Effective Date" shall be defined as set forth in
Section 3.1.
"East Cherry Creek Agreement" shall be defined to mean that
certain agreement dated July 8, 1983 by and between OAR,
Incorporated (Rangeview's predecessor), and East Cherry Creek
Valley Water and Sanitation District.
"ECCV" shall be defined to mean East Cherry Creek Valley
Water and Sanitation District.
"Enterprise" shall be defined as Rangeview's water activity
enterprise established by resolution of Rangeview adopted at a
public meeting of Rangeview's board of directors on September 11,
1995, and effective as of the date of its adoption.
"Entitlement Basis" shall be defined to mean a sale or other
disposition of water to a third party with the third party
bearing all costs of withdrawal, treatment and delivery.
"Export Water" shall be defined as set forth in Section 6.1.
"Export Water Contractor" shall be defined as set forth in
Section 6.1.
"Export Water Purchaser" shall be defined to mean the person
or entity who purchases Export Water other than the Export Water
Contractor and a retail end user.
"Force Majeure" shall be defined as set forth in
Section 15.20.
"Gross Revenues" shall be defined to mean all pre-tax
amounts or consideration actually received directly or indirectly
by Rangeview or the Export Water Contractor, as applicable, from
the sale or other disposition of Water Rights, including tap
fees, usage fees, service charges and all other revenues,
excluding taxes and refunds.
"Index" shall be defined to mean the Consumer Price Index
for Urban Consumers-All items (CPI-U) published by the Bureau of
Labor Statistics of the U.S. Department of Labor. In the event
that the Index shall subsequently be converted to a different
standard reference base or otherwise revised, the determination
involved shall be made with the use of such conversion factor,
formula or table for converting said Index as may be published by
the Bureau of Labor Statistics, or if said Bureau shall not
publish the same, then with the use of such conversion factor,
formula or table as may be published by Prentice Hall, Inc., or,
failing such publication, by any other nationally recognized
publisher of similar statistical information. In the event that
the Index shall cease to be published, then for the purposes of
this Agreement, there shall be substituted such other index as
the Parties shall agree upon, and if they are unable to agree,
then ninety (90) days after the Index
<PAGE>
ceases to be published, such matters shall be determined by
arbitration as provided in Section 15.16 of this Agreement.
"Initial Export Royalty Rates" shall be defined as set forth
in Section 7.2(a).
"Initial Permitted Sale" shall be defined as set forth in
Section 6.1.
"Land Board" is defined to mean the State of Colorado acting
by and through its State Board of Land Commissioners.
"Lease" is defined to mean the aggregate of the following:
a. Lease S-37280, dated April 26, 1982 between the Land
Board and OAR, Inc., whose rights and obligations were
subsequently conveyed to Lowry Range Metropolitan District, now
known as Rangeview;
b. Amendment to Lease S-37280, dated February 22, 1983;
c. Amendment to Lease S-37280, dated December 19, 1983;
d. Amendment to Lease S-37280, dated November 26, 1984;
e. Amendment to Lease S-37280, dated June 5 and 6, 1986;
f. Transfer Agreement dated December 8, 1986 ("Transfer
Agreement"); and
g. Novation Agreement dated December 7, 1988 ("Novation
Agreement").
"Litigation" is defined to mean the case entitled Apex
Investment Firm, II, L.P., et al. v. Colorado State Board of Land
Commissioners, et al., Case No. 94CV5405, District Court, in and
for the City and County of Denver, State of Colorado.
"Lowry Range" shall be defined to mean the approximately
24,567.21 acres, more or less, according to U.S. Government
survey, in Arapahoe County, Colorado more particularly described
as follows:
Township 5 South, Range 64 West of the 6th P.M.,
Sections 7 through 10: all; Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of the 6th P.M.,
Sections 33: all; and 34: all.
<PAGE>
Township 5 South, Range 65 West of the 6th P.M.,
Section 3: all; Sections 10 through 15: all, less certain
surface rights granted for the Aurora Reservoir (but
including the water under the Aurora Reservoir) in
Section 15; Sections 22 through 27: all, less certain
surface rights granted for the Aurora Reservoir (but
including the water under the Aurora Reservoir) in
Section 22; Sections 35 and 36: all; Section 34: north
2,183.19 feet.
Township 5 South, Range 66 West, of the 6th P.M.,
Section 36: all.
"Non-Export Water" shall be defined to mean the Water Rights
other than (i) the Export Water and (ii) the water subject to the
East Cherry Creek Agreement.
"Off-Site" shall be defined to mean outside the boundaries
of the Lowry Range.
"Operating Expenses" shall mean all actual maintenance and
operating costs incurred by Rangeview or its Service Provider in
discharging Rangeview's obligations to provide Non-Export Water
to Water Users as required by Section 8.1. Such Operating
Expenses may include, for example, expenses for repairs to the
infrastructure; salaries, wages and employee benefit expenses;
fees for services, materials and supplies; rents, administrative
and general expenses; insurance expenses; fees for legal,
engineering, accounting and other consulting and technical
services; and taxes and other governmental charges. Such
Operating Expenses shall not include expenditures which are
properly capitalized under generally accepted accounting prin
ciples, depreciation or obsolescence charges or reserves
therefor, reserves for any other purpose, amortization of
intangibles or other bookkeeping entries of a similar nature,
interest charges and charges for the payment of principal or
amortization of bonded or other indebtedness, royalties, or
losses from the sale, abandonment, reclassification, re-
evaluation or other disposition of capitalized assets.
"Parties" shall be defined to mean the Land Board and
Rangeview.
"Rangeview" shall be defined to mean Rangeview Metropolitan
District, a State quasi-municipal corporation and political
subdivision of the State of Colorado, acting directly as such or
acting by and through the Enterprise.
"Reserved Water" shall be defined as set forth in
Section 5.1(e).
"Retail Sales Price" shall be defined to mean the gross
rates and charges per 1,000 gallons charged by a municipality,
water district or other water provider to retail end users of the
water.
"Royalty Base" shall be defined as set forth in
Section 7.2(b).
<PAGE>
"Sale of Water" or similar phrases used herein shall mean
the sale of the rights as set forth in Section 5.1 and
Section 6.1.
"Service Agreement" shall be defined as set forth in
Section 6.4.
"Service Provider" shall be defined to mean any entity,
other than Rangeview, actually delivering the Non-Export Water
and related services to the Water Users as permitted by
Article 9.
"Settlement Agreement" shall be defined to mean the
Settlement Agreement and Mutual Release dated April 4, 1996 among
the Parties and the other parties in the Litigation.
"Substitute Facilities" shall be defined as set forth in
Section 8.3.
"Water Interest Ratio" shall be defined as set forth in
Section 8.3.
"Water Rights" shall be defined as set forth in Section 5.1.
"Water Users" shall be defined to mean surface tenants,
occupants, developers, land owners and all other water users on
the Lowry Range.
2. Preliminary Matters
(1) A dispute has arisen between the Parties and others
concerning the status of the Lease as evidenced in part by the
claims asserted by and against various parties in the Litigation.
(2) The Parties to this Agreement desire to: (1) amend and
completely restate the rights and obligations of the Lease;
(2) acknowledge and agree that the Lease as amended and
completely restated by this Agreement is valid and enforceable;
(3) eliminate uncertainty surrounding the Lease as amended and
completely restated by this Agreement; and (4) resolve all issues
between the Parties to this Agreement which are related to all
issues which have been raised or could be raised in connection
with the Litigation.
<PAGE>
3. Effective Date
(1) Effective Date of This Agreement. This Agreement shall
be binding on the date it is fully executed and delivered by the
Parties subject only to, as a condition subsequent, entry of the
final non-appealable order of the Denver District Court in the
Litigation approving this Agreement and the related Settlement
Agreement. The date of the final non-appealable order of the
Denver District Court shall be deemed the Effective Date of this
Agreement. The Parties agree to cooperate and to use their best
efforts to obtain prompt entry of a final non-appealable order.
(2) Amendment. This Agreement amends, restates in its
entirety, and supersedes in all respects the Lease, and from and
after the Effective Date, this Agreement, including the Exhibits
hereto and the Settlement Agreement, shall control and define the
rights and obligations of the Parties with respect to the subject
matter of this Agreement.
(3) Objectives of This Agreement. The Parties acknowledge
that it is in their best interests to arrange for water
development on the Lowry Range to be pursued in a manner which
encourages efficient and economical use of the water resources
which are the subject of this Agreement and encourages surface
development on the Lowry Range. Rangeview has the objective of
acquiring an adequate water supply to provide water delivery to
Water Users pursuant to this Agreement and, subject to the terms
of this Agreement, to apply the Export Water to a use which
creates revenue and thereby provides additional royalty payments
to the Land Board. In order to achieve this objective, the
Parties acknowledge that Rangeview's first priority for
utilization of its available revenues will be the fulfillment of
its commitment to provide water service to its Water Users. The
Land Board contemplates that it may lease, sell, or otherwise
dispose of portions of the surface of the Lowry Range at some
undetermined point in the future and anticipates that the
availability and provision of water service to the Lowry Range
pursuant to this Agreement may promote development on the Lowry
Range.
(4) Rangeview. The Enterprise agrees that it shall cause
Rangeview, acting directly and not through the Enterprise, to
execute and deliver a guaranty of this Agreement in the form
attached hereto as Exhibit I.
4. Leased Premises
(1) General Description of Water Subject to This Agreement.
Except as otherwise reserved to the Land Board in Section 5.1
below, this Agreement shall encompass the use of all of the
waters on and under the surface of the Lowry Range.
<PAGE>
5. Grant of Lease
(1) Grant. Subject to the terms, conditions and
limitations set forth in this Agreement, the Land Board hereby
leases to Rangeview the right and privilege during the term of
this Agreement to divert and put to beneficial use all water on
and under the surface of the Lowry Range, including all rights to
the first use, reuse, successive use and disposition of such
water, together with the right to use as much of the surface and
underground portions of the Lowry Range as provided in Article 11
of this Agreement as may be reasonably required in the exercise
of the rights granted by this Agreement, including, in accordance
with commercially reasonable and prudent water provider practice
in Colorado, the right to drill and build wells, construct
buildings (except office and other such buildings not directly
necessary for the extraction and transportation of water), make
excavations, stockpiles, dumps, drains, roads, power lines,
pipelines, and other improvements (all such activity hereinafter
being referred to as "Construction"), but only as may be
reasonably necessary for the development and delivery of the
water pursuant to this Agreement. The foregoing items exclusive
of the reservations set forth below are collectively referred to
as the "Water Rights."
Reserving, however, to the Land Board:
1. Except as are herein specifically granted, the right to
exercise all rights and privileges of every type and nature which
are incident to the ownership of the Lowry Range, or any part
thereof, at any time, for any purpose, including, without limita
tion, the right to explore, prospect for and extract oil and gas
and other minerals, including sand and gravel, on or under said
land, in a manner not inconsistent with the full exercise by
Rangeview of the rights and privileges herein granted;
2. The right at any time to go upon those portions of the
Lowry Range not exclusively utilized by Rangeview and the right
at all reasonable times upon five (5) days' written notice during
the term of this Agreement to go upon those portions of the Lowry
Range exclusively utilized by Rangeview and every part thereof
for the purpose of inspecting same, including metering, measuring
and other similar devices, and, in accordance with Section 7.6,
to inspect the books of accounts and records of water development
and use therein, and of ascertaining whether or not Rangeview,
and those entities holding under and buying from or contracting
with Rangeview, are carrying out the terms, covenants and
agreements of this Agreement;
3. All interests in the Water Rights and all interests in
the Lowry Range previously granted by the Land Board identified
in Exhibit A;
4. The Land Board's recharge rights set forth in 6.2(b);
and
<PAGE>
5. A total of 1,135 acre feet annually of non-tributary
and not non-tributary (as defined by statute) water blended
proportionally from all aquifers based on water court decrees
adjudicating water under the Lowry Range as such decrees may be
amended from time to time ("Reserved Water"). Except for the
restriction on sale set forth in Section 6.1(b), this Reserved
Water shall not be subject to this Agreement and is released by
Rangeview in favor of Land Board.
(2) Term. The term of the Lease commenced at 12:00 noon on
May 1, 1982, and, as amended by this Agreement, shall expire at
12:00 noon on May 1, 2081 unless terminated earlier in accordance
with the terms of this Agreement or otherwise extended.
(3) Effect of Expiration of the Agreement. Upon
expiration, or earlier termination of the term of this Agreement,
the right to the use of the Non-Export Water shall automatically
and without further act of the Parties or anyone else revert to
the Land Board. To the extent Non-Export Water is actually being
delivered to provide water service to Water Users, the Land Board
agrees that such water will continue to be made available to
Water Users under commercially reasonable agreements to be
negotiated at the time of such expiration or termination, which
agreements shall include adequate revenue for the Land Board. In
the event no agreement is reached, then the terms of such
agreements shall be determined by arbitration pursuant to
Section 15.16.
(4) Land Board's Legal Right to Water. The Land Board
hereby warrants and represents that, except as provided in
Exhibit A, it has all right, title and interest in the Water
Rights granted to Rangeview and it has not granted such rights to
any other person or entity. Rangeview agrees to pursue
diligently (1) the adjudication of all of the Water Rights, and
(2) the development of the Water Rights as necessary to provide
water service to Water Users in a commercially reasonable time
and manner and in accordance with prudent water provider practice
in Colorado, without cost or legal expense to the Land Board.
The Land Board shall reasonably cooperate and render assistance
with respect to all permits, applications, filings and documents
related to Rangeview's activity in adjudicating all of the Water
Rights and shall be provided courtesy copies of such papers five
(5) days before they are filed. It is further agreed by the
Parties hereto that all permits, applications, filings, documents
and decrees in connection with establishing such Water Rights
shall bear the name of, and be made in the name of Land Board
and, if necessary, Rangeview, as lessee. Legal title to the
Water Rights shall be held in the name of the Land Board except
to the extent reasonably necessary to include Rangeview, as
lessee, in water decrees, without cost to the Land Board, and any
water rights adjudicated on and under the Lowry Range shall auto
matically become Water Rights under this Agreement. Nothing in
this Agreement shall be deemed to prohibit Rangeview from
adjudicating in its sole name and for its sole benefit any other
Off-Site water rights not subject to this Agreement.
<PAGE>
Unless expressly agreed to by the Land Board in writing and
in its sole discretion, the Water Rights, the water system to be
constructed, and the rights-of-way on and aquifers under the
Lowry Range required to deliver both Export and Non-Export Water,
and any other rights granted hereunder, shall not be used for any
business or other purpose except to provide water service
consistent with this Agreement and the water decrees by which
such Water Rights have been or may be adjudicated.
(5) Sale of Land. C.R.S. 36-1-118(4) provides that the
Land Board may, in its discretion, offer for sale any land leased
at any time during the term of any lease as though said lease had
not been executed, or it may withdraw such land from sale during
the full term of the lease. The Land Board affirms that the
right to develop, divert, convey and use the Water Rights and the
interest in the surface of the Lowry Range conferred by
Article 11 of this Agreement shall be withdrawn from sale until
this Agreement terminates in accordance with the provisions
hereof.
<PAGE>
6. Right to Sell Water
(1) Rangeview's Conveyance of Export Water.
1. As of the Effective Date and subject only to the terms
of this Agreement, Rangeview shall sell or have the right to sell
the right to divert and sell outside the Lowry Range the use of
up to a total gross volume of 1,165,000 acre feet of the non-
tributary and not non-tributary water included in the Water
Rights ("Export Water") pursuant to an agreement in the form
attached hereto as Exhibit C (the "Initial Permitted Sale"). The
purchaser of the Export Water, pursuant to Exhibit C, shall be
referred to herein as the "Export Water Contractor." The Export
Water may be withdrawn only to the extent permitted by the water
decrees by which such water was adjudicated, as such decrees may
be amended from time to time, and may not be withdrawn in
quantities or in any other manner that would adversely affect the
delivery of Non-Export Water to Water Users. Notwithstanding the
expiration or early termination of this Agreement, such right to
divert, sell and use the total gross volume of 1,165,000 acre
feet of Export Water shall be absolute and irrevocable subject to
the provisions of Section 6.6. The diversion and use of the
Export Water shall be in accordance with the terms of the water
decrees by which such water was adjudicated, as such decrees may
be amended, from time to time and will include the right to sell
all use, reuse, and successive uses of the Export Water. Upon
the sale or other disposition of all or any portion of the Export
Water following the Initial Permitted Sale, Rangeview shall cause
to be paid and the Land Board shall receive the royalty described
in Section 7.2 below. The Land Board will have no approval
rights as to any sale or other disposition of the use of the
Export Water subsequent to the Initial Permitted Sale, except
that Rangeview shall provide to the Land Board written notice of
and access to the contemplated sale documents twenty-one (21)
days in advance of such sale or other disposition pursuant to
Rangeview's rights as set forth in Section 12.1 of Exhibit C.
Contracts for sales of the use of Export Water shall provide for
the substitution of facilities and oversizing of pipes as
provided in Sections 8.3 and 8.4 below and that the capital costs
for the Off-Site delivery system and oversizing of pipes will not
be charged, directly or indirectly, to the Land Board, Rangeview,
or Water Users (except to the extent such facilities are
substituted for on-site service, in which case Water Users will
indirectly bear costs through rates and charges and Rangeview may
incur administrative and maintenance expenses with respect
thereto). In addition, Rangeview shall cause such contracts to
provide for the payment of royalties as otherwise provided in
this Agreement.
2. The Land Board agrees that the Reserved Water shall not
be sold by the Land Board before (i) the sale or disposition of
the Export Water by the Export Water Contractor subsequent to the
Initial Permitted Sale or (ii) May 1, 2032, whichever is earlier.
<PAGE>
3. Rangeview is in the process of adjudicating certain
tributary waters on the Lowry Range. To the extent Rangeview is
successful in completing adjudication of such rights, and to the
extent water is available pursuant to such adjudication, the
Export Water Contractor shall have the right at any time during
the first five (5) years following the adjudication to substitute
up to 1,650 acre feet per year of non-tributary water which
constitutes the Export Water as defined in this Section 6.1 for
an absolute and irrevocable decree for up to 1,650 acre feet of
tributary water. If the Export Water Contractor exercises the
foregoing right, the Export Water Contractor shall reconvey a
total gross volume of 165,000 acre feet of non-tributary water
and not non-tributary water which constitutes the Export Water to
the Land Board, as lessor, and Rangeview, as lessee, to become
Non-Export Water subject to this Agreement and the Export Water
Contractor shall enter into an agreement with Rangeview which
provides that in years when less than a total of 3,300 acre feet
per year of tributary water on the Lowry Range is physically
available, the Export Water Contractor shall only utilize up to
fifty percent (50%) of the available tributary water unless the
remaining available tributary water is not being utilized by
Rangeview, its Service Provider, or the Land Board, as
applicable, and Rangeview, its Service Provider, or the Land
Board, if applicable, agrees that it does not plan to utilize
such water during the year, in which case the Export Water
Contractor may utilize the available tributary water which
Rangeview, its Service Provider, or the Land Board does not plan
to use up to a maximum of 1,650 acre feet. In no case shall Non-
Export Water be used to augment the Export Water Contractor's
tributary water hereunder.
For example, if in a year there are only 2,400 acre
feet of tributary water available, the Export Water Contractor
could only utilize 1,200 acre feet unless Rangeview, its Service
Provider, or the Land Board, if applicable, does not plan to use
some portion of the remaining 1,200 acre feet, in which case the
Export Water Contractor could use the unused tributary water up
to a maximum of 450 acre feet for a combined total of 1,650 acre
feet.
(2) Right to Artificially Recharge.
1. Rangeview's Right to Recharge. Rangeview, the Service
Provider (but only as to the provision of water to Water Users
pursuant to the Service Agreement) and the Export Water Purchaser
shall have the right to artificially recharge and to store the
recharged water in the aquifers from which such Water Rights are
withdrawn (but only to the extent all or some of the Water Rights
have been withdrawn from the aquifers by the recharging party)
and to withdraw such artificially recharged and stored water.
Rangeview, the Service Provider, and the Export Water Purchaser
shall also have the right, to the extent Water Rights have been
withdrawn from the aquifers by the recharging party, to store
additionally acquired water in reservoirs on the surface of the
Lowry Range in a commercially reasonable manner consistent with
prudent water provider practice in Colorado and subject to the
requirements set forth herein.
<PAGE>
(i) The amount of recharged water stored in the
aquifers and on the surface in reservoirs combined cannot exceed
the amount of Water Rights withdrawn by the recharging entity
from the aquifers.
(ii) If Rangeview, the Service Provider, or the Export
Water Purchaser desires to construct a surface reservoir, such
entity must notify the other entities of such intention and give
them the opportunity to participate in the project. Any such
reservoir must be compatible with the existing and reasonably
projected development of the surrounding land. The Land Board
shall have the right to veto the construction of any surface
reservoir if it reasonably determines that the reservoir would
adversely impact either (i) the provision of service to Water
Users, or (ii) the value of the Land Board's land within the
Lowry Range, based on then known facts and reasonable projections
regarding future needs of Water Users and future development of
the Lowry Range. Any disputes over whether the reservoir will be
compatible with the development of the surrounding land or
whether the reservoir would adversely impact the provision of
service to Water Users or the value of the Land Board's land
shall be resolved by arbitration pursuant to Section 15.16 of
this Agreement. The burden of proof in such arbitration shall be
on the entity desiring to construct the reservoir. If a
reservoir is constructed, the entity or entities constructing
such reservoir shall permit reasonable access to the reservoir,
if requested by surrounding land owners, municipalities, parks
and recreation districts or similar entities, provided that the
access requested does not interfere with or render more costly
the planned use and operation of the reservoir and provided that
it shall not be the responsibility of Rangeview, the Service
Provider, or the Export Water Purchaser to provide amenities or
safety features to accommodate needs of such third persons
unrelated to the water service function of the reservoir.
(iii) Subject to the provisions of subsection (ii)
above:
(a) Notwithstanding Article 11, if the
Export Water Purchaser plans to construct the reservoir, the Land
Board shall grant to the Export Water Purchaser a perpetual right-
of-way on the land for such reservoir, which does not expire
unless the reservoir is abandoned in accordance with
Section 14.2. This right-of-way shall be granted in exchange for
payment of the then fair market value for the land.
(b) If Rangeview or the Service Provider
requests a right-of-way for a reservoir, Rangeview shall be
granted the right-of-way, and Rangeview shall grant a license to
the Service Provider, if necessary, and the Land Board shall
receive fees in accordance with Article 11.
(c) If the reservoir is planned to be
jointly constructed by Rangeview and/or its Service Provider and
the Export Water Purchaser, then the fees and rights-of-way
granted will be based on the proportionate part of the reservoir
to be used by Rangeview or its Service Provider on the one hand,
and the Export Water Purchaser on the other.
<PAGE>
For example, if Rangeview and the Export Water
Purchaser agree to construct a reservoir which will be used to
store ten thousand (10,000) acre feet of water per year and which
requires a one hundred (100) acre right-of-way, and each party
intends to utilize one-half of the reservoir, then Rangeview will
pay to the Land Board the fee set forth in Section 11.2 for fifty
(50) acres and the Export Water Purchaser will pay fair market
value for the remaining fifty (50) acres. Rangeview will receive
a right-of-way in the one hundred (100) acres in the form of
Exhibit F, and, if necessary, will license such right-of-way to
the Service Provider pursuant to a license in the form of
Exhibit G. The Export Water Purchaser shall receive a perpetual
right-of-way in the one hundred (100) acres. Each entity would
thereafter have access to the entire reservoir but would only
have the usage rights to their undivided one-half of the
reservoir.
(iv) Any artificial recharge must be done in
accordance with all applicable laws, rules, and regulations in
effect at the time of such artificial recharge, and
notwithstanding such compliance, shall not interfere with or
render more burdensome or costly delivery of the Non-Export Water
to Water Users.
(v) Rangeview, the Service Provider, the Export Water
Contractor, and the Export Water Purchaser (but excluding the end
user) shall be jointly and severally liable for all damages,
including without limitation, environmental or water quality
damages, if any, incurred by the Land Board or the Water Users
arising out of the artificial recharge, storage, or withdrawal of
such artificially recharged water.
(vi) Rangeview shall cause all contracts for the sale
or other disposition of the Export Water to provide that the Land
Board shall be paid the royalty required by Section 7.4(a) at the
time the recharged water is withdrawn. The royalty shall be
payable by the entity withdrawing such water and the Land Board
shall have the right to enforce such payment requirement,
including the rights as provided in Section 6.6. If there is a
dispute as to the royalty attributable to such recharged water
when it is withdrawn, the royalty shall be resolved by
arbitration pursuant to Section 15.16 of this Agreement.
(vii) The right to recharge Export Water is not
alienable from the Export Water and must be sold in conjunction
therewith. Subject to Section 15.19, the right to recharge sold
with the Export Water shall be deemed abandoned when the Export
Water Purchaser withdraws the entire portion of the Export Water
purchased plus the entire amount of water recharged by the Export
Water Purchaser and such purchaser has failed to recharge any
portion of the aquifers for a period of ten (10) years. In the
event of a dispute in the determination of the abandonment of the
right to recharge, the matter shall be determined by arbitration
pursuant to Section 15.16 of this Agreement.
<PAGE>
(viii) Rangeview shall cause the Service Provider and
the Export Water Purchaser to comply with this Section 6.2(a) in
conducting any recharge activities permitted above.
2. Land Board's Right to Recharge. The Land Board shall
have the right to artificially recharge, store and withdraw
water in the aquifers beneath the Lowry Range in accordance with
all applicable laws, rules and regulations in effect at the time
of such artificial recharge; provided, however, that
notwithstanding such compliance, the Land Board shall not
interfere with or render more burdensome or costly the storage of
or delivery of or recharge of water by Rangeview, the Service
Provider, or the Export Water Purchaser and shall not interfere
with or render more burdensome or costly the delivery of Export
Water by the Export Water Contractor if the Export Water is sold
by the Export Water Contractor on a Delivered Basis. Further,
the Land Board shall be liable for damages, including without
limitation, environmental or water quality damages, if any,
incurred by Rangeview, the Service Provider, the Export Water
Contractor, the Export Water Purchaser or the Water Users arising
out of such artificial recharge, storage or withdrawal by the
Land Board.
(3) Water Available to Export. The Non-Export Water (and
water recharged other than with respect to Export Water
withdrawn) shall not be used, transferred, sold, or otherwise
disposed of Off-Site without the express written consent of the
Land Board. Disposal of untreated effluent, sewage, or sewerage
Off-Site shall be permitted only with the express written consent
of the Land Board, which consent shall not be unreasonably
withheld. Rangeview shall pay to the Land Board forty-five
percent (45%) of Gross Revenues, if any, for the disposal of
untreated effluent, sewage, or sewerage Off-Site, within thirty
(30) days after receipt. In the event that Rangeview sells or
disposes of treated effluent off-site (subject to the consent
required in the first sentence of this Section 6.3), then
Rangeview shall pay to the Land Board forty-five percent (45%) of
all Gross Revenues received after deduction of all costs of
treatment. If there is a dispute as to such payment, the matter
shall be resolved by arbitration pursuant to Section 15.16 of
this Agreement. The Land Board shall be provided twenty-one (21)
days advance written notice and access to contemplated contracts
for the disposal of effluent, sewage, and sewerage Off-Site.
Sale of Use of Water on the Lowry Range. Subject to
the provisions of this Agreement, Rangeview shall provide water
service to all current and future Water Users needing water
service on the Lowry Range and shall have the right to divert and
use all Non-Export Water for such purpose. Reuse and successive
use of Non-Export Water, if any, shall be done in a commercially
reasonable manner consistent with prudent water provider practice
in Colorado. At its option, and subject to the provisions of
Article 9 below, Rangeview may enter into a Service Agreement
contract to provide Non-Export Water to Water Users substantially
in the form attached hereto as Exhibit B (the "Service
Agreement"). To the extent that Non-Export Water is insufficient
to provide water service to Water Users, Rangeview shall be
obligated to locate additional sources of water for Water Users.
Rangeview shall either acquire such additional water and provide
service to Water Users at the rates and charges set forth in
Section 8.2 or it shall notify the Land Board that it
<PAGE>
(4) requires an increase in the rates and charges to cover the
cost of acquiring the additional water, in which case the Land
Board shall have the option of (i) permitting Rangeview to charge
such increased rates or (ii) serving any Water Users requesting
service after the Non-Export Water is committed. Rangeview
agrees that if it acquires such additional water, it shall,
consistent with prudent water provider practices in Colorado, use
such water to provide water service to Water Users without
additional cost to the Land Board. Any additional water shall
not be subject to the terms of this Agreement except (i) to the
extent that such additional water is stored in aquifers beneath
the surface of the Lowry Range or in reservoirs on the surface of
the Lowry Range, in which case, such water shall thereafter be
subject to the royalty set forth in Section 7.4(b) and (ii) to
the extent such additional water may remain subject to the rates
and charges in Section 8.3 as described above. Such additional
water shall not be used to determine when Section 7.3(b) of this
Agreement becomes applicable and Section 7.3(b) shall not be
applicable to such additional water unless Rangeview utilizes
additional water to provide water service to Water Users when
there is still sufficient Non-Export Water available on a
commercially reasonable basis and in compliance with prudent
water provider practice in Colorado to provide such service. If
Rangeview does not acquire additional water for Water Users,
because the Land Board elects to serve Water Users requesting
service after the Non-Export Water is committed, then Rangeview
shall continue to provide Non-Export Water to Water-Users who are
issued taps prior to the time when the available Non-Export Water
was committed pursuant to such taps. Rangeview shall not issue
taps based on unused cumulative rights under the decrees for the
Non-Export Water. The phrase "unused cumulative rights under the
decrees" means the amount of water that could otherwise have been
legally withdrawn pursuant to the Statewide Non-Tributary Ground
Water Rules, 2 C.C.R. 402-7, Rule 8A., over and above the allowed
average annual amount of withdrawal permitted under the decrees.
The Land Board may utilize the Reserved Water or any other water
sources it may have or acquire, to service subsequent Water
Users. The Land Board shall have the right to jointly use and
expand the facilities constructed by Rangeview or its Service
Provider to provide Non-Export Water to Water Users to provide
service to subsequent Water Users to the same extent Rangeview
would have used and expanded such facilities consistent with
prudent water provider practices in Colorado if it had acquired
additional water to service such Water Users.
<PAGE>
(5) Quality of Water. Unless authorized in writing by the
Land Board, the use of Water Rights may only be sold or otherwise
disposed of as water blended proportionally from all aquifers
based on water court decrees adjudicating the Water Rights,
except for the water committed pursuant to the East Cherry Creek
Agreement and the sale or disposition of any tributary water
(including the tributary water described as set forth in
Section 6.1(c)).
(6) Termination of Export Water. In the event the Export
Water Contractor or the Export Water Purchaser fails to pay the
royalties required by this Agreement within ten (10) business
days after the applicable due date, or takes or fails to take
action which would cause material harm to the Water Rights or the
aquifers, or the surface of the Lowry Range then owned by the
Land Board and such action or failure is not cured within thirty
(30) days after written notice has been given by the Land Board
or Rangeview specifically setting forth the nature of the
problem, or if more than thirty (30) days is reasonably required
to cure such matter complained of, if the Export Water Contractor
or Export Water Purchaser, as applicable, shall fail to commence
to correct the same within said thirty (30) day period and shall
thereafter fail to prosecute the same to completion with
reasonable diligence, or commits a fraud in the performance (as
opposed to the inducement) of this Agreement, as may be
determined in a final non-appealable order of a court of
competent jurisdiction, the Land Board or Rangeview may elect to
terminate the rights to the portion of the Export Water which has
not been conveyed or is not otherwise subject to a good faith,
binding agreement to be conveyed to an Export Water Purchaser and
pursue such other remedies as may be provided by law. Rangeview,
at its option, without prejudice to any other remedies it may
have, may cure any of the foregoing defaults in order to protect
its rights under this Agreement without waiting for the thirty
(30) day period to run and seek reimbursement from the Export
Water Contractor or Export Water Purchaser, as applicable, for
any costs and damages associated therewith.
7. Rent and Royalty Payments to
Land Board
(1) Annual Rent. Rangeview shall pay annual rent ("Annual
Rent") in the amount of Five Thousand Dollars ($5,000.00) to the
Land Board on or before May 1 of each year until this Agreement
expires or otherwise terminates. The Annual Rent shall be
increased every five (5) years proportionally to the five (5)
year increase, in the Index. In no case shall the annual rent be
reduced.
<PAGE>
(2) Royalty for Export Water.
1. Royalty Rates for Public Versus Private Use. A sum
equal to ten percent (10%) of the Royalty Base shall be paid to
the Land Board as a royalty in the case of a sale or other
disposition of Export Water to a Title 32 water district or other
similar municipal or public entity, and a sum equal to twelve
percent (12%) of the Royalty Base shall be paid to the Land Board
as a royalty in the case of a sale or other disposition of Export
Water to all others. These royalty rates shall be referred to as
the "Initial Export Royalty Rates."
2. Application of Initial Royalty Rates. In addition to
the Annual Rent, Rangeview shall pay or cause the Export Water
Contractor to pay the Initial Export Royalty Rates (subject to
adjustment as provided in Section 7.2(c)) on the sale or other
disposition of the Export Water. The royalty paid to the Land
Board upon a sale or other disposition of Export Water shall be
based on the greater of the following values ("Royalty Base"):
(1) the Export Water Contractor's Gross Revenues for the specific
interest granted; or (2) the value of the specific interest
granted, as determined in accordance with Section 7.2(d). The
Parties intend that the Royalty Base shall include, without
limitation, all Gross Revenues relative to the sale or other
disposition of any or all Export Water rights, including without
limitation, option rights, the right to first use, reuse,
successive use, or any other disposition of the Export Water.
3. Adjustment of Initial Export Royalty Rate.
a. If the Export Water is sold or disposed of by the
Export Water Contractor on an Entitlement Basis to a public
entity for an amount in excess of Forty-Five Million Dollars
($45,000,000) in Gross Revenues, the Initial Export Royalty Rate
shall be increased for Gross Revenues received in excess of
$45,000,000 as follows:
Royalty
Gross Revenue Rate
0 - $45,000,000 10%
$45,000,000 - $60,000,000 20%
$60,000,000 - $75,000,000 30%
$75,000,000 - $90,000,000 40%
Over $90,000,000 50%
As an example, if the Export Water Contractor receives One
Hundred Million Dollars ($100,000,000) in Gross Revenues from
sales of the Export Water on an Entitlement Basis to a public
entity, the Land Board will receive a royalty as follows:
<PAGE>
Gross Revenue Royalty
the first $45,000,000 $4,500,000
the next $15,000,000 $3,000,000
the next $15,000,000 $4,500,000
the next $15,000,000 $6,000,000
the next $10,000,000 $5,000,000
b. If the Export Water is sold by or disposed of by the
Export Water Contractor on an Entitlement Basis for a private use
for an amount in excess of Forty-Five Million Dollars
($45,000,000), the Initial Royalty Rate shall be increased for
the Export Water Contractor's Gross Revenues in excess of Forty-
Five Million Dollars ($45,000,000) as follows:
Royalty
Gross Revenue Rate
0 - $45,000,000 12%
$45,000,000 - $60,000,000 24%
$60,000,000 - $75,000,000 36%
$75,000,000 - $90,000,000 48%
Over $90,000,000 50%
c. The foregoing adjustments to the Initial Export Royalty
Rate shall also apply to sales or other dispositions on other
than an Entitlement Basis, i.e., where the Export Water
Contractor bears all or part of the costs of withdrawal,
treatment or delivery. In such cases, there shall be deducted
from Gross Revenues those costs (including a reasonable overhead
allocation) which are incurred as a direct or indirect result of
the incremental activity associated with the withdrawal,
treatment and delivery of the Export Water involved on an other
than Entitlement Basis. In such cases, the resulting number
(Gross Revenues less such incremental costs) shall be used as the
"Gross Revenues" number in the formulae set forth in
subparagraphs 7.2(c)(1) and (2).
4. Determination of Royalty Base.
a. If interests in the Export Water are sold or otherwise
disposed of by the Export Water Contractor on an Entitlement
Basis, the value of the Export Water shall be conclusively deemed
to equal the Export Water Contractor's Gross Revenues
attributable to each acre foot of water plus Five Hundred Dollars
($500.00) per acre foot and the $500 shall be added to Gross
Revenues for purposes of calculating the Royalty Base. The Five
Hundred Dollar ($500.00) figure shall be increased or decreased
every five (5) years proportionally to the five (5) year increase
or decrease in the Index.
<PAGE>
b. If the Export Water is sold or otherwise disposed of
with the Export Water Contractor bearing the cost of withdrawal,
treatment and delivery to a purchaser at least to the boundary of
the Lowry Range (a "Delivered Basis"), then the Royalty Base
shall be as set forth in Section 7.2(b)(1).
c. If the Export Water is sold other than on a Delivered
Basis or an Entitlement Basis, then each contract for the sale or
other disposition of a specific interest in the Export Water
shall be delivered to the Land Board for its review together with
a written statement setting forth the Royalty Base believed to
apply to each such transaction (the "Proposed Royalty Base").
The Land Board shall have forty-five (45) days to either approve
the Proposed Royalty Base or make its own determination of the
Royalty Base. If the Land Board does not make such determination
within forty-five (45) days after receipt of the Proposed Royalty
Base, the Proposed Royalty Base shall conclusively be deemed to
have been accepted. In the event of a dispute in the
determination of the Royalty Base under this Section 7.2(d)(3),
the matter shall be determined by arbitration pursuant to
Section 15.16 of this Agreement. The arbitrator shall be
required to determine a Royalty Base for a sale or other
disposition under this Section 7.2(d)(3) which results in a
royalty no higher than that for a Delivered Basis sale and no
less than that for an Entitlement Basis sale.
d. Except for the sale or disposition of Export Water on a
Delivered Basis, Rangeview shall cause each contract for the sale
or other disposition of Export Water by the Export Water
Contractor to include a requirement that the first Export Water
Purchaser pay as additional consideration ("Additional
Consideration") at least five percent (5%) of such Export Water
Purchaser's Retail Sales Price at the time the Export Water is
delivered to a third person (regardless of whether such person is
a retail end user). Rangeview shall cause the Export Water
Contractor to pay directly to the Land Board an amount equal to
the greater of (i) five percent (5%) of such Export Water
Purchaser's Retail Sales Price or (ii) fifty percent (50%) of
such Additional Consideration received by the Export Water
Contractor.
As an example, if the Export Water Contractor sells the Export
Water on an Entitlement Basis for Two Thousand Dollars
($2,000.00) per acre/foot, plus twelve percent (12%) of the
Export Water Purchaser's Retail Sales Price, the Land Board
royalty shall be calculated as follows: the Land Board shall
receive Two Hundred Fifty Dollars ($250.00) per acre/foot (ten
percent (10%) of the sum of Two Thousand Dollars ($2,000.00) plus
Five Hundred Dollars ($500.00) for each acre foot) plus fifty
percent (50%) of the twelve percent (12%) of the Retail Sales
Price when the Export Water is delivered to a third person. If
the Retail Sales Price to retail end users totals $2.00 per 1,000
gallons, then the Land Board shall receive $.12 for each 1,000
gallons delivered to a third person even if such third person
uses such water for an augmentation plan or other non-retail use.
<PAGE>
5. Subsequent to the anniversary date of this Agreement in
the year 2081, any ongoing Gross Revenues from the sale of Export
Water shall belong to and be paid to the Land Board.
(3) Royalties for On-site Use.
1. Initial Royalty. For sales or other dispositions of
Non-Export Water for use on the Lowry Range, Rangeview will pay
to the Land Board a royalty of twelve percent (12%) of the Gross
Revenues related to the sale or other disposition of the Non-
Export Water (including any reuse or successive use) to Water
Users.
2. Royalty at Build-Out. At such time as metered
production in any calendar year of Non-Export Water reaches
13,000 acre feet (including any re-use of water), or,
alternatively, at such time as a total of 10,000 surface acres on
the Lowry Range has been (i) rezoned to a use other than
agricultural, (ii) finally platted, and (iii) water tap
agreements have been entered into with respect to all
improvements to be constructed on such acreage, then the Land
Board may elect to receive, at its option, in lieu of the royalty
provided in Section 7.3(a), an amount equal to fifty percent
(50%) of the collective net profits derived by Rangeview and the
Service Provider from the sale of Non-Export Water to Water
Users. Net Profits shall be defined as the Gross Revenues
received from Water Users less (i) the currently amortized
portion of applicable capital costs (assuming for purposes of
this calculation that such costs are to be amortized over the
estimated useful lives of the assets involved) incurred with
respect to the Non-Export Water delivery system; and (ii) all
Operating Expenses whether incurred by Rangeview or its Service
Provider.
(4) Recharge Royalty.
1. Export Water. If additional water acquired by the
Export Water Purchaser is stored pursuant to Section 6.2(a) in
surface reservoirs or in aquifers beneath the surface of the
Lowry Range, Rangeview shall pay or cause to be paid to the Land
Board a royalty equal to ten percent (10%) (for sales or
dispositions to public entities) or twelve percent (12%) (for
sales or dispositions to all others) of the Export Water
Purchaser's Retail Sales Price at the time of the sale or other
disposition of such stored or recharged water (regardless of
whether such sale or other disposition is to a retail purchaser).
2. Non-Export Water. If additional water acquired by
Rangeview or its Service Provider is stored pursuant to Section
6.2(a) in surface reservoirs or in aquifers beneath the surface
of the Lowry Range for sale or other disposition to Water Users,
Rangeview shall pay or cause to be paid to the Land Board a
royalty equal to ten percent (10%) (for sales or dispositions to
public entities) or twelve percent (12%) (for sales or
dispositions to all others) of the Retail Sales Price received by
Rangeview or its Service Provider from the sale or other
disposition of such stored or recharged water to Water Users.
<PAGE>
(5) Payment of Royalty. Payment of any royalty payable
pursuant to this Agreement shall be deemed earned in
proportionate part as Gross Revenues derived from the subject
transaction are received. In the case of an installment sale,
the royalty shall be deemed earned upon receipt of each
installment payment. The royalty on Export Water sold by the
Export Water Contractor shall be deemed earned as actual payments
are made by the purchaser of the Export Water or when the Export
Water is delivered Off-Site whichever shall first occur.
Royalties earned in any calendar year quarter shall be paid to
the Land Board within thirty (30) days after the end of the
quarter in which earned. Unpaid royalties shall accrue interest
at the rate of two percent (2%) per month from the date due.
(6) Reporting.
1. Rangeview shall report to the Land Board the quantity
of Water Rights (including any recharged or stored water pursuant
to Section 6.2(a)) delivered, the exact amount of Gross Revenues
or, if applicable, Retail Sales Price relating to the sale or
other disposition of Water Rights, and the entity to whom the
Water Rights were delivered. The report shall be due within
thirty (30) days after the end of each calendar year, until such
time as production of Export and/or Non-Export Water reaches 500
acre feet in a calendar year, and thereafter on or before the
thirtieth (30th) day following the end of each calendar quarter
during the term of this Agreement.
2. Rangeview shall, or shall cause its Service Provider
and/or the Export Water Contractor to, prepare and keep full,
complete, and proper books, records and accounts of all Water
Rights (including any recharged or stored water pursuant to
Section 6.2(a)) sales or dispositions and shall document such
transactions as may be required by law. Said books, records, and
accounts of Rangeview, its Service Provider, and/or the Export
Water Contractor shall be open at all reasonable times, upon ten
(10) days' prior written notice, to the inspection of the Land
Board and its representatives who may, at the Land Board's
expense, copy or extract all or a portion of said books, records,
and accounts for a period of up to five (5) years after the date
such books, records and accounts are made. The Land Board's
right to inspect shall not prejudice the Land Board's right to
collect payments due pursuant to this Agreement. The Land Board
may, upon no less than fourteen (14) days' prior written notice
to Rangeview, its Service Provider, and/or the Export Water
Contractor, cause a partial or complete audit of the entire
records and operations of Rangeview, its Service Provider, and/or
the Export Water Contractor for a five (5) year period preceding
the date of the audit relating to the Lowry Range and water use
pursuant to this Agreement to be made at the Land Board's expense
by an auditor selected by the Land Board. Within fourteen (14)
days following the Land Board's notice, Rangeview, its Service
Provider, and/or the Export Water Contractor shall make available
to the Land Board's auditor the books and records the auditor
reasonably deems necessary or desirable for the purpose of making
the audit. Any deficiency in the payment of royalties determined
upon such inspection or audit shall be immediately due and
payable by Rangeview, and by the inspected or audited party if
other than Rangeview, together with interest thereon at the rate
of two percent (2%) per month from the date or dates such amounts
should have been paid. If such deficiency is in excess of two
percent (2%) of the royalty previously paid, then Rangeview shall
pay or cause the audited party if other than Rangeview to pay to
the Land Board the actual cost of the audit at the time the
deficiency is paid.
<PAGE>
8. Development of Infrastructure
and Water Service on the Lowry Range
(1) Rangeview Shall Serve. Subject to the requirement that
customers pay any appropriate fees and charges and comply with
reasonable policies, rules and regulations which may govern the
activities of Rangeview acting in its capacity as the provider of
water service to the Lowry Range, Rangeview shall, consistent
with the terms of this Agreement, and consistent with the
obligations of the Service Provider as set forth in Article 9
below, provide water service during the term of this Agreement to
all Water Users. All such service, whether actually provided by
Rangeview, or some other entity as may be approved by the Land
Board, shall remain the primary obligation and responsibility of
Rangeview, and shall be provided in a commercially reasonable
time and manner consistent with prudent water service practice in
Colorado.
(2) Water Fees and Rates. Tap fees, usage charges, and
service charges to Water Users on the Lowry Range for Non-Export
Water shall not exceed the average of those similar charges then
imposed by the Town of Castle Rock, East Cherry Creek Valley
Water and Sanitation District, and Parker Water and Sanitation
District, or their respective successors.
(3) Substitution of Facilities. All contracts for the sale
of Export Water shall allow Rangeview or the Service Provider, or
the Land Board (upon the expiration or termination of this
Agreement), as applicable, at its option, to utilize a portion
(equal to the ratio of Export Water to Non-Export Water based on
the acre feet decreed in the now existing water court decrees,
said ratio being hereinafter referred to as the "Water Interest
Ratio") of the capacity of the ground water wells which are used
to produce the Export Water, under the following conditions:
1. Rangeview, the Service Provider or the Land Board, as
applicable, must provide substitute well capacity (the
"Substitute Facilities") of equivalent quantity and, to the
extent practicable, water quality as the well capacity utilized
by the Export Water Purchaser under this Section 8.3.
2. Subject to further substitution, the Substitute
Facilities will be dedicated to the benefit of the Export Water
user. Title to the Substitute Facilities shall be held in the
same manner as title to the facilities which they replace.
The construction and operation of the Substitute
Facilities are intended to enable Rangeview, the Service Provider
or the Land Board, as applicable, to incrementally expand the
<PAGE>
3. delivery system for the Export Water to provide service to
those areas of the Lowry Range on which the Export Water delivery
system has already been developed.
4. The intent of this Section 8.3 is to allow Rangeview,
the Service Provider or the Land Board, as applicable, the use of
that portion of the Export Water delivery system, utilizing the
excess capacity as discussed in Section 8.4, to provide water
service to the Lowry Range. The further intent of this
Section 8.3 is to ensure that facilities initially constructed to
serve Export Water will, as necessary, be available for service
to the Lowry Range if Substitute Facilities are constructed and
dedicated to the Export Water user as outlined in Sections 8.3(a)
and (b). The Export Water user will have the same opportunity to
substitute facilities from the Non-Export Water delivery system
for the Export Water delivery system so that the well field is
developed in a manner reasonably consistent with the master plan
attached hereto as Exhibit D. The well field and Export Water
and Non-Export Water delivery systems, when fully completed,
shall have been developed in a manner such that each of
Rangeview, the Service Provider, or the Land Board, as
applicable, on the one hand, and the Export Water Purchaser(s),
on the other, shall bear the economic burden of developing their
proportionate part of the total infrastructure based on the ratio
of Water Rights used on the Lowry Range and outside the Lowry
Range.
5. In the event a dispute arises concerning substitution
of facilities pursuant to this Section, the dispute shall be
resolved by arbitration pursuant to Section 15.16 of this
Agreement.
(4) Right to Use Transmission Lines; Infrastructure. All
contracts for the sale of Export Water will provide for
construction of excess capacity in Export Water transmission
lines only within the Lowry Range, so as to accommodate the
transmission of water for on-site use within that portion of the
Lowry Range which may be served by those lines. The Service
Provider, Rangeview, or the Land Board, as applicable, shall have
access to and the right to use a portion of the capacity of any
and all Export Water transmission lines on the premises to the
extent set forth in Exhibit E attached hereto. The well field
and delivery system built for delivery of Export Water must be
built in a commercially reasonable manner using accepted
engineering practices considering the requirements of Section 8.3
and 8.4 related to the development of infrastructure for water
service on the Lowry Range. The costs of constructing
(1) infrastructure to deliver Export Water; and (2) the excess
pipeline capacity required by this Section will not be paid,
directly or indirectly, by Rangeview, the Land Board, or Water
Users (except to the extent such facilities are substituted for
on-site service, in which case Water Users will indirectly bear
costs through rates and charges and Rangeview may incur
administrative and maintenance expenses with respect thereto).
Ownership of the excess capacity needed for on-site use will be
transferred to Rangeview, the Service Provider, or the Land
Board, as applicable, at such time as such capacity is utilized,
under agreements which provide for the payment by Rangeview, the
Service Provider, or the Land Board, as applicable, of a
proportionate share of operation, maintenance and replacement
costs.
<PAGE>
(5) Title to Equipment and Improvements. Rangeview acknowl
edges and shall cause its Service Provider to acknowledge that
equipment and improvements placed on the Lowry Range are subject
to the provisions of this Agreement. Rangeview shall pay or
cause its Service Provider to pay all taxes, fees, assessments or
other charges, if any, which may be assessed upon or become due
with respect to, the equipment and improvements during the term
of this Agreement. On the Effective Date, this Agreement shall
be recorded with the Clerk and Recorder for Arapahoe County.
(6) Future Leases. The Parties acknowledge that the Lowry
Range is tax exempt as long as it is owned by the Land Board or
another tax exempt entity and that the operation of Rangeview is
based upon a revenue and not a tax base. The provisions of any
leases or contracts for exchanges, sales or other dispositions
pertaining to any interest in the surface of the Lowry Range
shall not restrict the ability of Rangeview to sell water to, and
receive revenue from, Water Users. Unless expressly authorized
in writing by the Land Board or unless otherwise required by law,
Rangeview will not impose taxes, assessments or other charges of
any kind on Water Users in connection with the provision of, or
cost to deliver, Non-Export Water to such Water Users except as
contemplated by Section 8.2; provided that Rangeview may assess
amounts it is required to pay in lieu of taxes pursuant to
36 1-120.5(5), 15 C.R.S. (1990 Rplc.).
(7) Rangeview District Boundaries. Subject to complying
with reasonable policies, rules and regulations which may govern
the activities of Rangeview, and to the extent permitted by law,
upon petition for inclusion by a landowner within the Lowry Range
qualified under Title 32 or other appropriate action thereafter,
Rangeview shall cooperate and, with due diligence proceed to take
action pursuant to law, to include such area as may be designated
by such petition or other action within Rangeview's district
boundaries.
(8) Development of Lowry Range. Rangeview shall have no
obligation to promote development of the Lowry Range, other than
its obligation under this Agreement to provide water service and
associated infrastructure as a prudent water provider to meet all
reasonable Water User demands, if and when a demand may arise.
The nature, timing, financing, and approval of development of any
land uses shall be the sole responsibility of the Land Board.
The Land Board makes no representation as to if, when, and how
the land development, if any, on the Lowry Range will occur, or
as to the density of any such development.
(9) Reserves. Rangeview shall establish and maintain a
maintenance and operating reserve for providing Non-Export Water
to Water Users in accordance with Section 8.1. The amount of
such reserve shall be at least equal to thirty-three and one-
third per cent (33-1/3%) of the Operating Expenses budgeted by
Rangeview and, if applicable, its Service Provider, for the then
current calendar year. In establishing such reserve initially
and in increasing the amount of such reserve as a result of an
increase in budgeted Operating Expenses or an expenditure which
diminishes the reserve below the required amount, Rangeview shall
allocate any available funds not budgeted to other proper and
necessary functions of Rangeview toward building such reserve.
Such reserve funds shall be continuously maintained and may be
utilized by Rangeview solely for paying lawful obligations
relating to the provision of Non-Export Water to Water Users as
required by Section 8.1.
<PAGE>
9. Service Provider Contract
(1) Service Provider for Rangeview. As of the Effective
Date, at its option Rangeview may enter into a contract pursuant
to which a Service Provider will provide the service of
delivering Non-Export Water to the current and future Water Users
pursuant to and consistent with the terms of this Agreement.
Rangeview shall not enter into any Service Provider contract
except as contemplated by the Settlement Agreement without the
express written consent of the Land Board. All Service Provider
contracts shall be in the form of Exhibit B only with such
changes as may be approved in writing by the Land Board. If
Rangeview chooses to contract with a Service Provider to provide
Non-Export Water services on the Lowry Range, Rangeview shall
cause such Service Provider to comply with all obligations of
Rangeview under this Agreement relating to Non-Export Water
services on the Lowry Range. Rangeview agrees (and will cause
any other Service Provider to agree) that:
1. The Service Provider contract cannot be assigned or
transferred without the express written consent of the Land
Board, which consent may be withheld by the Land Board in its
sole discretion. The Service Provider contract cannot be amended
without the express written consent of the Land Board, which
consent shall not be unreasonably withheld.
2. Any breach by the Service Provider of its obligations
under its Service Provider contract with Rangeview shall
constitute a breach of this Agreement by Rangeview subject to
Rangeview's right to cure such breach or default.
3. Ten (10) days prior to the execution of any construc
tion or financing contracts by Rangeview or the Service Provider
in excess of Five Hundred Thousand Dollars ($500,000) related to
the provision of Non-Export Water Service to Water Users
(including contracts for the disposal of effluent, sewage or
sewerage as permitted under Section 6.3 of this Agreement),
Rangeview shall provide or cause the Service Provider to provide
the Land Board with courtesy copies of such contracts (drafts
being acceptable if finals are not yet available).
<PAGE>
4. Water service on the Lowry Range shall be provided as
needed in a commercially reasonable time and manner consistent
with prudent water service practice in Colorado if and when
development of the surface of the Lowry Range may occur.
5. If there is an approved Service Provider, all financing
for infrastructure for delivery of Water Rights and all costs of
operation, maintenance, debt service and repair to provide water
service to Water Users will be provided without cost to
Rangeview, the Land Board or any Water User on the Lowry Range,
except to the extent paid for with the water fees and rates
described in Section 8.2, and Rangeview shall not issue bonds to
finance such infrastructure or service.
6. Re-use and successive use of Non-Export Water, if any,
shall be done in a commercially reasonable manner consistent with
prudent water provider practice in Colorado.
7. Except for the disposal of effluent, sewage or sewerage
Off-Site as provided in Section 6.3 of the Agreement, none of the
Non-Export Water, including all re-use and successive uses of
such water, shall be used, sold, transferred, or otherwise
disposed of outside the Lowry Range without the express written
consent of the Land Board.
8. If the Service Provider decides not to provide or not
to continue providing service to Water Users on the Lowry Range
during the term of this Agreement, then Rangeview shall require
the Service Provider to give one (1) year's prior written notice
to Rangeview which written notice shall be transmitted by
Rangeview to the Land Board. During such one-year period, the
Service Provider shall continue to provide service in accordance
with the terms of the Service Agreement, unless Land Board and
Rangeview require the Service Provider to discontinue providing
services prior to the expiration of such one-year period.
9. Rangeview and its Service Provider shall, at all times,
act in a commercially reasonable manner consistent with prudent
water provider practice in Colorado.
10. If and to the extent at any time monies are not
available to Rangeview to fund the reserve which Rangeview is
required to maintain pursuant to Section 8.9 or if monies in such
reserve are withdrawn such that the amount of the reserve drops
below the amount which Rangeview is required to maintain and such
reserve cannot reasonably be expected to be reestablished from
anticipated income to Rangeview within one year, then Rangeview
shall promptly notify the Service Provider of such fact and the
Service Provider shall within thirty (30) days deliver funds to
Rangeview sufficient to replenish the reserve fund to its
required level. Notwithstanding the fact that the reserve can
reasonably be expected to be reestablished within one year, the
Service Provider shall be required to deliver funds to Rangeview
sufficient to replenish the reserve fund to its required level at
the time the Service Provider discontinues service.
<PAGE>
10. East Cherry Creek Valley
Water and Sanitation District
(1) Terms and Revenue. The terms of the East Cherry Creek
Agreement are not altered or affected by this Agreement, nor is
its duration extended. All revenue paid by ECCV pursuant to the
East Cherry Creek Agreement subsequent to the Effective Date of
this Agreement shall be paid as follows: fifty percent (50%) to
be paid by Rangeview directly to the Land Board (unless ECCV
agrees to pay such fifty percent (50%) directly to the Land
Board) and fifty percent (50%) to be paid by ECCV directly to
Rangeview. Rangeview further agrees that within ten (10) days
following the Effective Date, Rangeview shall pay the Land Board
ten percent (10%) of all revenues paid by ECCV for January and
February 1995 and fifty percent (50%) of all revenues paid by
ECCV to Rangeview for the period from March 1, 1995 through the
Effective Date. No additional royalty with respect to the
revenue derived from the East Cherry Creek Agreement shall be
payable to the Land Board.
(2) Title Reversion. Upon the expiration or termination
of the East Cherry Creek Agreement, for whatever reason, all
interests in the water, infrastructure, and leased premises
related thereto, to the extent provided for in the East Cherry
Creek Agreement, shall automatically and without further act of
the Parties or anyone else revert to the Land Board free and
clear of this Agreement. Failure of Rangeview to contest the
expiration or termination of the East Cherry Creek Agreement,
which the Land Board contends expires in 2032, shall not be a
default under this Agreement. The Land Board agrees not to take
any action inconsistent with the Land Board's rights, duties, and
obligations of this Agreement which would cause Rangeview to be
in default or otherwise result in liability to Rangeview under
the East Cherry Creek Agreement. Nothing in the preceding
sentence shall prevent the Land Board or Rangeview from taking
any actions they are permitted to take by law with respect to
ECCV.
<PAGE>
11. Rights-of-Way
(1) Master Plan. The Parties agree to a master plan of
rights-of-way, which plan is attached to this Agreement as
Exhibit D. To the extent not already granted, the rights-of-way
described on Exhibit D shall be granted by Land Board to
Rangeview within sixty (60) days of Rangeview's complete
application with Land Board for specific rights-of-way, provided
that the requested rights-of-way are necessary for construction
of facilities within a reasonable time after the rights-of-way
are to be granted. The grant shall be made in accordance with
the form attached as Exhibit F, which form may be amended to
comply with applicable statutes, regulations and Land Board
policy directives from time to time. Said master plan may be
amended by Land Board for the convenience of the Parties,
provided that any such amendment shall not materially adversely
affect the rights and privileges of any Party. The total acres
of rights-of-way shall not be reduced and the Land Board may
relocate rights-of-way, whether planned or in use, for the
commercially reasonable development of the Lowry Range. If the
Land Board relocates rights-of-way which are in use by Rangeview,
its Service Provider, or the Export Water Purchaser (or which any
such entity has expended funds to develop for use), then the Land
Board must pay the affected entities' costs associated with
relocating such rights-of-way.
(2) Fee for Right-of-Way. Rangeview shall pay Land Board
an amount equal to Fifty Dollars ($50.00) per acre of the surface
land utilized at the time of granting a right-of-way, which,
commencing with the Effective Date of this Agreement, shall be
increased every five (5) years proportionally to the five (5)
year increase in the Index. In no case shall the rights-of-way
fee be reduced. Land Board shall include a description of the
master plan of rights-of-way in subsequent leases, sales or other
dispositions pertaining to the Lowry Range and shall, subject to
the amendment provisions set forth in Section 11.1, be bound by
such master plan in all subsequent leases, sales or other
dispositions.
(3) License to Service Provider. To the extent necessary
to implement the intent of Article 11, Rangeview may grant to its
Service Provider and/or the Export Water Purchaser a license to
use the rights-of-way granted by the Land Board to Rangeview for
the purposes contemplated by this Agreement. Such licenses shall
be in the forms attached hereto as Exhibits G and H,
respectively.
<PAGE>
12. Bonding Requirements
(1) Bond. No operations are to be commenced on the Lowry
Range until Rangeview, its Service Provider, the Export Water
Purchaser or their agents have filed good and sufficient bonds
with Land Board consistent with the requirements of C.R.S. 38-26-
106 and 36-1-129 in an amount fixed by Land Board, to secure the
payment for damages, losses or expenses caused by Rangeview, its
Service Provider, the Export Water Purchaser or their agents as a
result of operations on or under the Lowry Range. Land Board may
waive the bonding requirements, in its discretion, and may
require that the bond be maintained in full force and effect for
one (1) year after cessation of the operations for which the bond
was intended.
(2) Bond of Contractors. Bonds provided by contractors
for construction activities to Rangeview, its Service Provider,
or the Export Water Purchaser may list Land Board as a coinsured.
As long as such bonds otherwise comply with Section 12.1 above
and list Land Board as coinsured, the contractors shall not be
required to obtain any other bonds for the Land Board. Contracts
entered into by Rangeview, its Service Provider or the Export
Water Purchaser which constitute public works shall comply with
24-91-103, 103.5 and 103.6, 10B C.R.S. (1988 Rplc.).
13. Default and Remedies
(1) Events of Default. The following events shall
hereinafter be referred to as "Events of Default":
1. Rangeview shall default in the due and punctual
payment of royalties, rents or any other amounts payable
hereunder, and such default shall continue for ten (10) business
days after the applicable due date;
2. This Agreement shall be transferred to or shall pass
to or devolve upon any other person or party except as expressly
permitted by this Agreement;
3. This Agreement or the Non-Export Water or any part
thereof shall be taken upon execution or by other process of law
directed against Rangeview, or shall be taken upon or subject to
any attachment at the instance of any creditor or claimant
against Rangeview, and said attachment shall not be discharged or
disposed of within sixty (60) days after the levy thereof;
4. Rangeview shall file a petition in bankruptcy or
insolvency or for reorganization or arrangement under the bank
ruptcy laws of the United States or under any insolvency act of
any state, or shall be dissolved or shall make an assignment for
the benefit of creditors;
<PAGE>
5. Involuntary proceedings under any such bankruptcy law
or insolvency act or for the dissolution of Rangeview shall be
instituted against Rangeview, or a receiver or trustee shall be
appointed for all or substantially all of the property of
Rangeview, and such proceeding shall not be dismissed or such
receivership or trusteeship vacated within sixty (60) days after
such institution or appointment;
6. If either party shall fail to perform any material
term, covenant or condition herein contained and such failure
shall continue and not be cured for a period of thirty (30) days
after written notice specifically setting forth the nature of the
default has been given by the non-defaulting party to the
defaulting party, or if more than thirty (30) days is reasonably
required to cure such matter complained of, if the defaulting
party shall fail to commence to correct the same within said
thirty (30) day period and shall thereafter fail to prosecute the
same to completion with reasonable diligence. For purposes of
this subparagraph (f), if Rangeview has a Service Provider and
such Service Provider shall breach any of its obligations to
Rangeview, or if the Export Water Contractor shall breach any of
its obligations to Rangeview, or if the Export Water Purchaser
shall breach any of its obligations to Rangeview or the Export
Water Contractor, and such acts or omissions also constitute or
result in the failure to perform a material obligation for which
Rangeview has responsibility hereunder, then the same shall
constitute a material failure of performance by Rangeview.
Further in such event, the thirty (30) day period provided in the
first sentence of such subparagraph (f) shall be extended up to a
maximum of sixty (60) days if Rangeview first attempts to require
its Service Provider, the Export Water Contractor, or the Export
Water Purchaser, as applicable, to cure during any applicable
cure period provided in the agreements applicable to the
defaulting party, so that if in such case the Service Provider,
the Export Water Contractor, or the Export Water Purchaser, as
applicable, fails to cure, Rangeview itself shall have an
additional thirty (30) days to cure such material failure of
performance. Thus, for example, if such a material failure of
performance results from an act or omission of Rangeview's
Service Provider, the Land Board may immediately give Rangeview
notice regarding the same and thereby commence the running of
Rangeview's cure period. That period would be thirty (30) days,
unless Rangeview in turn gives notice to its Service Provider and
commences an applicable cure period under the Service Provider
Agreement, in which case if the Service Provider fails to cure,
Rangeview would have an additional thirty (30) days to cure;
provided that no more than a total of sixty (60) days shall be
allowed for such cure period (subject to any reasonably required
extension as provided in the first sentence of this paragraph
(f)).
(2) Remedies. If any one or more Events of Default shall
occur and not be cured within any applicable cure period, then:
<PAGE>
1. If Rangeview is the defaulting party, Land Board,
without prejudice to any other remedies that it may have, may
give written notice of its intention to terminate this Agreement
on the date of such notice or on any later date specified in such
notice, and, on the date specified in such notice, Rangeview's
right to possession of the premises will cease and this Agreement
will be terminated (except as to Rangeview's liability set forth
in this Section 13.2) as if the expiration of the term fixed in
such notice were the end of the term of this Agreement. In
connection with such termination, Land Board with notice may re-
enter and take possession of the leased premises or any part
thereof (subject to any existing licenses related to delivery of
Export Water) and repossess the same as the Land Board's former
estate, and expel Rangeview from the premises and those claiming
through or under Rangeview except with respect to the Export
Water, and remove the effects of both or either, without being
deemed guilty of any manner of trespass and without prejudice to
any other remedies. In the event of such termination, Rangeview
and its Service Provider shall surrender and peacefully deliver
to the Land Board the above-described land and the Non-Export
Water, and such land as was in Rangeview's possession or control
shall be returned to the Land Board in good condition (subject to
any existing licenses related to the delivery of Export Water),
and the Land Board shall be entitled to the return of all Non-
Export Water, plus the title to all infrastructure built to
divert or withdraw and deliver Non-Export Water and any other
interest in shared facilities for use with the Non-Export Water,
plus the revenue stream associated with such Non-Export Water and
the East Cherry Creek Agreement, and the reserves required to be
maintained by Rangeview pursuant to Section 8.9. Upon such
termination, if Rangeview shall remain in possession of any part
of the Lowry Range (subject to any existing licenses related to
delivery of Export Water) or Non-Export Water, Rangeview shall be
guilty of an unlawful detainer and shall be subject to eviction
or removal, forcibly or otherwise, to the extent provided by law.
2. In the Event of Default by either party, the non-
defaulting party shall be entitled to any and all damages
proximately caused by the default or breach and its costs and
reasonable attorney fees from the defaulting party. In addition,
Rangeview shall be entitled to specifically enforce performance
by the Land Board of the Land Board's obligations under this
Agreement.
(3) No Waiver. No failure by Rangeview or the Land Board,
to insist upon the strict performance of any agreement, term,
covenant or condition hereof or to exercise any right or remedy
consequent upon a breach thereof, and no acceptance of full or
partial payment of any amount payable during the continuance of
any such breach, shall constitute a waiver of any such breach of
such agreement, term, covenant or condition hereof to be
performed or complied with by Rangeview or the Land Board, as the
case may be. No breach thereof shall be waived, altered, or
modified except by written instrument executed by the Land Board,
or Rangeview, as the case may be. No waiver of any breach shall
affect or alter this Agreement, but each and every agreement,
term, covenant and condition hereof shall continue in full force
and effect with respect to any other then-existing or subsequent
breach thereof. Notwithstanding any termination of this
Agreement, the same shall continue in force and effect as to any
provisions hereof which require observance or performance of
Rangeview or Land Board subsequent to termination.
<PAGE>
(4) Land Board's Right to Cure Rangeview's Breach.
The Land Board may, but shall not be obligated to, cure any
default by Rangeview, specifically including, but not by way of
limitation, Rangeview's failure to pay any tax due hereunder,
obtain insurance, make repairs, or satisfy lien claims, after
providing reasonable notice to Rangeview, and whenever the Land
Board so elects, all costs and expenses paid by the Land Board in
curing such default, including, without limitation, reasonable
attorneys' fees, shall be so much additional rent due ten (10)
days after such payment together with interest at the rate of two
percent (2%) per month from the date of advancement to the date
of repayment by Rangeview to the Land Board.
14. Improvements
(1) Transfer of Improvements. In the event this Agreement
is terminated by forfeiture, surrender, or election upon default
or breach, and no later than the expiration of this Agreement,
title to all improvements and equipment and related permits and
licenses and all rights-of-way on the Lowry Range exclusively for
delivering Non-Export Water and interests in shared facilities
used for delivery of Non-Export Water shall automatically,
without the necessity of any further action by the Parties or
anyone else, revert and be transferred to the Land Board as of
the date of such forfeiture, surrender, election, upon default or
breach, or as of the expiration of the Agreement. Such automatic
reversion and transfer shall be conclusively evidenced of record
by the Land Board's filing with the Clerk and Recorder for
Arapahoe County a certificate stating the fact of such reversion
and transfer. Title to improvements and rights-of-way on the
Lowry Range for the sale of the use of Export Water including,
without limitation, the East Cherry Creek Agreement, shall not be
affected by termination of this Agreement.
(2) Abandonment of Export Water Facilities. Once the
Export Water Purchaser withdraws the entire portion of the Export
Water purchased plus the entire amount of water recharged by the
Export Water Purchaser and such purchaser has failed to recharge
any portion of the aquifer for a period of ten (10) years, the
Land Board shall have the right to notify the Export Water
Purchaser in writing of its intention to declare the rights-of-
way, improvements and equipment on the Lowry Range owned or
licensed by such Export Water Purchaser as abandoned. The Export
Water Purchaser shall have three (3) months from receipt of such
notice to remove any improvements and equipment which can be
removed without damaging the Lowry Range or any shared
facilities. At the end of such three (3) month period, title to
any improvements and equipment then remaining and all rights-of-
way shall automatically, without necessity of any further action
by the Export Water Purchaser or anyone else, revert and be
transferred to the Land Board as of such date. Such automatic
reversion and transfer shall be conclusively evidenced of record
by the Land Board's filing with the Clerk and Recorder for
Arapahoe County a certificate stating the fact of such reversion
and transfer. In the event of a dispute regarding this
Section 14.2, the matter shall be determined by arbitration
pursuant to Section 15.16 of this Agreement.
<PAGE>
15. General Provisions
(1) Assignment by Rangeview. Rangeview may assign its
interest in this Agreement, but only upon terms expressly
approved in writing by the Land Board in its sole discretion.
Any attempted assignment in contravention of this section shall
be null and void.
(2) Work Requirements. To the extent work is performed on
the Lowry Range directly by (i) Rangeview or its Service Provider
(ii) independent contractors of Rangeview or its Service Provider
or (iii) a permitted assignee (in which case any reference to
Rangeview shall be deemed to be a reference to the assignee where
appropriate), the following shall apply:
1. Indemnity. Rangeview and its Service Provider shall
jointly and severally indemnify and hold harmless the Land Board
against and from all liabilities, claims and demands, settlement
or litigation expenses and related attorneys' fees (hereafter
"Indemnified Items") for personal injury or property damage
arising out of, or caused by, any act or omission of Rangeview,
its Service Provider, or their contractors, agents or employees.
2. Insurance. Rangeview shall at all times carry
insurance in the amounts and for the liabilities required by
24-10-114, 10A C.R.S. (1988 Repl.), as amended, which insurance
shall name the Land Board as an additional insured. Rangeview
shall require its Service Provider at all times to carry
insurance in amounts and with carriers reasonably acceptable to
the Land Board for worker's compensation coverage in accordance
with Colorado law, and for public liability insurance covering
death and bodily injury with limits of not less than One Million
Five Hundred Thousand Dollars ($1,500,000.00) for one person, and
Five Million Dollars ($5,000,000.00) for any one accident or
disaster, and property damage coverage with limits of not less
than Five Hundred Thousand Dollars ($500,000.00), which insurance
shall name the Land Board as an additional insured. The Land
Board reserves the right to reasonably increase the limits of
insurance required of the Service Provider as the Land Board may
deem appropriate from time to time; provided that, if Rangeview
or the Service Provider disputes the reasonableness of such
increase, the matter shall be submitted to arbitration as
provided in Section 15.16.
3. Liens. Except with respect to liens or encumbrances
expressly permitted hereunder, Rangeview and its Service Provider
shall jointly and severally indemnify and hold the Land Board
harmless from and against all Indemnified Items relating to liens
or claims of right to enforce liens arising from actions of
Rangeview or its Service Provider, their contractors and agents.
Rangeview and its Service Provider shall promptly cause any such
lien to be removed notwithstanding the fact that Rangeview may
believe that there is a valid defense to any such claim.
Rangeview and its Service Provider shall retain the right to
pursue any claims against the claimant after any such lien is
removed.
<PAGE>
4. Permits and Licenses. Rangeview and its Service
Provider shall, at their own expense, apply for and obtain all
necessary building, occupancy, well and other permits and
licenses which may be required by any governmental entity which
has jurisdiction over the operations to be performed pursuant to
this Agreement. Copies of all such permits and licenses shall be
provided to the Land Board.
5. Taxes. Rangeview and its Service Provider shall be
jointly and severally responsible for and shall pay all taxes,
fees and assessments, including payments pursuant to 36-1-
120.5(5), 15 C.R.S. (1990 Rplc.), if any, in connection with the
work, improvements, facilities or the materials to be utilized in
accomplishing the activities of Rangeview or its Service Provider
pursuant to this Agreement.
(3) Third Party Beneficiaries. Except as otherwise contem
plated by the provisions of this Agreement, it is not the intent
of the Parties, nor shall it be the effect of this Agreement, to
vest rights of any nature or form in individuals or entities not
executing this Agreement.
(4) Notice. All notices required by this Agreement shall
be in writing and shall be delivered to the person to whom the
notice is directed, either in person, by courier service or by
United States mail as a certified item, return receipt requested,
addressed to the address stated below. Notices delivered in
person or by courier service shall be deemed given when delivered
to the person to whom the notice is directed. Notices delivered
by mail shall be deemed given on the date of delivery as
indicated on the return receipt. The Parties may change the
stated address by giving ten (10) days' written notice of such
change pursuant to this section.
RANGEVIEW METROPOLITAN DISTRICT:
Rangeview Metropolitan District
141 Union Boulevard, Suite 150
Lakewood, Colorado 80228
With a copy to:
Pure Cycle Corporation
5650 York Street
Commerce City, Colorado 80022
Attn: President
<PAGE>
STATE BOARD OF LAND COMMISSIONERS:
Board of Land Commissioners
Attention: President
620 Centennial Building
1313 Sherman Street
Denver, Colorado 80203
With a copy to:
Office of Attorney General
Attn: State Land Board Attorney
1525 Sherman Street, Fifth Floor
Denver, Colorado 80203
(5) Construction. Where required for proper
interpretation, words in the singular shall include the plural,
and the masculine gender shall include the neuter and the
feminine, and vice versa, as is appropriate. The article and
section headings are for convenience and are not a substantive
portion of this Agreement. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Colorado.
It shall be construed as if it were equally drafted in all
aspects by all Parties.
(6) Entire Agreement. This Agreement, including the items
attached in accordance with the provisions of this Agreement and
Service Provider Agreement and the Settlement Agreement and
Mutual Release of even date herewith, constitute the entire
agreement among the Parties pertaining to the subject matter of
this Agreement and supersede all prior and contemporaneous
agreements and understandings of the Parties as to the subject
matter of this Agreement. No representation, warranty, covenant,
agreement or condition not expressed in this Agreement shall be
binding upon the Parties or shall change or restrict the
provisions of this Agreement.
(7) Authority. Each of the Parties represents and
warrants that it has all requisite power, corporate and
otherwise, to execute, deliver and perform its obligations
pursuant to this Agreement, that the execution, delivery and
performance of this Agreement and the documents to be executed
and delivered pursuant to this Agreement have been duly
authorized by it, and that upon execution and delivery, this
Agreement and all documents to be executed and delivered pursuant
to this Agreement will constitute its legal, valid and binding
obligations, enforceable against it in accordance with their
terms.
(8) Copies. Numerous copies of this Agreement have been
executed by the Parties. Each such executed copy shall have the
full force and effect of an original, executed Agreement.
<PAGE>
(9) Amendment. This Agreement shall not be amended except
by a writing executed by all Parties.
(10) Compliance with Law. Rangeview and the Land Board
covenant and agree that during the continuance of this Agreement,
they shall comply fully with all provisions, terms, and
conditions of all laws whether state or federal, and orders
issued thereunder, which may be in effect during the continuance
hereof, which in any manner affect their operations and the Lowry
Range and the Water Rights which are the subject of this
Agreement.
(11) Binding Effect. The benefits and terms and
obligations of this Agreement shall extend to and be binding upon
the successors or permitted assigns of the respective Parties
hereto.
(12) Severability. If any clause or provision of this
Agreement is illegal, invalid or unenforceable under present or
future laws effective during the term of this Agreement, then and
in that event, it is the intention of the Parties hereto that the
remainder of this Agreement shall not be affected thereby. It is
also agreed that in lieu of each clause or provision of this
Agreement that is illegal, invalid or unenforceable, there shall
be added as a part of this Agreement a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause
or provision as may be possible and be legal, valid and
enforceable.
(13) Optimum Long-Term Revenue. C.R.S. 36-1-118(1)(a)
states that the public lands of the State of Colorado may be
leased by the Land Board in such manner and to such persons as
will produce an optimum long-term revenue. Article IX, Section
10 of the Colorado Constitution provides that the Land Board
shall provide for the disposition of lands in such manner as will
secure the maximum possible amount therefor. The Land Board
determines that, under all existing facts and circumstances, this
Agreement constitutes an arrangement which will produce an
optimum long-term revenue and meet the requirements of C.R.S.
36-1-118(1)(a) and Article IX, Section 10 of the Colorado
Constitution.
(14) Further Assurance. Each of the Parties hereto, at
any time and from time to time, will execute and deliver such
further instruments and take such further action as may
reasonably be requested by the other Party hereto, in order to
cure any defects in the execution and delivery of, or to comply
with or accomplish the covenants and agreements contained in,
this Agreement and/or any other agreements or documents related
thereto.
(15) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Colorado and applicable federal law.
<PAGE>
(16) Arbitration. Any controversy or claim arising out of
or relating to the computation of royalties or net profits
interest under this Agreement, and all other controversies or
claims which the Parties have expressly agreed herein shall be
submitted to arbitration, shall be settled by arbitration
administered by the American Arbitration Association in
accordance with its commercial rules, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Rangeview and the Land Board agree that
the Service Provider, the Export Water Contractor, or the Export
Water Purchaser, as applicable, may participate directly in any
arbitration which affects such entity's rights and/or obligations
with respect to the Water Rights; provided such entity agrees to
be bound by the arbitration award to the same extent as the Land
Board and Rangeview.
(17) Litigation. Except as provided in Section 15.16
above, in the event of claims, disputes or other disagreements
between the Parties which the Parties are not able to resolve
amicably, either party may bring suit in a court of competent
jurisdiction seeking resolution of the matter.
(18) Duty of Good Faith and Fair Dealing. The parties
acknowledge and agree that each party has a duty of good faith
and fair dealing in its performance of this Agreement. Rangeview
will advise the Land Board of its and its Service Provider's
activities no less than annually until such time as production of
Water Rights exceeds 500 acre feet per year and thereafter,
quarterly during the term of this Agreement and will respond to
reasonable requests of the Land Board for additional information
on Rangeview's and its Service Provider's activities affecting
the Lowry Range.
(19) Force Majeure. Should either Party be unable to
perform any obligation required of it under this Agreement, other
than the payment of money, due to any cause beyond its control
(including, but not limited to war, insurrection, riot, civil
commotion, shortages, strikes, lockout, fire, earthquake,
calamity, windstorm, flood, material shortages, failure of any
suppliers, freight handlers, transportation vendors or like
activities, or any other force majeure), then such party's
performance of any such obligation shall be suspended for such
period as the party is unable to perform such obligation.
<PAGE>
IN WITNESS WHEREOF, the Land Board has caused these presents
to be executed in multiple originals by the State Board of Land
Commissioners and sealed with the official seal of the Land
Board. Rangeview has similarly executed this Agreement this 4th
day of April, 1996.
APPROVED AS TO FORM: STATE OF COLORADO
STATE BOARD OF LAND COMMISSIONERS
GALE A. NORTON
Attorney General of the
State of Colorado
President
STEPHEN K. ERKENBRACK
Chief Deputy Attorney
General
TIMOTHY M. TYMKOVICH
Solicitor General
_________________________
Richard A. Westfall
Special Deputy Solicitor
General
RANGEVIEW METROPOLITAN DISTRICT, ACTING BY AND THROUGH ITS
WATER ACTIVITY ENTERPRISE
By:
Its:
STATE OF COLORADO )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this
day of April, 1996, by Maxine F. Stewart, as President of
the State of Colorado, State Board of Land Commissioners.
Witness my hand and official seal.
My commission expires:
Notary Public
<PAGE>
STATE OF COLORADO )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this
______ day of April, 1996, by , as
, of Rangeview Metropolitan District.
Witness my hand and official seal.
My commission expires:
Notary Public
<PAGE>
EXHIBITS
Exhibit A Water Previously Conveyed
Exhibit B Service Agreement
Exhibit C Export Water Contract
Exhibit D Master Plan of Well Field and Rights-of-Way
Exhibit E Pipe Sizes
Exhibit F Right-of-Way Grant Form
Exhibit G Service Provider Right-of-Way License
Exhibit H Export Water Contractor Right-of Way License
Exhibit I Guaranty
EXHIBIT A TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
EXHIBIT A EXISTING WATER AND OTHER USES
Type Lessee Water Used Acreage
------------------ ---------- ---------- -----------
1. Grazing Lease S- Michael- Livestock 1,870.98
41136 Peterson Acres
2. Grazing Lease S- Pancost Livestock/ 10,655.44
41250 Domestic Acres
3. Grazing Lease S- Pancost Livestock/ 10,874.80
41251 Domestic Acres
4. Missile Site Well Rangeview Water* 0.1 Acres
SUP S-300
5. Improvements Lease Arapahoe Domestic 161.13 Acres
CD S-39443 Hunt Club
6. Unimproved Hunting Arapahoe Minimal 21,410.24
Area Lease CD S-39443 Hunt Club Acres
7. Model Plane Mile High Domestic 40 Acres
Club Lease CD S- RC Club
39485
8. Model Plane Cross Domestic 40 Acres
Club Lease 0T S- Winds RC
39655 Club
9. Model Plane Model Domestic 40 Acres
Club Lease 0T S- Museum
40047 Flying
Club
10. Military Flyover Army None 21,570.24
SUP S-30 National Acres
Guard
11. Helicopter Landing Army None 6.06 Acres
SUP S-150 National
Guard
12. Concrete Plant and Owens Commercial 14.87 Acres
Brothers Exempt*
Concrete & Asphalt Concrete
Recycling S-39471
13. Sand & Gravel Triad For gravel 1,590.00
Lease Western mining & Acres
GL 264 Corp. augmentation
of water
loss*
14. Explosives Atlas Commercial 2 Acres
Magazines Powder Exempt plus clear
SUP S-132 zone
15. Monitoring Wells U.S. Dept Monitoring 0.03 Acres
SUP S-351 of
Interior
Geo.
Survey
16. Radio Tower Site Century Commercial 31.49 Acres
OT S-39670 Broadcast Exempt
ing
17. Gravel Stockpile Cooley Commercial 40.00 Acres
OT S- Gravel Exempt
38542
18. Firewood OM 3104 Ozark None 1800.00
Firewood Acres
19. Oil & Gas Various Use of Multiple
Exploration Lessees water leases
Leases incidental covering
to oil & gas most of
production Lowry
20. Rights-of-Way numerous Minimal Listed in
SLB plat
books or
records
21. State Patent No. City of None described in
7845 (June Aurora patent
17,1985) (Aurora
Reservoir)
22. PLUS: other 90 acre feet
incidental uses as have
been or may be
permitted by the Land
Board, exclusive of
this Agreement, which
may result in
cumulative consumption
of not more than 90
acre feet per year.
* subject to existing Agreement with Rangeview
EXHIBIT B TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
For Exhubit B to the Lease, which consists of a Service Agreement
between the Company and Rangeview Metropolitan District, see
DOCUMENT 10.2
EXHIBIT C TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
For Exhubit C to the Lease, which consists of an Agreement for
the Sale of Export Water between Rangeview Metropolitan District
and the Company, see DOCUMENT 10.3
EXHIBIT D TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
Exhibit D to the Lease is a Master Plan of Well Field and Rights-
of-Way. It consists of a map of the Lowry Range which is
approximately 24,567.21 acres, more or less, according to U.S.
Government survey, in Arapahoe County, Colorado. The full legal
description of the Lowry Range is set forth in Exhibit 1 to
Exhibit 10.1. The map depicts proposed rights of way, proposed
well site locations, and potential reservoir sites for
development of water rights on and under the surface of the Lowry
Range.
<PAGE>
EXHIBIT E TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
Exhibit E -- Right to Partial Capacity of Export Water Transmiss
ion Lines
Pursuant to Section 8.4 of the Amended and Restated
Lease Agreement, the Service Provider, Rangeview, or the Land
Board, as applicable, shall have the right to use the following
partial capacities of any and all export water transmission lines
on the premises.
---------------------------------------------------------------------
ASSUMING 4 FPS FLOW VEL*; NEW SCHED 40 STEEL PIPE
---------------------------------------------------------------------
Pipeline Nominal Total Capacity Right to Use
Diameters ------------------ -----------------
(Inches) (GPM) (AF/yr) (GPM) (AF/yr)
---------------- ----- ------- ----- -------
4 159 256 79 128
6 353 568 195 314
8 627 1,009 275 442
10 980 1557 347 558
12 1411 2271 431 694
14 1920 3091 510 820
16 2508 4037 588 946
18 3174 5110 666 1072
20 3918 6308 745 1199
24 5642 9084 1723 2772
30 8816 14194 3173 5105
----------------------------------------------------------------------
ASSUMING 5 FPS FLOW VEL*; NEW SCHED 40 STEEL PIPE
----------------------------------------------------------------------
Pipeline Mominal Total Capacity Right to Use
Diameter ------------------- -----------------
(Inches) (GPM) (AF/yr) (GPM) (AF/yr)
---------------- ----- ------- ----- -------
4 198 319 99 159
6 441 710 243 391
8 784 1262 343 552
10 1224 1969 439 707
12 1764 2839 539 867
14 2400 3864 637 1025
16 3135 5047 735 1183
18 3967 6387 833 1341
20 4898 7885 931 1498
24 7053 11355 2157 3470
30 11020 17742 3969 6387
The right to use the capacities described above shall be at no
cost, except for a proportional share (based on actual use) of
operation, maintenance and replacement costs once use of such
capacity has begun.
* (the flow rates of 4 fps and 5 fps shown on this exhibit are
projected but not required rates. If different flow rates are
used, the capacities to which Rangeview, the Service Provider or
the Land Board, as applicable, are entitled shall be adjusted
proportionately).
<PAGE>
EXHIBIT F TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
Exhibit F RIGHT-OF-WAY , BOOK
THIS INDENTURE, made this day of , ,
between the STATE OF COLORADO, acting by and through the STATE
BOARD OF LAND COMMISSIONERS ("Land Board"), and, RANGEVIEW
METROPOLITAN DISTRICT ("Rangeview") whose address is
COLORADO :
WHEREAS, Rangeview was granted the Amended and Restated Lease
Agreement (Lease No. S-37280) ("Lease") by the Land Board
effective , 1996 and
WHEREAS, pursuant to the Lease, Rangeview has applied to the Land
Board for a right-of-way over, upon, under and across the surface
of certain portions of school lands as hereinafter described, for
the purpose of constructing, reconstructing, operating,
repairing, removing and maintaining a
and
WHEREAS, the Land Board has agreed to grant such right-of-way for
the purpose aforesaid and none other, upon the terms and
conditions set forth herein.
NOW, THEREFORE, the Land Board, in consideration of the premises
and the sum of ($ ), paid to the Land
Board, the receipt whereof is acknowledged, and in further
consideration of the terms and conditions of the Lease does grant
and convey to Rangeview, its successors and assigns, a non-
exclusive right-of-way for the purpose of constructing,
reconstructing, operating, and maintaining (describe scope &
purpose) , upon,
over, under and across the surface of those certain portions of
school lands described as follows: [insert legal description
here], (the "Premises")
Subject to the following conditions:
1. This grant is made with the understanding that
Rangeview must begin construction of these facilities
described above within five years from date hereof,
failing in which this grant may be subject to
cancellation of the unconstructed portions at the
option of the Land Board. If the Land Board extends
the construction period, the Land Board may fix
additional consideration based on the terms of the
Lease.
2. All rights to any and all minerals, ores, and metals of
any kind and character, and all coal, asphaltum, oil,
gas, geothermal resources, or other substances in or
under the Premises are reserved to the State of
Colorado.
3. In the event the Land Board should at any time desire
to occupy or use or permit the occupancy or use of the
Premises which are subject to the right-of-way herein
granted or any portions thereof, for any purpose with
which the aforesaid facilities would interfere,
including the mining, removing, or recovering of all
minerals, ores, and metals of every kind and character
and all coal, asphaltum, geothermal steam, and other
substances, in or under said Premises, then the Land
Board may require Rangeview to relocate, raise, lower,
disconnect, or otherwise adjust the facilities
described above at any location or locations where said
facilities pass over and across the Premises after
first, in each case, receiving not less than 180-days'
prior written notice from the Land Board. In such
event, Rangeview shall be furnished a similar right-of-
way to relocate, raise, lower, disconnect or otherwise
adjust said facilities The expense of said relocation,
movement, or rebuilding shall be paid according to the
Lease.
<PAGE>
4. This grant of right-of-way is made subject to any and
all leases, easements, rights-of-way and other
interests heretofore legally granted and now in full
force and effect, if any there be.
5. The Land Board reserves the right to cultivate, use,
develop, occupy, and sell, lease or otherwise dispose
of the Premises and to use the Premises for all
purposes, including the issuance of additional rights
to third parties, except as necessarily limited by the
facilities described above; provided that Rangeview's
rights to the Premises are not unreasonably impaired by
the exercise of this right by the Land Board.
6. The Land Board reserves the right to require, at
Rangeview's cost, the burial of any power lines and, to
the extent reasonable, other facilities when, in the
Land Board's discretion, development of the adjoining
property or other circumstances warrant burial.
Rangeview shall be given not less than (180) days
written notice of such requirement.
7. This right-of-way is made for the sole and only purpose
as herein set forth and no other and does not give
Rangeview exclusive possession of any part of the land
above described. If Rangeview or its successors,
assigns or licensees shall at any time use or attempt
to use the same for any other purpose whatsoever, then
this right-of-way shall become void and of no effect,
and any and all such rights and privileges herein
granted shall revert to the Land Board, subject to any
right to cure which may exist under the Lease.
8. Rangeview shall have the right to trim trees and
shrubbery upon this right-of-way only if such trees and
shrubbery should interfere with or endanger the proper
operation, construction and maintenance of said
facilities.
9. This right-of-way in itself does not grant rights,
express or implied, to water. Such rights shall be and
remain subject to the Lease.
10. Rangeview shall not transfer, issue licenses from, or
assign this right-of-way except as permitted by the
Lease. As to those licenses permitted by the Lease,
Rangeview shall not charge the Licensee any additional
consideration beyond the amount which Rangeview pays
to the Land Board for this right-of-way. This shall
not preclude Rangeview from charging administrative and
legal expenses associated with issuing a license or
costs associated with reviewing licensees' plans and
operations with respect to the right-of-way. Any other
consideration, license, transfer or assignment, either
executed or attempted, transfer or assignment of this
agreement or any of the rights hereby granted shall be
absolutely void and, at the option of the Land Board
and subject to any right to cure which may exist under
the Lease, shall terminate this agreement.
<PAGE>
11. Rangeview shall provide drainage and erosion control
structures, fences, gates, cattleguards, or any other
facilities reasonably necessary to protect state land.
12. Rangeview shall not unreasonably fence or obstruct free
and open access to and travel upon, over and across the
Premises, without written authorization of the Land
Board.
13. Rangeview shall have such rights of ingress and egress
as may be necessary for the construction,
reconstruction, operation, maintenance, and removal of
said facilities, but shall not leave open, or permit to
be left open, any fences, bars or gates not owned by
Rangeview or its licensees. All such fences, bars or
gates which may be damaged or disturbed in any way
shall be fully restored by Rangeview.
14. In the event that the facilities for which this right-
of-way is granted are to be materially enlarged,
replaced, relocated, or added to in the future,
Rangeview shall advise the Land Board of such change
and furnish surveys, plats, and description of the
proposed change to the Land Board. Any such changes
and the consideration required therefor, shall be
controlled by the Lease.
15. The rights herein granted shall expire when the Lease
expires, or otherwise terminates, but no later than
May 1, 2081; however, any-right-of way for the "Export
Water", as that term is defined in the Lease, may
continue for so long as, and to the extent that, rights
to Export Water extend beyond 2081. If the facilities
are abandoned or discontinued all rights hereunder
shall automatically terminate . Normal non-use of the
approved facility or facilities constructed that is
consistent with the prudent operation of a municipal
water delivery system shall not constitute abandonment
of the facility.
16. Except as permitted by the Lease, Rangeview may not
remove its facilities or related improvements without
the permission of the Land Board.
17. If this right-of-way is terminated for any cause
whatsoever, Rangeview shall restore the Premises, as
near as practicable, to their original condition, if
requested to do so by the Land Board.
18. Rangeview agrees to assume all liability arising from
the exercise of the right-of-way herein granted in
accordance with the terms of the Lease.
19. Rangeview will pay to the Land Board the full amount
necessary to compensate the Land Board for damages to
its property, rights, franchises or privileges,
including legal liabilities and damages to crops of
lessees, resulting from acts or omissions of Rangeview,
its agents, employees, or licensees or from the
exercise of the right-of-way herein granted.
<PAGE>
20. Upon completion of construction or reconstruction of
the herein described facility, Rangeview agrees to
restore the Premises surrounding the facility, as near
as practicable, to its original condition, unless
otherwise agreed to, in writing, by the Land Board.
21. Rangeview shall be responsible for and shall pay all
taxes, fees, assessments and other charges, if any, in
connection with its work, improvements, materials, or
facilities to be utilized in accomplishing its
activities pursuant to this grant of right-of-way.
22. This grant shall extend to and be binding upon the
successors, licensees and assigns of the parties
hereto, and the use of it shall be subject in all
respects to the Lease. Any conflict between this grant
and the Lease shall be governed by the terms of the
Lease.
IN WITNESS WHEREOF, The State of Colorado has executed this
grant, by the State Board of Land Commissioners, and has caused
the seal of the State Board of Land Commissioners to be hereunto
affixed; and Rangeview, by its
, has accepted this grant and affixed its corporate seal hereto,
the day and year first above written.
STATE BOARD OF LAND COMMISSIONERS
By:
Title:
RANGEVIEW METROPOLITAN DISTRICT
By:
Title:___________________________________
<PAGE>
EXHIBIT G TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
Exhibit G LICENSE AGREEMENT TO USE RIGHT-OF-WAY
(SERVICE PROVIDER)
This License Agreement, made this ______ day of
_______________, by and between Rangeview Metropolitan District
("Rangeview"), a quasi-municipal corporation and subdivision of
the State of Colorado and [Service Provider] ("Licensee"), a
____________________ Corporation _______________.
WHEREAS:
16. Rangeview and the State Board of Land Commissioners ("Land
Board") entered into their Amended and Restated Lease Agreement
dated April ______, 1996 ("Lease").
17. The Lease gives Rangeview rights to use water on and under
certain state lands in Arapahoe County (which lands are more
fully described in the Lease); and allows Rangeview to obtain
from the Land Board certain rights-of-way to exercise its rights
and obligations under the Lease.
C. The Land Board has issued to Rangeview that certain right-of-
way dated _________, 1996.
D. The Lease, in turn, permits Rangeview to license certain
rights to use the right-of-way to the [Service Provider].
E. Rangeview and [Service Provider] entered into a [Service
Agreement] dated _______________ _____, 1996.
F. The [Service Agreement] calls for the issuance of a license
from Rangeview to [Service Provider] to use a portion of
Rangeview's interests in the rights-of-way which Rangeview
receives from the Land Board.
NOW, THEREFORE, in consideration of the covenants contained
herein, it is agreed as follows:
(1) This license is subject in all ways to the Lease and
the right-of-way. In the event of a conflict between this
license and the right-of-way, the right-of-way shall prevail. In
the event of a conflict between this license and the Lease, the
terms of the Lease shall prevail. In the event of a conflict
between the right-of-way and the Lease, the Lease shall prevail.
In particular, the Licensee shall comply with all standards,
conditions, reservations, requirements and all other terms set
forth in the Lease and the right-of-way. Licensee agrees that it
has reviewed and takes subject to notice of the Lease and the
right-of-way upon which this license is based.
(2) In consideration of __________________ ($________),
Rangeview grants to Licensee a non-exclusive license to use a
portion of Rangeview's right-of-way for the purposes and at the
locations described on Exhibit A attached hereto. [Exhibit A to
describe scope, purpose, legal description, etc.]
(3) This license shall expire upon the earlier of the
expiration of the right-of-way, the Lease or the Service
Agreement. Except as provided herein, Licensee shall have no
title or interest in the land that is subject to this license or
subject to the right-of-way or the Lease.
(4) Except as granted by the Lease or the right-of-way, the
Land Board reserves all rights incident to its ownership of the
land involved, including those rights reserved in the Lease and
the right-of-way.
(5) Licensee may not assign or grant to others any right or
interest in this license, the right-of-way or the Lease.
In Witness whereof, the parties have executed this agreement
as of the ______ of _______________, 1996.
RANGEVIEW METROPOLITAN DISTRICT
By:
Title
LICENSEE
By:
Title
EXHIBIT H TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
Exhibit H LICENSE AGREEMENT TO USE RIGHT-OF-WAY
(EXPORT WATER)
This License Agreement, made this ______ day of
_______________, by and between Rangeview Metropolitan District
("Rangeview"), a quasi-municipal corporation and subdivision of
the State of Colorado and [Export Water Purchaser] ("Licensee"),
a ____________________ corporation ______________.
<PAGE>
WHEREAS:
_ Rangeview and the State Board of Land Commissioners ("Land
Board") entered into their Amended and Restated Lease Agreement,
dated April ______, 1996 ("Lease").
_ B. The Lease gives Rangeview rights to use water on and
under certain state lands in Arapahoe County (which lands are
more fully described in the Lease); and allows Rangeview to
obtain from the Land Board certain rights-of-way in land to
exercise Rangeview's rights and obligations under the lease.
C. The Land Board has issued to Rangeview that certain right-of-
way dated _____________, 1996.
_ The Lease, in turn, permits Rangeview to license certain
rights to use the right-of-way to the [Export Water Purchaser].
_ Rangeview and [Export Water Purchaser] purchased Export
Water pursuant to ________________________ dated _______________
______, 1996, which agreement provides for Rangeview to license
certain rights in the right-of-way to the Export Water Purchaser.
NOW THEREFORE, in consideration of the covenants contained
herein, it is agreed as follows:
(6) This license is subject in all ways to the Lease and
the right-of-way. In the event of a conflict between this
license and the right-of-way, the right-of-way shall prevail. In
the event of a conflict between this license and the Lease, the
terms of the Lease shall prevail. In the event of a conflict
between the right-of-way and the Lease, the Lease shall prevail.
In particular, the Licensee shall comply with all standards,
conditions, reservations, requirements and all other terms set
forth in the Lease and the right-of-way. Licensee agrees that it
has reviewed and takes subject to notice of the Lease and the
right-of-way upon which this license is based.
(7) In consideration of __________________ ($________),
Rangeview grants to Licensee a non-exclusive license to use
Rangeview's right-of-way for the purposes and at the locations
described on Exhibit A attached hereto. [Exhibit A to describe
scope, purposes, legal description, etc.]
(8) This license shall expire upon the earlier of the
expiration or termination of the right under the lease to take
Export Water, the abandonment under the Lease of the Export Water
facilities, or the termination or expiration of the right-of-way.
Except as provided herein, Licensee shall have no title or
interest in the land that is subject to this license or subject
to the right-of-way or the Lease.
<PAGE>
(9) Except as granted by the Lease and the right-of-way,
the Land Board reserves all rights incident to its ownership of
the land involved, including those rights reserved in the Lease
and the right-of-way.
In witness whereof, the parties have executed this Agreement
as of the ______ of _______________, 1996.
RANGEVIEW METROPOLITAN DISTRICT
By:
Title:
LICENSEE [Export Water Purchaser]
By:
Title:
EXHIBIT I TO EXHIBIT 1 OF DOCUMENT 10.1
=======================================
GUARANTY
Subject to approval of this Guaranty at an election
held pursuant to Article X, Section 20, of the Colorado
Constitution, Rangeview Metropolitan District, a quasi-municipal
corporation and political subdivision of the State of Colorado
("Rangeview"), hereby guarantees to the State of Colorado, acting
through its State Board of Land Commissioners (the "Land Board"),
the timely performance by Rangeview's water activity enterprise
established by resolution of Rangeview adopted at a public
meeting of Rangeview's board of directors on September 11, 1995,
and effective as of the date of its adoption (the "Enterprise")
of all obligations under the Amended and Restated Lease Agreement
dated April 11, 1996, between the Land Board and the Enterprise
(the "Lease"). After providing the Enterprise with any notice
and cure rights provided in the Lease, the Land Board may proceed
to enforce this Guaranty directly against Rangeview without any
further notice or cure rights. Rangeview agrees that it shall
submit this Guaranty to an election of its voters in November,
1996.
<PAGE>
IN WITNESS WHEREOF, Rangeview has executed this
Guaranty as of the 11th day of April, 1996.
RANGEVIEW METROPOLITAN DISTRICT
By:
Title:
EXHIBIT 2 OF DOCUMENT 10.1
==========================
DISTRICT COURT, CITY AND COUNTY OF DENVER, STATE OF COLORADO
Case No. 94CV5405, Courtroom No. 1
ORDER AND JUDGMENT
APEX INVESTMENT FUND, II, L.P. et al.,
Plaintiffs,
v.
COLORADO STATE BOARD OF LAND COMMISSIONERS, et al.,
Defendants,
and
<PAGE>
COLORADO STATE BOARD OF LAND COMMISSIONS, ROBERT R. MAILANDER,
LUCY BLACK CREIGHTON, JOHN S. WILKES, III, and the STATE OF
COLORADO ex rel. ATTORNEY GENERAL GALE A. NORTON,
Counterclaimants, Crossclaimants and Third-Party
Plaintiffs,
v.
OAR INCORPORATED, COLORADO FINANCIAL CONSULTANTS, INC. WILLIARD
G. OWENS, H.F. RIEBESELL, JR., CARLTON E. ALLDERDICE, and JOHN
and JANE DOES 1-50,
Third Party Defendants.
This matter has come before the Court pursuant to the
Motion for Entry of Order and Judgment ("Motion").
After having reviewed the pleadings filed in this
action as well as the Motion and Settlement Agreement, this Court
being duly advised in the premises and pursuant to C.R.C.P.
41(a)(2), hereby finds and concludes as follows:
(10) This Court has jurisdiction over the subject matter and
the parties to this action.
(11) Each of the parties has the power and authority to
enter into the Settlement Agreement and all of the documents
required to be executed pursuant to the Settlement Agreement,
including without limitation, the Amended and Restated Lease
Agreement between the Land Board and Rangeview.
(12) The Amended and Restated Lease Agreement, the
Settlement Agreement, and all documents which are part of the
Settlement Agreement are legal, valid, binding and enforceable,
will produce optimum long term revenue and otherwise fully comply
with the requirements of C.R.S. 36-1-118(1)(e) and Article IX,
10 of the Colorado Constitution.
(13) The terms, conditions and provisions of the Settlement
Agreement and all of the documents required to be executed
pursuant to the Settlement Agreement including, without
limitation, the Amended and Restated Lease Agreement, fairly and
reasonably settle the disputes amongst the parties, including
those set forth in the Complaint, Counterclaims, Crossclaims and
Third Party Claims.
<PAGE>
IT IS THEREFORE ORDERED AS FOLLOWS:
(14) The Settlement Agreement, including all documents which
are a part of the Settlement Agreement, are approved.
(15) All claims, cross-claims, counterclaims and third party
claims shall be dismissed with prejudice and each party shall
bear its own costs, expenses and attorney fees.
(16) Based upon the stipulations and representations of the
parties as set forth in the Settlement Agreement, the Amended and
Restated Lease Agreement, the Settlement Agreement, and all
documents which are a part of the Settlement Agreement are legal,
valid, binding and enforceable in accordance with their terms,
will produce optimum long term revenue and otherwise fully comply
with the requirements of C.R.S. 36-1-118(1)(e) and Article IX,
10 of the Colorado Constitution. This Court shall not have any
continuing jurisdiction over this matter, nor shall this Court or
any other Court exercise its contempt power to enforce this Order
and Judgment.
(17) The funds presently held in the Court Registry shall be
distributed to Rangeview and the Land Board pursuant to Article
10 of the Amended and Restated Lease Agreement and the Clerk
shall distribute the principle sum of $108,800 to Rangeview and
$83,200 to the Land Board, together with any interest that may
have accrued on such amounts which shall be distributed on a pro-
rata basis.
(18) This Order and Judgment shall be deemed final pursuant
to Rule 54(b) of the Colorado Rules of Civil Procedure.
Dated and Signed this _______ day of ______________,
1996.
By the Court:
Larry J. Naves
District Court Judge
EXHIBIT 3 OF DOCUMENT 10.1 - DOES NOT EXIST
===========================================
<PAGE>
EXHIBIT 4 OF DOCUMENT 10.1
==========================
ASSIGNMENT
The undersigned irrevocably assigns to Pure Cycle
Corporation, a Delaware corporation, this 11th day of April,
1996, all of the undersigned's right, title and interest in the
following:
(1) Escrow Agreement, by and among OAR, Incorporated,
Willard G. Owens in his individual and representative capacities,
Colorado Water Consultants, Incorporated, INCO Securities
Corporation, Richard F. Meyers in his individual and
representative capacities, Carlton Allderdice, H. F. Riebesell,
and Colorado National Bank of Denver as Escrow Agent, dated as of
August 12, 1991, and those certain Escrow Closing Instructions,
amended and restated as of August 12, 1992;
(2) Option and Purchase Agreement by and among OAR,
Incorporated, a Colorado corporation, and INCO Securities
Corporation, a Delaware corporation, as amended by Amendment No.
1 on February 12, 1991 and Amendment No. 2 on August 12, 1992
(the "OAR Option Agreement");
(3) Option and Purchase Agreement, by and between Colorado
Water Consultants, Incorporated, a Colorado corporation, and INCO
Securities Corporation, a Delaware corporation, dated as of
November 8, 1990, as amended by Amendment No. 1 on February 12,
1991 and Amendment No. 2 on August 12, 1992 (the "CWC Option
Agreement");
(4) Option Agreement for Sale and Operation of Production
Right, by and between Rangeview Metropolitan District, a quasi-
municipal corporation and political subdivision of the State of
Colorado, and INCO Securities Corporation, dated as of November
14, 1990, as amended by Amendment No. 1 on February 12, 1991;
(5) All of the undersigned's rights to receive all accrued
but unpaid interest owed by the Rangeview Metropolitan District,
Arapahoe County, Colorado, associated with the Lowry Range
Metropolitan District Water Revenue Notes, Series 1987 A-D, dated
August 7, 1987, to the extent of $63,000;
(6) All of the undersigned's rights to receive all accrued
but unpaid interest owed by the Rangeview Metropolitan District,
Arapahoe County, Colorado, associated with the Rangeview
Metropolitan District Water Revenue Notes, Series 1988 A-D, dated
December 7, 1988, to the extent of $27,000;
(7) Right of First Refusal Agreement by and among INCO
Securities Corporation and Richard F. Meyers, Mark W. Harding,
Thomas P. Clark, Thomas Lamm and Rowena Rogers dated August 12,
1992; and
<PAGE>
(8) The assignment to Pure Cycle Corporation hereunder
includes the right of Pure Cycle Corporation to exercise the
options granted under the OAR Option Agreement and the CWC Option
Agreement and INCO Securities Corporation waives performance of
the provisions of Section 5.04 of the Water Rights
Commercialization Agreement dated as of December 11, 1990,
amended February 12, 1991, and further amended August 12, 1992.
IN WITNESS WHEREOF, this Assignment has been executed
as of the date first set forth above.
INCO SECURITIES CORPORATION
By:
Title:
EXHIBIT 5 OF DOCUMENT 10.1
==========================
For Exhibit 5 to the Settlement Agreement, which consists of an
Amended and Restated Option and Purchase Agreement among OAR,
Incorporated, the Company, and Inco Securities Corporation, see
DOCUMENT 10.4.
EXHIBIT 6 OF DOCUMENT 10.1
==========================
For Exhibit 6 to the Settlement Agreement, which consists of an
Amended and Restated Option and Purchase Agreement among the
State of Colorado, acting by the State Board of Land
Commissioners, H.F. Riebesell, Jr., the Company and Inco
Securities Corporation, see DOCUMENT 10.5.
EXHIBIT 7 OF DOCUMENT 10.1
==========================
For Exhibit 7 to the Settlement Agreement, which consists of
Amended Escrow Instructions among OAR, Incorporated, the Company,
State of Colorado State Board of Land Commissioners, H. F.
Riebesell, Jr., and Colorado National Bank, see DOCUMENT 10.6.
EXHIBIT 8 OF DOCUMENT 10.1
==========================
For Exhibit 8 to the Settlement Agreement, which consists of
Comprehensive Amendment Agreement No. 1 among Inco Securities
Corporation, the Company, the State of Colorado, acting through
the State Board of Land Commissioners, and others, see
DOCUMENT 10.7.
<PAGE>
=============
DOCUMENT 10.2
=============
SERVICE AGREEMENT
between
PURE CYCLE CORPORATION
and
RANGEVIEW METROPOLITAN DISTRICT,
ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE
TABLE OF CONTENTS
Page
RECITALS 1
AGREEMENT 4
ARTICLE I Definitions 4
1.1 Lowry Range 4
1.2 Non-Export Water 4
1.3 Definitions 4
1.4 Intent of This Agreement 4
ARTICLE II Grant and East Cherry Creek Revenues 5
2.1 Appointment of Agent 5
2.2 East Cherry Creek Revenues 5
ARTICLE III Rangeview Representations and Covenants 5
3.1 Lease 5
3.2 Conflicts of Interest 5
ARTICLE IV Construction of Facilities 6
4.1 Construction 6
4.2 Quality 7
4.3 Rules and Regulations of Rangeview 7
ARTICLE V Coordination of Export and Non-Export
Water 7
5.1 Substitution of Facilities 7
5.2Right to Use Transmission Lines; Infrastructure 7
ARTICLE VI Ownership, Operation, and Maintenance
of Facilities 8
6.1 Ownership Prior to Termination 8
6.2 Ownership Post-Expiration 8
6.3 Ownership Post-Termination 8
ARTICLE VII Obligations of Pure Cycle 8
7.1 Water System 8
7.2 Control 8
7.3 Phased Development 9
7.4 Administration 9
7.5 Records 9
<PAGE>
7.6 Services 9
7.7 Recharge 10
7.8 Compliance with Laws 10
7.9 Permits and Licenses 10
7.10 Taxes 10
7.11 Limitations on Use of Non-Export Water 10
7.12 Financing 10
7.13 Reporting 10
7.14 Access 11
ARTICLE VIII Billing and Rates 11
8.1 Rates 11
8.2 Billing 11
8.3 Renegotiation 12
8.4 Reserves 12
8.5 Reports and Audits 13
ARTICLE IX Management of Non-Export Water 14
9.1 Use of Non-Export Water 14
9.2 Insufficient Non-Export Water 14
ARTICLE X Rights-of-Way 15
10.1 Master Plan 15
10.2 Rights-of-Way 15
10.3 Fees for Rights-of-Way 15
10.4Condemnation of Land Not Owned by the Land Board 15
ARTICLE XI Indemnification 16
11.1 General 16
11.2 Liens 16
11.3 Mutual Indemnity 16
ARTICLE XII Financing 16
12.1 Review by Land Board 16
ARTICLE XIII Insurance and Bonds 17
13.1 Insurance 17
13.2 Bonds 17
13.3 Bond of Contractors 17
<PAGE>
ARTICLE XIV Term, Default and Termination 18
14.1 Effective Date 18
14.2 Term 18
14.3 Default and Termination 18
14.4 Declaration of Forfeiture 19
14.5 Pure Cycle Right of Termination 20
14.6 Termination of Lease 20
ARTICLE XV General Provisions 20
15.1 Assignment 20
15.2 Third Party Beneficiaries 20
15.3 Notice 20
15.4 Construction 21
15.5 Entire Agreement 21
15.6 Authority 21
15.7 Copies 22
15.8 Counterparts 22
15.9 Amendment 22
15.10 Compliance with Law 22
15.11 Binding Effect 22
15.12 Severability 22
15.13Duty of Good Faith and Fair Dealing; Regular Consultation
22
15.14 Further Assurance 22
15.15 Governing Law 23
15.16 Arbitration 23
15.17 Litigation and Attorneys' Fees 23
15.18 Force Majeure 23
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Agreement") is entered
into as of the 11th day of April, 1996, by and between PURE CYCLE
CORPORATION, a Delaware corporation ("Pure Cycle"), and RANGEVIEW
METROPOLITAN DISTRICT, a quasi-municipal corporation and
political subdivision of the State of Colorado, acting by and
through its water activity enterprise ("Rangeview").
RECITALS
18. Rangeview is a special district organized pursuant to
Title 32 of the Colorado Revised Statutes with the power, among
others, to supply water for domestic and other public and private
purposes. Rangeview's water activity enterprise was established
by resolution of the district adopted at a public meeting of its
board of directors on September 11, 1995, and effective as of the
date of its adoption.
19. Pure Cycle is a corporation involved in the acquisition
and development of water.
20. In November 1990, Inco Securities Corporation ("Inco")
entered into (i) option agreements (the "Bond Options") which
collectively granted Inco the right to purchase Rangeview
Metropolitan District Water Revenue Bonds, Series 1988 M, in the
principal amount of $17,771,200, Rangeview Metropolitan District
Water Revenue Notes, Series 1987 A-L, in the principal amount of
$5,000,000, and Rangeview Metropolitan District Water Revenue
Notes, Series 1988 A-L, in the principal amount of $2,142,858
(collectively the "Rangeview Bonds and Notes"), which constituted
substantially all of the outstanding debt of Rangeview. In
addition, Inco entered into an Option Agreement For Sale and
Operation of Production Right with Rangeview, dated as of
November 14, 1990, as amended ("Inco Water Option Agreement"),
pursuant to which Inco acquired an option to acquire certain
rights to 10,000 acre-feet of water per year (the "Inco Water
Rights") from Rangeview.
21. Pure Cycle and Inco entered into a certain Water Rights
Commercialization Agreement, dated as of December 11, 1990, as
amended (the "Commercialization Agreement") pursuant to which
Inco and Pure Cycle agreed to jointly develop and market the Inco
Water Rights and to share in the profits therefrom and Pure Cycle
obtained certain rights to become the assignee of Inco's rights
under the Bond Options and the Inco Water Option Agreement.
22. Pure Cycle sold portions of its right to profits from
the Inco Water Rights under the Commercialization Agreement and
certain of the Rangeview Bonds and Notes which it acquired
pursuant to the Bond Options to finance (i) partial exercises of
the Bond Options, (ii) extensions of the Inco Water Option
Agreement, (iii) marketing efforts to sell the Inco Water Rights,
and (iv) loans to Rangeview to finance administrative and legal
expenses of Rangeview.
<PAGE>
23. Rangeview's right to sell the Inco Water Rights derived
from a Lease between Rangeview and the State of Colorado, acting
through the State Board of Land Commissioners (the "Land Board")
denominated Lease Number S-37280, dated April 26, 1982, as
amended (the "Original Lease").
24. A lawsuit was filed in the District Court in and for
the City and County of Denver (the "Denver District Court") on
October 28, 1994 styled Apex Investment Fund II. L.P., et al. v.
Colorado State Board of Land Commissioners, et al., Case
No. 94-CV-5405 (Courtroom I) (the "Denver Lawsuit") by Pure
Cycle, Inco and a number of investors who acquired interests in
the Rangeview Bonds and Notes from Pure Cycle to resolve various
claims relating to the status and validity of the Original Lease,
the Inco Water Option Agreement, and the Rangeview Bonds and
Notes.
25. As part of the settlement of the Denver Lawsuit, Inco
assigned its remaining rights and obligations under the Bond
Options and the Inco Water Option Agreement to Pure Cycle.
26. As part of the settlement of the Denver Lawsuit, the
Land Board and Rangeview have entered into an Amended and
Restated Lease Agreement dated the date hereof (the "Lease")
which supersedes the Original Lease. A copy of this Agreement is
attached to the Lease as Exhibit B.
27. As part of the settlement of the Denver Lawsuit, Pure
Cycle, Inco and Rangeview have agreed to supersede the Inco Water
Option Agreement with an Agreement for Sale of Export Water
between Rangeview and Pure Cycle, dated the date hereof (the
"Export Water Agreement").
28. Article 9 of the Lease provides that Rangeview may
enter into a contract in the form of this Agreement with a
service provider to provide water services to surface tenants,
occupants, developers, landowners and all other water users on
the Lowry Range (as defined in Section 1.1) (collectively "Water
Users"), subject to the terms and conditions set forth in the
Lease.
29. Subject to entry of a judgment in the Denver Lawsuit in
conformance with the terms of the settlement, Pure Cycle has
purchased all remaining Rangeview Bonds and Notes not already
owned by Pure Cycle.
30. As part of the settlement of the Denver Lawsuit,
Rangeview is required to acquire and retire the Rangeview Bonds
and Notes.
<PAGE>
31. Pure Cycle is willing to convey the Rangeview Bonds and
Notes to Rangeview provided Pure Cycle obtains the Export Water
(as defined in the Lease) pursuant to the Export Water Agreement
and the rights granted under this Agreement in exchange for such
Rangeview Bonds and Notes. In order to assure that future
revenues of Rangeview are sufficient to compensate Pure Cycle for
the conveyance of its Rangeview Bonds and Notes hereunder,
including any interest due on such bonds and notes, Pure Cycle is
willing to provide water services, pursuant to the terms and
conditions set forth in the Lease and herein, to Water Users in
exchange for the revenues described in Sections 2.2 and 8.2 of
this Agreement.
32. The Export Water Agreement provides for the conveyance
by Pure Cycle of the Rangeview Bonds and Notes to Rangeview for
retirement in exchange for the rights granted to Pure Cycle
hereunder and under the Export Water Agreement.
33. Rangeview believes that settlement of the Denver
Lawsuit is in the best interest of Rangeview and is desirous of
acquiring and retiring the Rangeview Bonds and Notes in exchange
for (i) Pure Cycle's acquisition of the Export Water pursuant to
the Export Water Agreement; and (ii) Pure Cycle's commitment to
construct, maintain and operate the infrastructure necessary to
deliver water service to Water Users and to provide such water
service to Water Users as Rangeview's agent in accordance with
the terms of the Lease and this Agreement.
34. Rangeview has determined that it is in the best
interest of Rangeview to settle the Denver Lawsuit on the terms
proposed and to engage Pure Cycle to provide water services to
Water Users for a number of reasons, including the following:
(1) The Rangeview Bonds and Notes were to be repaid from
revenues received from selling water under the Original Lease to
water users on the Lowry Range; however, the Land Board has not
yet sold or developed the Lowry Range and Rangeview has no
assurance that the Land Board will ever do so. Due to the lack
of development on the Lowry Range, Rangeview has been unable to
pay principal and interest on the Rangeview Bonds and Notes and,
therefore, they have accrued over $15,000,000 in interest.
Therefore, Rangeview views a settlement which results in a
retirement of the Rangeview Bonds and Notes as beneficial to the
district.
(2) Pure Cycle has a long-term relationship with Rangeview
and is very familiar with the Water Rights (as that term is
defined in the Lease).
(3) Pure Cycle has expertise in the area of water
development, including the financial feasibility of such
development.
(4) Rangeview has obligations under the Lease to develop
the Water Rights and to acquire additional water, if necessary.
Rangeview does not have the financial ability or expertise to
develop the Water Rights or acquire additional water. By
utilizing Pure Cycle's financial and development expertise,
Rangeview will be able to meet its obligations under the Lease.
<PAGE>
AGREEMENT
In consideration of the foregoing, the covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
Definitions
(2) Lowry Range. "Lowry Range" shall mean the
approximately 24,567.21 acres, more or less, according to U.S.
Government survey, in Arapahoe County, Colorado more particularly
described as follows:
Township 5 South, Range 64 West,
Sections 7 through 10: all; Sections 15
through 22: all; Sections 27 through
34: all.
Township 4 South, Range 65 West,
Sections 33: all; and 34: all.
Township 5 South, Range 65 West,
Section 3: all; Sections 10 through 15:
all, less certain surface rights granted
for (but including the water under) the
Aurora Reservoir) in Section 15;
Sections 22 through 27: all, less
certain surface rights granted for (but
including the water under) the Aurora
Reservoir in Section 22; Sections 35 and
36: all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66 West, Section 36:
all.
(3) Non-Export Water. "Non-Export Water" shall have the
meaning set forth in the Lease.
(4) Definitions. Capitalized terms used but not defined
herein shall be defined as set forth in the Lease.
<PAGE>
(5) Intent of This Agreement. This Agreement is intended
to provide the terms and conditions under which Pure Cycle will
act as Rangeview's agent to provide water service to Water Users
consistent with the obligations of Rangeview under the Lease.
ARTICLE II
Grant and East Cherry Creek Revenues
(6) Appointment of Agent. During the term of this
Agreement and subject to the terms of the Lease (which terms are
incorporated herein by reference), Rangeview hereby grants to
Pure Cycle the sole and exclusive right to use the Non-Export
Water as its agent for the sole purpose of providing water
services to the Water Users. To the extent, if any, that the
terms of this Agreement are contrary to, or inconsistent with,
the terms of the Lease, the provisions of the Lease shall control
and govern the conduct of the parties hereto. By execution of
this Agreement, Pure Cycle, as service provider to Rangeview,
consents and agrees to be bound by the Lease provisions relative
to the service provider.
(7) East Cherry Creek Revenues. Rangeview acknowledges
that Pure Cycle has loaned funds to Rangeview to operate the
district, which loans are documented in a promissory note dated
April 17, 1995 (the "Note"). The outstanding principal balance
on the Note as of the date of this Agreement is $192,600.
Rangeview agrees that it will apply any revenue received by
Rangeview pursuant to the East Cherry Creek Agreement (i) toward
payment to the Land Board of its share of such revenues pursuant
to Section 10.1 of the Lease, (ii) to establish a fund for
Rangeview's budget for the district's current calendar year
operations, (iii) to establish and maintain the reserve required
by Section 8.9 of the Lease, and (iv) remaining revenues, if any,
toward repayment of the Note, and once the Note has been repaid
in full, Rangeview agrees to pay to Pure Cycle ninety-five
percent (95%) of Rangeview's share of any remaining revenue
received by Rangeview pursuant to the East Cherry Creek
Agreement.
ARTICLE III
Rangeview Representations and Covenants
(8) Lease. Rangeview represents and warrants that all
terms and conditions of the Lease have been complied with by it
and, to its knowledge, by the Land Board. Rangeview shall not
enter into any amendments to the Lease that affect Pure Cycle's
rights and/or obligations under this Agreement without Pure
Cycle's prior written approval. Rangeview agrees that it will
comply with the terms of the Lease, including paying all rents
and royalties due under the Lease, and maintain it in effect
during the term of this Agreement. It shall not be a breach of
this covenant if Rangeview's failure to maintain the Lease in
effect is due to a breach of this Agreement or the Lease by Pure
Cycle.
(9) Conflicts of Interest. The parties hereto acknowledge
that certain members of the board of directors of Rangeview are
either officers, directors or employees of Pure Cycle and may
have conflicts of interest with regard to this transaction.
Rangeview represents and warrants that such board members have,
pursuant to 24-18-110, C.R.S., filed all necessary disclosure
statements with Rangeview and the Colorado Secretary of State,
that Rangeview has provided copies of such disclosure statements
to the Land Board, and that those members with conflicts have
abstained from voting on this Agreement. Pure Cycle represents
and warrants that the members of Pure Cycle's board of directors
who also serve on the Rangeview board of directors have fully
disclosed such interests to the disinterested board members of
Pure Cycle prior to obtaining board approval of this Agreement
and those members with potential conflicts have abstained from
voting on this Agreement.
ARTICLE IV
Construction of Facilities
(10) Construction. Pure Cycle shall cause construction of a
Water System (as defined below) to provide water service to meet
the demand for water of Water Users and shall do so in a
commercially reasonable time and manner consistent with prudent
water service practice in Colorado and consistent with Article 9
of the Lease, subject to the receipt of all necessary
governmental approvals. Upon receiving a written request for
water service from a Water User, Rangeview shall give Pure Cycle
written notice of such request. Within thirty (30) days after
receipt of all information necessary to establish the service
needs of the Water User, Rangeview and Pure Cycle shall establish
a schedule identifying the scope of improvements and the timing
of construction ("Construction Schedule") for such Water User.
Upon execution of a tap purchase agreement with such Water User
or some other agreement which secures the Water User's commitment
to purchase water taps or receive water service, which tap
purchase agreement shall indicate that Rangeview's commitment for
service is subject to the completion of the improvements
identified in the Construction Schedule or such other time as
would be consistent with the Lease, Pure Cycle shall cause
construction of the identified improvements pursuant to the time
frame set forth in the Construction Schedule. Once construction
is completed, Pure Cycle will provide Rangeview with copies of
the plans for the improvements as built. The term "Water System"
shall mean wells, intake lines, pumps, treatment facilities,
transmission systems, storage facilities and all other components
of a water supply system to provide Non-Export Water to Water
Users. Pure Cycle shall cause the Water System to be completed
in a workmanlike manner and in compliance with the plans approved
by Rangeview, which approval will not be unreasonably withheld or
delayed. Pure Cycle shall make available to Rangeview copies of
any and all construction contracts and related documents
concerning the Water System. Twenty-one (21) days prior to the
execution of any construction contract related to the Water
System in excess of One Million Dollars ($1,000,000), Pure Cycle
shall provide Rangeview with a copy of such contract (a draft
being acceptable if finals are not available) and information
regarding how the improvements will be financed and how such
financing obligation will be paid. Rangeview shall review such
information for the sole purposes of determining whether such
contract is commercially reasonable and in compliance with
prudent water provider practice in Colorado and whether the
project is fiscally viable. Rangeview shall be deemed to have
consented to the contract unless, within fourteen (14) days of
the date of delivery of the contract, it delivers to Pure Cycle a
notice specifically stating the reasons for its determination
that the proposed contract is not commercially reasonable, is not
in compliance with prudent water provider practice in Colorado,
or the project is not fiscally viable. Disputes, if any, as to
matters under this Section will be submitted to arbitration
pursuant to Section 15.16, and a hearing shall be held within
fourteen (14) days of submission of the matter to arbitration.
(11) Quality. Pure Cycle shall cause the Water System to be
designed to comply with applicable requirements of the federal
Safe Drinking Water Act or such other similar or successor laws
(the "Safe Drinking Water Act") in effect at the time the Water
System is constructed. In addition, Pure Cycle shall operate and
maintain the Water System, and to the extent necessary, modify or
upgrade the Water System, such that the water provided through
the Water System complies with the Safe Drinking Water Act;
provided, however, that it shall not be a default of this Section
if at any time the water fails to comply with the requirements of
the Safe Drinking Act, Pure Cycle cures such noncompliance within
thirty (30) days of learning of such noncompliance, or if more
than thirty (30) days is reasonably required to cure such
noncompliance, Pure Cycle commences to correct the problem within
thirty (30) days and thereafter prosecutes the same to completion
with reasonable diligence.
<PAGE>
(12) Rules and Regulations of Rangeview. All construction,
operation, and maintenance of the Water System shall be performed
in accordance with the Rangeview Metropolitan District Rules and
Regulations, as adopted from time to time (the "Rules and
Regulations") which shall not be inconsistent with the terms of
the Lease.
ARTICLE V
Coordination of Export and Non-Export Water
(13) Substitution of Facilities. In connection with the
provision of Non-Export Water to Water Users, Pure Cycle shall
(i) be entitled, at Pure Cycle's option subject to Rangeview's
consent which shall not be unreasonably withheld, to exercise
Rangeview's right to substitute facilities and (ii) have the
obligation to provide substitute facilities on Rangeview's behalf
to the Export Water Purchaser as provided in Section 8.3 of the
Lease.
(14) Right to Use Transmission Lines; Infrastructure.
Pursuant to the Lease, all contracts for the sale of Export Water
will provide for construction of excess capacity in Export Water
transmission lines only within the Lowry Range, so as to
accommodate the transmission of water for on-site use within that
portion of the Lowry Range which may be served by those lines.
Ownership of the excess capacity needed for use on the Lowry
Range will be transferred to Rangeview at such time as such
capacity is utilized, under agreements which provide for the
payment by Rangeview of a proportionate share of operation,
maintenance and replacement costs. Rangeview agrees to provide
such excess capacity to Pure Cycle to provide the services
contemplated hereunder and Pure Cycle agrees to assume
Rangeview's obligations with respect to operation, maintenance
and replacement costs under the excess capacity agreements for so
long as this Agreement is in effect.
ARTICLE VI
Ownership, Operation, and Maintenance of Facilities
(15) Ownership Prior to Termination. Rangeview shall own
the Water System, Pure Cycle shall operate and be responsible for
the maintenance of the Water System. Subject to Pure Cycle's
obligations under Section 8.2, Rangeview shall own, operate, and
be responsible for maintenance of meters installed to measure the
quantity of Non-Export Water delivered to Water Users in
accordance with Section 7.1.
(16) Ownership Post-Expiration. In the event this Agreement
expires pursuant to Section 14.2 or terminates pursuant to
Section 14.6, title to any rights-of-way on the Lowry Range used
exclusively for delivering Non-Export Water and any interest of
Pure Cycle in the Water System or shared facilities for delivery
of Non-Export Water pursuant to agreements described in
Section 5.2 or otherwise, shall automatically, without the
necessity of any further action by the parties, revert and be
transferred to the Land Board as of the date of such expiration
or termination in accordance with Section 14.1 of the Lease.
(17) Ownership Post-Termination. In the event this
Agreement is terminated by Rangeview pursuant to Section 14.3 or
by Pure Cycle pursuant to Section 14.5, Pure Cycle shall
surrender all of Pure Cycle's interest in rights-of-way on the
Lowry Range used exclusively for delivering Non-Export Water and
any interest of Pure Cycle in the Water System or shared
facilities for delivery of Non-Export Water pursuant to
agreements described in Section 5.2 or otherwise, to Rangeview in
accordance with Section 14.4 of this Agreement.
ARTICLE VII
Obligations of Pure Cycle
(18) Water System. At its cost, Pure Cycle shall provide a
Water System for Water Users in a commercially reasonable manner
consistent with prudent water provider practice in Colorado in
order to meet the demand of Water Users for water subject to the
terms and conditions of the Lease and this Agreement. In
addition, Pure Cycle shall install meters, in accordance with the
Rules and Regulations, capable of measuring the quantity of Non-
Export Water delivered to Water Users. Pure Cycle acknowledges
that unless expressly agreed to by the Land Board in writing, the
Non-Export Water, the Water System and the rights-of-way on and
aquifers under the Lowry Range required to deliver Non-Export
Water and any other rights granted with respect to the Non-Export
Water under the Lease, shall not be used for any business or
other purpose except to provide water service consistent with
this Agreement, the Lease and the water decrees by which such
water has been or may be adjudicated.
<PAGE>
(19) Control. Pure Cycle shall have the responsibility for
and control over the details and means for providing the
services hereunder subject to the requirement that the services
be provided in a commercially reasonable time and manner
consistent with prudent water service practice in Colorado and in
accordance with the Lease, this Agreement and the Rules and
Regulations.
(20) Phased Development. Pure Cycle may phase the
installation of the Water System in accordance with the needs of
Water Users, it being understood that additional Water Users will
be generated or created only upon the development of the Lowry
Range. Pure Cycle shall have no obligation whatsoever to install
or create access to a Water System in advance of the need for
such facilities, such need to be based upon commercially
reasonable standards for similar development projects. To the
extent portions of the Lowry Range have been sold by the Land
Board, Pure Cycle agrees to provide Rangeview with a reasonable
long range development plan for such land.
(21) Administration. Pure Cycle shall operate, maintain and
administer the Water System, including billing (but not
collecting) all charges for water services in accordance with
Article VIII and issuing taps on behalf of Rangeview. Taps for
Non-Export Water shall not be issued based on "unused cumulative
rights under the decrees" (as that phrase is defined in the
Lease).
(22) Records. Pure Cycle shall keep and maintain accurate
files of all contracts concerning the Water System and all other
records necessary to the orderly administration and operation of
the Water System which are required to be kept by local, state or
federal statutes, ordinances or regulations or which are
necessary to comply with the Lease. Pure Cycle shall provide a
copy of each executed contract concerning the Water System within
three days.
(23) Services. Pure Cycle shall employ or contract with
such engineers and qualified operators as it deems appropriate,
to perform the duties of operating the Water System, including
the following:
1. cooperating with Rangeview and other state, county,
local and federal authorities in providing such tests as are
necessary to maintain compliance with appropriate governmental
standards;
2. supervising the connection of lines to private
development and recording such connections for billing proposes
in accordance with Section 8.2;
3. coordinating construction with various utility
companies to ensure minimum interference with the Water System;
4. performing all maintenance and repairs necessary to
continue the efficient operation of the Water System;
<PAGE>
5. providing for the services of subcontractors necessary
to maintain and continue the efficient operation of the Water
System; and
6. providing for emergency preparedness to provide
response to emergencies, including, but not limited to,
interruption of services because of line breaks, freeze-up or
other mechanical problems.
To the extent Pure Cycle engages contractors, it shall require
such contractors to maintain bonds and insurance, including
workers' compensation insurance, in compliance with applicable
laws, the Lease, and the Rules and Regulations.
(24) Recharge. Pure Cycle shall have the right to
artificially recharge (but only as to the provision of water to
Water Users pursuant to this Agreement) and to store the
recharged water in the aquifers from which such Non-Export Water
is withdrawn (but only to the extent all or some of the Non-
Export Water has been withdrawn from the aquifers by Pure Cycle)
and to withdraw such artificially recharged and stored water in
accordance with Section 6.2(a) of the Lease.
(25) Compliance with Laws. Pure Cycle shall comply with all
applicable government statutes, regulations, ordinances, permits
and orders, including the Rules and Regulations and, if
applicable, Colo. Rev. Stat. 24-91-103, 103.5 and 103.6
(1995 Supp.), in its performance under this Agreement.
(26) Permits and Licenses. Pure Cycle shall, at its own
expense, apply for and obtain all necessary building, occupancy,
well and other permits and licenses which may be required by any
governmental entity which has jurisdiction over the operations to
be performed by Pure Cycle pursuant to this Agreement. All well
permits shall be obtained in the name of the Land Board and, if
necessary, Rangeview as lessee.
(27) Taxes. Pure Cycle shall be solely responsible for and
shall pay all taxes, fees, charges and assessments, if any, in
connection with the work or the materials to be utilized in
accomplishing the activities of Pure Cycle pursuant to this
Agreement.
(28) Limitations on Use of Non-Export Water. Pure Cycle
shall not use, transfer, or otherwise dispose of Non-Export
Water, including any re-use or successive use of such Non-Export
Water, outside the boundaries of the Lowry Range without the
express written consent of the Land Board in accordance with the
Lease.
<PAGE>
(29) Financing. Pure Cycle shall be responsible for
financing its obligations hereunder with the funds it receives
pursuant to this Agreement or from such other sources as it deems
desirable subject to Section 4.1 hereof and the terms of the
Lease.
(30) Reporting. In addition to the reports required
pursuant to Section 8.5, Pure Cycle agrees to provide Rangeview
with annual budgets and business plans with respect to the Water
System and such other information as Rangeview may reasonably
request in order to assure itself that the demands of Water Users
are being adequately provided for and to assist Rangeview in its
long-term planning efforts. Pure Cycle shall also provide
courtesy copies of annual budgets and business plans to the Land
Board. Pure Cycle shall also supply Rangeview with such
information as Rangeview may reasonably require to comply with
its obligations to state, county, local and federal authorities,
including, for example, the results of tests on the quality of
the water and information concerning compliance with health and
safety regulations.
(31) Access. Pure Cycle agrees to permit the Land Board
access to the Lowry Range to the same extent Rangeview is
required to grant the Land Board access under Section 5.1(b) of
the Lease.
ARTICLE VIII
Billing and Rates
(32) Rates. Rangeview will establish the tap fees, usage
charges, and service charges, including late payment charges, to
be imposed upon the Water Users for the water services provided
by Pure Cycle hereunder consistent with Section 8.2 of the Lease.
(33) Billing.
1. Pure Cycle shall read the meters and bill the Water
Users for water services provided hereunder, including all tap
fees, usage charges, and service charges, on behalf of Rangeview
and in accordance with the Rules and Regulations. The bills
shall provide that payment shall be made by Water Users to
Rangeview at an address designated by Rangeview. Rangeview shall
have the option, upon sixty (60) days written notice to Pure
Cycle, to assume the obligation of reading meters and billing
hereunder. Pure Cycle shall have the option upon sixty (60) days
written notice to Rangeview to relinquish the obligation of
reading meters and billing hereunder. In either case, Pure Cycle
shall deliver to Rangeview the records necessary to enable
Rangeview to perform such services. Pure Cycle shall thereafter
continue to perform all obligations hereunder except those
pertaining to billing. If Rangeview's costs are significantly
impacted by the transfer of billing responsibilities, the amounts
paid to Pure Cycle under this Agreement shall be subject to
renegotiation under Section 8.3.
<PAGE>
2. Rangeview shall be responsible for collection efforts
on delinquent accounts. To the extent necessary to enable
Rangeview to determine royalties due under the Lease, Pure Cycle
shall code the bills in a manner which will enable Rangeview to
distinguish which bills are for recharged water and of such bills
which are to Title 32 water districts or similar municipal
entities supplying water for public use ("Public Entities").
After deducting the amount required to be paid or accrued to pay
the royalties required for Non-Export Water under the Lease,
Rangeview shall pay Pure Cycle on or before the 15th day of each
month ninety-five percent (95%) of all remaining amounts
collected by Rangeview from Water Users in the previous month.
Such payment will be accompanied by a report from Rangeview
specifying the amount received by Rangeview from Public Entities
for recharged water and the amount received by Rangeview from
other Water Users in the previous month. Once the royalty
obligation set forth in Section 7.3(b) of the Lease becomes
applicable, Pure Cycle shall provide Rangeview with a report on
or before the 10th day of each month specifying those costs and
expenses of Pure Cycle for the preceding month which are
components of Net Profits (as that term is defined in the Lease)
in order to enable Rangeview to determine the royalties payable
under the Lease and the amount payable to Pure Cycle for the
previous month.
(34) Renegotiation. The parties acknowledge that due to the
fact that the Lowry Range has not yet been developed and Water
Users and the Water System do not yet exist, the operating costs
of Rangeview and Pure Cycle with respect to the water service to
be provided hereunder are unknown. Therefore, notwithstanding
the provisions of Section 8.2, if the five percent (5%) of
revenues retained by Rangeview are insufficient to cover
Rangeview's costs relating to the provision of water service with
respect to Non-Export Water, including, without limitation, the
proportionate share of Rangeview's reasonable general, legal,
administrative, engineering, regulatory compliance, and long-term
planning costs attributable to provision of water service with
respect to Non-Export Water and Rangeview's reserve requirements
pursuant to Section 8.9 of the Lease, Pure Cycle and Rangeview
shall negotiate an amendment to Section 8.2 in good faith which
provides Rangeview with sufficient revenues from this Agreement
to cover its costs relating to the provision of water service
with respect to Non-Export Water. During any period of
renegotiation, each party shall continue to perform its
obligations under this Agreement. Disputes as to an appropriate
amendment to provide Rangeview with sufficient revenues under
this Section will be settled by arbitration pursuant to
Section 15.16 of this Agreement.
<PAGE>
(35) Reserves.
1. Rangeview shall utilize the five percent (5%) of
revenues retained by it pursuant to Section 8.2 and, if
applicable, the five percent (5%) of revenues retained by it
pursuant to Section 2.2 from the East Cherry Creek Agreement,
(i) to pay proper and necessary expenses related to the functions
of Rangeview, (ii) to build and maintain the reserve required by
Section 8.9 of the Lease (which reserve is equal to thirty-three
percent (33%) of the Operating Expenses budgeted by Rangeview and
Pure Cycle for the then current calendar year), (iii) to
establish a fund for Rangeview's budget for the following
calendar year, and (iv) to increase the reserve fund described in
(ii) above to an amount equal to fifty (50%) of the Operating
Expenses budgeted by Rangeview and Pure Cycle for the then
current year. The reserve fund shall be continuously maintained
and may be utilized by Rangeview solely for paying lawful
obligations relating to the provision of Non-Export Water to
Water Users as required by Section 8.1 of the Lease.
2. Pure Cycle agrees that if and to the extent at any time
monies are not available to Rangeview to fund the reserve which
Rangeview is required to maintain pursuant to Section 8.9 of the
Lease or if monies in such reserve are withdrawn (for a purpose
permitted by Section 8.4(a) above and by Section 8.9 of the
Lease) such that the amount of the reserve drops below the amount
which Rangeview is required to maintain pursuant to the Lease and
such reserve cannot reasonably be expected to be reestablished
from anticipated income to Rangeview within one year, then within
thirty (30) days of receipt of notice from Rangeview of such
fact, Pure Cycle shall deliver funds to Rangeview sufficient to
replenish the reserve fund to the level required pursuant to the
Lease. Notwithstanding the fact that the reserve can reasonably
be expected to be reestablished within one year, Pure Cycle
agrees to deliver funds to Rangeview sufficient to replenish the
reserve fund to the level required pursuant to the Lease at the
time this Agreement terminates. If Pure Cycle has given notice
to Rangeview pursuant to Section 14.5 of Pure Cycle's election to
terminate this Agreement, any use by Rangeview of the reserve
fund in a manner which would cause Pure Cycle to be required to
replenish the fund pursuant to the foregoing sentence because the
termination date of this Agreement will occur sooner than the
date on which the reserves are reasonably expected to be
reestablished shall require the prior written consent of Pure
Cycle, which consent shall not be withheld to the extent it is
necessary to make such expenditure at that time.
3. Any dispute as to the necessity of an expenditure or
whether the reserve fund can reasonably be expected to be
reestablished from anticipated income within one year shall be
submitted to arbitration pursuant to Section 15.16 of this
Agreement.
<PAGE>
(36) Reports and Audits.
1. Within twenty-five (25) days after the end of each
calendar year, until such time as Rangeview notifies Pure Cycle
that production of Export Water and/or Non-Export Water has
reached 500 acre feet in any calendar year, and thereafter on or
before the twenty-fifth (25th) day following the end of each
calendar quarter during the term of this Agreement, Pure Cycle
shall deliver a report to Rangeview which specifies the quantity
of Non-Export Water (including any recharged or stored water
pursuant to Section 6.2(a) of the Lease) delivered by Pure Cycle,
the amount of Gross Revenues or, if applicable, Retail Sales
Price relating to the sale or other disposition of Non-Export
Water, and, if applicable, the costs and expenses of Pure Cycle
for such period which are components of Net Profits and such
other information as may be necessary in order to enable
Rangeview to comply with its reporting obligations to the Land
Board regarding the accuracy of royalties paid under the Lease.
2. Pure Cycle shall prepare and keep full, complete, and
proper books, records and accounts of all Non-Export Water
(including any recharged or stored water pursuant to
Section 6.2(a) of the Lease) sales or dispositions and, if
applicable, expenses of Pure Cycle included in the calculation of
Net Profits and shall document such transactions as may be
required by law. Said books, records, and accounts of Pure Cycle
shall be open at all reasonable times, upon three (3) days prior
written notice, to the inspection of Rangeview and its
representatives, and upon ten (10) days prior written notice, to
the inspection of the Land Board and its representatives, who
may, at Rangeview's or the Land Board's expense, as applicable,
copy or extract all or a portion of said books, records, and
accounts for a period of five (5) years after the date such
books, records and accounts are made. Rangeview or the Land
Board may, upon no less than fourteen (14) days' prior written
notice to Pure Cycle, cause a partial or complete audit to be
made at Rangeview's or the Land Board's expense, as applicable,
by an auditor selected by Rangeview or the Land Board, as
applicable, of the entire records and operations of Pure Cycle
for a five (5) year period preceding the date of the audit
relating to the Lowry Range and Non-Export Water use pursuant to
this Agreement. Within fourteen (14) days following receipt of
such a notice, Pure Cycle shall make available to the auditor the
books and records the auditor reasonably deems necessary or
desirable for the purpose of making the audit. If the results of
the audit reveal a deficiency in the amounts paid by Rangeview to
the Land Board under the Lease as a result of inaccurate reports
provided by Pure Cycle to Rangeview, then Pure Cycle shall refund
the revenues it received from Rangeview under Section 8.2 which
should have been paid to the Land Board together with interest
thereon at the rate of two percent (2%) per month from the date
or dates such amounts should have been paid to the Land Board.
If such inaccuracies resulted in a deficiency to the Land Board
in excess of two percent (2%) of the royalties previously
computed by Rangeview for the period covered by the audit, then
Pure Cycle shall also pay the actual cost of the audit.
<PAGE>
3. Rangeview shall prepare and keep full, complete, and
proper books, records and accounts of all collections with
respect to Non-Export Water (including any recharged or stored
water pursuant to Section 6.2(a) of the Lease) sales or
dispositions and, if applicable, expenses of Rangeview included
in the calculation of Net Profits and shall document such
transactions as may be required by law. Said books, records, and
accounts of Rangeview shall be open at all reasonable times to
the inspection of Pure Cycle and its representatives who may
also, at Pure Cycle's expense, audit, copy or extract all or a
portion of said books, records, and accounts for a period of five
(5) years after the date such books, records and accounts are
made. Pure Cycle may, upon fourteen (14) days' prior written
notice to Rangeview, cause a partial or complete audit to be made
at Pure Cycle's expense, by an auditor selected by Pure Cycle, of
the entire records and operations of Rangeview relating to the
Lowry Range and Non-Export Water collections and expenses
pursuant to this Agreement. Within fourteen (14) days following
receipt of such a notice, Rangeview shall make available to the
auditor the books and records the auditor deems necessary or
desirable for the purpose of making the audit. Any deficiency in
the payment of amounts due Pure Cycle pursuant to Section 8.2
determined by such audit shall be immediately due and payable by
Rangeview together with interest thereon at the rate of two
percent (2%) per month from the date or dates such amounts should
have been paid. If such deficiency is in excess of two percent
(2%) of the amounts previously computed by Rangeview for the
period covered by the audit, then Rangeview shall pay the actual
cost of the audit, at the time the deficiency is paid.
ARTICLE IX
Management of Non-Export Water
(37) Use of Non-Export Water. All use of Non-Export Water
by Pure Cycle hereunder, including any re-use or successive use,
shall be done in a commercially reasonable manner consistent with
prudent water provider practice in Colorado in accordance with
the Lease and the decrees adjudicating such water.
(38) Insufficient Non-Export Water. To the extent that Non-
Export Water is insufficient to provide water service to Water
Users, Rangeview is obligated under the Lease to locate
additional sources of water for Water Users. Pure Cycle agrees
to locate such additional sources of water for Rangeview. The
parties acknowledge that if Rangeview acquires such additional
water, it shall not be subject to the provisions of the Lease
except to the extent required by the Lease. In recognition of
the fact that it will be more efficient and economical to have
only one service provider and to limit the number of parties
jointly using and expanding the Water System, Rangeview agrees
that if it acquires such additional water, it shall give Pure
Cycle the first opportunity to negotiate a service provider
agreement with respect to any additional water. To the extent
Pure Cycle desires to be the service provider for such additional
water but the parties are unable to reach an agreement on the
terms of such service provider agreement, the missing terms shall
be settled by arbitration in accordance with Section 15.16. In
establishing such terms, the parties agree that the arbitrator
shall take into consideration prudent water provided practices in
Colorado. The terms of this Agreement may be considered by the
arbitrator in determining what terms would be consistent with
prudent water provider practice in Colorado except to the extent
such terms are influenced or dictated by the terms of the Lease.
Pure Cycle agrees that if Rangeview does not acquire additional
water, Pure Cycle shall permit the Land Board, as required by the
Lease, to jointly use and expand the Water System to the same
extent Pure Cycle would have used and expanded such facilities
consistent with prudent water provider practices in Colorado if
Rangeview had acquired additional water to provide service to
Water Users requesting service after the Non-Export Water is
committed.
ARTICLE X
Rights-of-Way
(39) Master Plan. As set forth in Exhibit D to the Lease, a
master plan of rights-of-way, has been agreed upon with respect
to the Lowry Range, subject to certain rights of the Land Board
to amend the master plan.
<PAGE>
(40) Rights-of-Way. When a right-of-way on or under the
Lowry Range is reasonably necessary to enable Pure Cycle to
perform the services contemplated by this Agreement, Pure Cycle
shall notify Rangeview. Rangeview shall file a request for the
right-of-way with the Land Board in accordance with the Lease.
Upon grant of a right-of-way by the Land Board, Rangeview shall
promptly notify Pure Cycle and, to the extent necessary to enable
Pure Cycle to perform its services hereunder, Rangeview shall
grant a license to Pure Cycle to use the right-of-way granted by
the Land Board. Such license shall be in the form of the license
attached to the Lease as Exhibit G.
(41) Fees for Rights-of-Way. Pure Cycle shall pay the costs
(including, if applicable, legal and engineering fees) associated
with obtaining rights-of-way. Pure Cycle acknowledges that
pursuant to the Lease, the Land Board shall receive Fifty Dollars
($50.00) per acre of the Lowry Range utilized as a right-of-way.
The Fifty Dollars ($50.00) is to be increased every five years
proportionately to the five-year increase in the Index (as that
term is defined in the Lease).
(42) Condemnation of Land Not Owned by the Land Board. Upon
Pure Cycle's request, Rangeview agrees to use its governmental
powers of condemnation if condemnation is reasonably necessary to
enable Pure Cycle to perform the services contemplated by this
Agreement. Rangeview agrees to grant Pure Cycle a right-of-way
in such condemned property substantially in the form attached
hereto as Exhibit A. The fee for such right-of-way shall be
based on the fair market value of the right-of-way at the time of
the grant assuming this Agreement will expire at the end of the
term set forth in Section 14.2. Pure Cycle shall be responsible
for the costs associated with Rangeview's condemnation of such
land. Nothing herein shall grant power to condemn land owned by
the Land Board or to interfere with the Land Board's rights under
the Lease.
ARTICLE XI
Indemnification
(43) General. Pure Cycle agrees that it shall jointly and
severally with Rangeview indemnify and hold harmless the Land
Board against and from all liabilities, claims and demands,
settlement or litigation expenses and related attorneys' fees
(hereafter "Indemnified Items") for personal injury or property
damage arising out of, or caused by, any act or omission of
Rangeview, Pure Cycle, their contractors, agents or employees.
(44) Liens. Except with respect to liens or encumbrances
expressly permitted under the Lease, Pure Cycle agrees that it
shall jointly and severally with Rangeview indemnify and hold the
Land Board harmless from and against all Indemnified Items
relating to liens or claims of right to enforce liens arising
from actions of Rangeview or Pure Cycle, its contractors and
agents.
<PAGE>
(45) Mutual Indemnity. As between Pure Cycle and Rangeview,
each party shall indemnify and hold harmless the other, to the
extent permitted by law, against and from all Indemnified Items
(i) for personal injury or property damage arising out of, or
caused by, any act or omission of such party, its contractors,
agents or employees or (ii) relating to liens or claims of right
to enforce liens arising from actions of such party, its
contractors and agents. The party whose actions caused such
liens to arise shall promptly cause any such lien to be removed
notwithstanding the fact that such party may believe that there
is a valid defense to any such claim. Such party shall retain
the right to pursue any claims against the person filing the lien
after any such lien is removed.
ARTICLE XII
Financing
(46) Review by Land Board. Pursuant to Section 9.1(c) the
Lease, Pure Cycle agrees to provide the Land Board with courtesy
copies of any construction or financing contracts in excess of
Five Hundred Thousand Dollars ($500,000) entered into by Pure
Cycle related to the provision of Non-Export Water to Water Users
(including contracts for the disposal of effluent, sewage or
sewerage) ten (10) days prior to the execution of any such
contracts (drafts being acceptable if finals are not yet
available).
ARTICLE XIII
Insurance and Bonds
(47) Insurance. Pure Cycle shall at all times carry
insurance in amounts and with carriers acceptable to Rangeview
for workers' compensation coverage fully covering all persons
engaged in the performance of this Agreement in accordance with
Colorado law, and for public liability insurance covering death
and bodily injury with limits of not less than $1,500,000 for one
person and $5,000,000 for any one accident or disaster, and
property damage coverage with limits of not less than $500,000,
which insurance shall name Rangeview and the Land Board as
additional insureds. Pure Cycle acknowledges that under the
Lease, the Land Board has reserved the right to reasonably
increase the required limits of insurance as the Land Board may
deem appropriate from time to time. Rangeview shall give notice
to Pure Cycle within five (5) days of receipt of a request from
the Land Board to increase the limits of insurance. Pure Cycle
shall promptly obtain such increased coverage and shall furnish
the Land Board with proof of such coverage; provided that, if
Pure Cycle disputes the reasonableness of such request, Pure
Cycle shall have the right to submit such dispute to arbitration
in accordance with Sections 15.2(b) and 15.16 of the Lease.
<PAGE>
(48) Bonds. No operations are to be commenced on the Lowry
Range until Pure Cycle has filed good and sufficient bonds,
consistent with the requirements of 38-26-106 and 36-1-129,
with the Land Board, and listing Rangeview as a coinsured, in an
amount fixed by the Land Board to secure the payment for damages,
losses or expenses caused by Pure Cycle as a result of operations
on or under the Lowry Range. Pure Cycle acknowledges that,
pursuant to the Lease, the Land Board may require that the bonds
be held in full force and in effect for one year after cessation
of the operations for which the bonds were intended. In
addition, Pure Cycle shall comply with the Rules and Regulations
with respect to bonds required by Rangeview.
(49) Bond of Contractors. Bonds provided by contractors for
construction activities to Pure Cycle may list the Land Board and
Rangeview as coinsureds. As long as such bonds otherwise comply
with Section 13.2 above and list the Land Board and Rangeview as
coinsureds, the contractors shall not be required to obtain any
other bonds for the Land Board or Rangeview.
ARTICLE XIV
Term, Default and Termination
(50) Effective Date. Rangeview's rights under the Lease are
subject to entry of a final non-appealable order in the Denver
Lawsuit. The parties to the Lawsuit have reached a settlement
agreement, to which the Lease is attached as Exhibit 1 (the
"Settlement Agreement"). This Agreement shall be binding on the
date that it is fully executed and dulivered by both parties
hereto, subject only as a condition subsequent to the occurrence
of the Effective Date (as that term is defined in the Settlement
Agreement). If the Settlement Agreement is terminated, this
Agreement shall be null and void ab initio and shall have no
force and effect.
(51) Term. This Agreement shall commence on the Effective
Date and, unless sooner terminated pursuant to this Article,
shall expire at 12:00 noon on May 1, 2081.
(52) Default and Termination.
1. The following events shall constitute events of default
under this Agreement:
a. The filing by a party of a petition in bankruptcy,
insolvency or for reorganization under the bankruptcy laws of he
United States or under any insolvency act of any state, the
dissolution of a party, or a party making an assignment for the
benefit of creditors;
b. The taking of the Lease or the Non-Export Water or any
part thereof by execution or other process of law or the
subjection of the Lease or the Non-Export Water or any part
thereof to attachment, which attachment is not discharged or
disposed of within sixty (60) days after the levy thereof;
c. The institution against a party of involuntary
proceedings under any such bankruptcy law or insolvency act or
for dissolution, or the appointment of a receiver or trustee for
all or substantially all of the property of a party, which
proceeding is not dismissed or receivership or trusteeship is not
vacated within sixty (60) days after such institution or
appointment; or
d. The material default in the performance of any material
term, covenant or condition in this Agreement which default shall
continue and not be cured for a period of thirty (30) days after
written notice specifically setting forth the nature of the
default has been given by the non-defaulting party to the
defaulting party, or if more than thirty (30) days is reasonably
required to cure such matter complained of, if the defaulting
party shall fail to commence to correct the same within said
thirty (30) day period and shall thereafter fail to prosecute the
same to completion with reasonable diligence.
2. If an event of default shall occur, then the non-
defaulting party may, at its option, without any prejudice to any
other remedies it may have, (i) terminate this Agreement upon
giving written notice of termination to the defaulting or
breaching party, and, if Rangeview is the non-defaulting party,
at its option, exercise its rights under Section 14.4, and/or
(ii) commence an action for specific performance of the
obligations of the defaulting party and/or damages proximately
caused by the default or breach and its costs and reasonable
attorneys' fees (including costs incurred to cure such default
pursuant to Section 14.3(c)).
3. If either party shall act or fail to act in a manner
which would constitute an Event of Default (as that term is
defined in the Lease) under the Lease, immediately, with the
passage of time, with notice, or any of the foregoing, the non-
defaulting party may, at its option, without prejudice to any
other remedies it may have, cure such Event of Default and seek
reimbursement from the defaulting party for any costs and damages
associated therewith or offset such costs and damages from any
amounts owed to the defaulting party under this Agreement or
otherwise without waiting for the thirty-day period provided for
in Section 14(a)(iv) to run.
(53) Declaration of Forfeiture. If an event of default
occurs and Rangeview terminates this Agreement or in the event of
a termination pursuant to Section 14.5, Rangeview shall have the
right, in connection with such termination, to enter onto the
Lowry Range and any part thereof (subject to any existing
licenses related to delivery of Export Water), and to expel Pure
Cycle from the premises and those claiming through or under Pure
Cycle pursuant to this Agreement, and remove the effects of both
or either, without being deemed guilty of any manner of trespass
and without prejudice to any other remedies. In the event of
such termination, Pure Cycle shall surrender and peacefully
deliver to Rangeview the above described land and the Non-Export
Water, and such land as was in Pure Cycle's possession or control
shall be returned to Rangeview in good condition (subject to any
existing licenses related to the delivery of Export Water), and
Rangeview shall be entitled to the return of all Non-Export
Water, plus any interest of Pure Cycle in all infrastructure
built to divert or withdraw and deliver the Non-Export Water and
any interest in shared facilities for use with the Non-Export
Water, plus the revenue stream associated with such Non-Export
Water and the East Cherry Creek Agreement. Subject to the
following sentence, title to such assets will be conveyed to
Rangeview free and clear of all security interests, liens and
encumbrances existing at the time of delivery to Rangeview.
Notwithstanding the foregoing, Pure Cycle shall have the right to
encumber the revenues it receives pursuant to this Agreement in
connection with the construction and development of the Water
System. Upon such termination, if Pure Cycle shall remain in
possession of any part of the Lowry Range (subject to any
existing licenses related to delivery of Export Water) or Non-
Export Water, Pure Cycle shall be guilty of an unlawful detainer
and shall be subject to eviction or removal, forcibly or
otherwise, to the extent provided by law.
<PAGE>
(54) Pure Cycle Right of Termination. Pure Cycle may
terminate this Agreement at any time without cause upon giving
one year's prior written notice to Rangeview. During the one-
year period, Pure Cycle shall continue to discharge all of its
obligations under this Agreement and shall be entitled to the
benefits of this Agreement, unless Rangeview and the Land Board,
at their option, require Pure Cycle to discontinue providing
services hereunder prior to the expiration of the one-year notice
period.
(55) Termination of Lease. If Rangeview's rights to the
Non-Export Water are terminated under the Lease, this Agreement
shall terminate.
ARTICLE XV
General Provisions
(56) Assignment. Pure Cycle may assign its interest in this
Agreement, but only upon terms expressly approved in writing by
Rangeview, which approval may not be unreasonably withheld.
Rangeview shall not be deemed to be unreasonable in withholding
consent if it is unable to obtain the consent required from the
Land Board pursuant to Section 9.1(a) of the Lease for such
assignment. Any attempted assignment in contravention of this
Section shall be null and void. Notwithstanding the foregoing,
Pure Cycle may contract with third parties to perform portions of
its obligations under this Agreement and such action on Pure
Cycle's part shall not be deemed an assignment of its interest in
this Agreement.
(57) Third Party Beneficiaries. It is not the intent of the
parties, nor shall it be the effect of this Agreement, to vest
rights of any nature or form in individuals or entities not
executing this Agreement as a party except to the extent that
this Agreement specifically contemplates vesting rights in the
Land Board.
(58) Notice. All notices required by this Agreement shall
be in writing and shall be delivered to the person to whom the
notice is directed, in person, by courier service or by United
States mail as a certified item, return receipt requested,
addressed to the address stated below. Notices delivered in
person or by courier service shall be deemed given when delivered
to the person to whom the notice is directed. Notices delivered
by mail shall be deemed given on the date of delivery as
indicated on the return receipt. The parties may change the
stated address by giving ten (10) days' written notice of such
change pursuant to this Section.
If to Rangeview:
Rangeview Metropolitan District
141 Union Boulevard, Suite 150
Lakewood, Colorado 80228
Attention: President
With copies to the Land Board when required by
this Agreement:
Board of Land Commissioners
620 Centennial Building
1313 Sherman Street
Denver, Colorado 80203
Attention: President
<PAGE>
and
Office of the Attorney General
1525 Sherman Street, Fifth Floor
Denver, Colorado 80203
Attention: State Land Board Attorney
If to Pure Cycle:
Pure Cycle Corporation
5650 York Street
Commerce City, Colorado 80022
Attention: President
(59) Construction. Where required for proper
interpretation, words in the singular shall include the plural,
and the masculine gender shall include the neuter and the
feminine, and vice versa, as is appropriate. The article and
section headings are for convenience and are not a substantive
portion of the Agreement. The Agreement shall be construed as if
it were equally drafted in all aspects by all parties.
(60) Entire Agreement. This Agreement, including the items
referenced herein or to be attached in accordance with the
provisions of this Agreement, constitutes the entire agreement
among the parties pertaining to the subject matter of this
Agreement and supersedes all prior and contemporaneous agreements
and understandings of the parties as to the subject matter of
this Agreement. No representation, warranty, covenant, agreement
or condition not expressed in this Agreement shall be binding
upon the parties or shall change or restrict the provisions of
this Agreement.
(61) Authority. Each of the parties represents and warrants
that it has all requisite power, corporate and otherwise, to
execute, deliver and perform its obligations pursuant to this
Agreement, that the execution, delivery and performance of this
Agreement and the documents to be executed and delivered pursuant
to this Agreement have been duly authorized by it, and that upon
execution and delivery, this Agreement and all documents to be
executed and delivered pursuant to this Agreement will constitute
its legal, valid and binding obligation, enforceable against it
in accordance with their terms.
(62) Copies. Numerous copies of this Agreement have been
executed by the parties. Each such executed copy shall have the
full force and effect of an original, executed Agreement.
(63) Counterparts. This Agreement may be executed in one or
more counterparts, all of which together shall constitute one and
the same instrument.
<PAGE>
(64) Amendment. This Agreement shall not be amended except
by a writing executed by both parties and, to the extent required
by Section 9.1(a) of the Lease, no such amendment shall be made
without the written consent of the Land Board, which consent
shall not be unreasonably withheld.
(65) Compliance with Law. Rangeview and Pure Cycle covenant
and agree that during the continuance of this Agreement, they
shall comply fully with all provisions, terms, and conditions of
all laws whether state or federal, and orders issued thereunder,
which may be in effect during the continuance hereof, which in
any manner affect their operations and the Lowry Range and Non-
Export Water.
(66) Binding Effect. The benefits and terms and obligations
of this Agreement shall extend to and be binding upon the
successors or permitted assigns of the respective parties hereto.
(67) Severability. If any clause or provision of this
Agreement is illegal, invalid or unenforceable under present or
future laws effective during the term of this Agreement, then,
and in that event, it is the intention of the parties hereto that
the remainder of this Agreement shall not be affected thereby.
It is also agreed that in lieu of each clause or provision of
this Agreement that is illegal, invalid or unenforceable, there
shall be added as a part of this Agreement a clause or provision
as similar in terms to such illegal, invalid or unenforceable
clause or provision as may be possible and be legal, valid and
enforceable.
(68) Duty of Good Faith and Fair Dealing; Regular
Consultation. The parties acknowledge and agree that each party
has a duty of good faith and fair dealing in its performance of
this Agreement. Pure Cycle will advise Rangeview of its
activities no less than annually until such time as Rangeview
notifies Pure Cycle that production of Export Water and/or Non-
Export Water has reached five hundred (500) acre feet in any
calendar year and thereafter, quarterly during the term of this
Agreement and will respond to reasonable requests of Rangeview
for additional information on Pure Cycle's activities affecting
the Lowry Range.
(69) Further Assurance. Each of the parties hereto, at any
time and from time to time, will execute and deliver such further
instruments and take such further action as may reasonably be
requested by the other party hereto, in order to cure any defects
in the execution and delivery of, or to comply with or accomplish
the covenants and agreements contained in this Agreement and/or
any other agreements or documents related thereto.
(70) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado
and applicable federal law.
<PAGE>
(71) Arbitration. Any controversy or claim arising out of
or relating to the computation of amounts due pursuant to
Section 8.2 under this Agreement and all other controversies or
claims which the parties have expressly agreed herein shall be
submitted to arbitration or which relate to matters which the
parties to the Lease have agreed shall be submitted to
arbitration, shall be settled by arbitration administered by the
American Arbitration Association in accordance with its
commercial rules, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. Rangeview and Pure Cycle agree that the Land Board may
participate directly in any arbitration which affects the Land
Board's rights and/or obligations with respect to the Non-Export
Water; provided such Land Board agrees to be bound by the
arbitration award to the same extent as Rangeview and Pure Cycle.
(72) Litigation and Attorneys' Fees. Except as provided in
Section 15.16 above, in the event of claims, disputes or other
disagreements between the parties which the parties are not able
to resolve amicably, either party may bring suit in a court of
competent jurisdiction seeking resolution of the matter. The
prevailing party in any arbitration or suit shall be entitled to
recover its reasonable attorneys' fees and costs from the other
party.
(73) Force Majeure. Should either party be unable to
perform any obligation required of it under this Agreement, other
than the payment of money, because of any cause beyond its
control (including, but not limited to war, insurrection, riot,
civil commotion, shortages, strikes, lockout, fire, earthquake,
calamity, windstorm, flood, material shortages, failure of any
suppliers, freight handlers, transportation vendors or like
activities, or any other force majeure), then such party's
performance of any such obligation shall be suspended for such
period as the party is unable to perform such obligation.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Service Agreement on the date first written above.
ATTEST: RANGEVIEW METROPOLITAN
DISTRICT, ACTING BY AND THROUGH
ITS WATER ACTIVITY ENTERPRISE
By: By:
Title: Title:
ATTEST: PURE CYCLE CORPORATION
By: By:
Title: Title:
EXHIBIT A TO DOCUMENT 10.2
==========================
Exhibit A
RIGHT-OF-WAY , BOOK , PAGE
THIS INDENTURE is made this day of
, 19 , between Rangeview Metropolitan District, acting by and
through its water activity enterprise ("Rangeview"), whose
address is , and
Pure Cycle Corporation, a Delaware corporation ("Pure Cycle"),
whose address is 5650 York Street, Commerce City, Colorado
80022.
WHEREAS, Rangeview and Pure Cycle entered into a
Service Agreement effective _________________, 1996, pursuant to
which Pure Cycle is to construct, operate and maintain a water
system on Rangeview's behalf (the "Service Agreement");
<PAGE>
WHEREAS, pursuant to the Service Agreement, Pure Cycle has
applied to Rangeview for a right-of-way over, upon, under and
across the surface of certain portions of land owned by Rangeview
as hereinafter described, for the purpose of constructing,
reconstructing, operating, repairing, removing and maintaining a
; and
WHEREAS, Rangeview has agreed to grant such right-of-
way for the purpose aforesaid and none other, upon the terms and
conditions set forth herein.
NOW, THEREFORE, Rangeview, in consideration of the
premises and the sum of Dollard ($
), paid to Rangeview, the receipt of which is hereby
acknowledged, and in further consideration of the terms and
conditions of the Service Agreement, does grant and convey to
Pure Cycle, its successors and assigns, a non-exclusive right-of-
way for the purpose of constructing, reconstructing, operating,
and maintaining (describe scope and purpose)
, upon, over, under and across the surface of those lands
described as follows: [insert legal description here], (the
"Premises").
Subject to the following conditions:
1. This grant is made with the understanding that Pure Cycle
must begin construction of these facilities described above
within five years from the date hereof, failing which this grant
may be subject to cancellation of the unconstructed portions at
the option of Rangeview.
2. In the event Rangeview should at any time desire to occupy
or use or permit the occupancy or use of the Premises, which are
subject to the right-of-way herein granted, or any portions
thereof, for any purpose with which the aforesaid facilities
would interfere, then Rangeview may require Pure Cycle to
relocate, raise, lower, disconnect, or otherwise adjust the
facilities described above at any location or locations where
said facilities pass over and across the Premises after first, in
each case, receiving not less than 180 days prior written notice
from Rangeview. In such event, Pure Cycle shall be furnished a
similar right-of-way to relocate, raise, lower, disconnect or
otherwise adjust said facilities. The expense of said
relocation, movement, or rebuilding shall be paid by Rangeview
according to the Service Agreement.
3. This grant of right-of-way is made subject to any and all
leases, easements, rights-of-way and other interests heretofore
legally granted and now in full force and effect, if any there
be.
4. Rangeview reserves the right to cultivate, use, develop,
occupy, sell, lease or otherwise dispose of the Premises and to
use the Premises for all purposes, including the issuance of
additional rights to third parties, except as necessarily limited
by the facilities described above; provided that Pure Cycle's
rights to the Premises are not unreasonably impaired by the
exercise of this right by Rangeview.
<PAGE>
5. Rangeview reserves the right to require, at Pure Cycle's
cost, the burial of any power lines and, to the extent
reasonable, other facilities when, in Rangeview's discretion,
development of the adjoining property or other circumstances
warrant burial. Rangeview shall be given not less than 180 days
written notice of such requirement.
6. This right-of-way is made for the sole and only purpose as
herein set forth and no other and does not give Pure Cycle
exclusive possession of any part of the land above described. If
Pure Cycle or its successors, assigns or licensees shall at any
time use or attempt to use the same for any other purpose
whatsoever, then this right-of-way shall become void and of no
effect, and any and all such rights and privileges herein granted
shall revert to Rangeview, subject to any right to cure which may
exist under the Service Agreement.
7. Pure Cycle shall have the right to trim trees and shrubbery
upon this right-of-way only if such trees and shrubbery should
interfere with or endanger the proper operation, construction and
maintenance of said facilities.
8. Pure Cycle shall not transfer or assign this right-of-way
except as permitted by the Service Agreement.
9. Pure Cycle shall provide drainage and erosion control
structures, fences, gates, cattleguards, or any other facilities
reasonably necessary to protect the Premises.
10. Pure Cycle shall not unreasonably fence or obstruct free and
open access to and travel upon, over and across the Premises,
without written authorization of Rangeview.
11. Pure Cycle shall have such rights of ingress and egress as
may be necessary for the construction, reconstruction, operation,
maintenance, and removal of said facilities, but shall not leave
open, or permit to be left open, any fences, bars or gates not
owned by Pure Cycle. All such fences, bars or gates which may be
damaged or disturbed in any way shall be fully restored by Pure
Cycle.
12. In the event that the facilities for which this right-of-way
is granted are to be materially enlarged, replaced, relocated, or
added to in the future, Pure Cycle shall advise Rangeview of such
change and furnish surveys, plats, and a description of the
proposed change to Rangeview. Any such changes and the
consideration required therefor, shall be controlled by the
Service Agreement.
13. The rights herein granted shall expire when the Service
Agreement expires, or otherwise terminates, but no later than
May 1, 2081. If the facilities are abandoned or discontinued,
all rights hereunder shall automatically terminate. Normal non-
use of the approved facility or facilities constructed that is
consistent with the prudent operation of a municipal water
delivery system shall not constitute abandonment of the facility.
<PAGE>
14. Except as permitted by the Service Agreement, Pure Cycle may
not remove its facilities or related improvements without the
permission of Rangeview.
15. If this right-of-way is terminated for any cause whatsoever,
Pure Cycle shall restore the Premises, as near as reasonably
practicable, to their original condition, if requested to do so
by Rangeview.
16. Pure Cycle agrees to assume all liability arising from the
exercise of the right-of-way herein granted in accordance with
the terms of the Service Agreement.
17. Upon completion of construction or reconstruction of the
herein described facility, Pure Cycle agrees to restore the
Premises surrounding the facility, as near as reasonably
practicable, to its original condition, unless otherwise agreed
to in writing by Rangeview.
18. Pure Cycle shall be responsible for and shall pay all taxes,
fees, assessments and other charges, if any, in connection with
its work, improvements, materials, or facilities to be utilized
in accomplishing its activities pursuant to this grant of right-
of-way.
19. This grant shall extend to and be binding upon the
successors, licensees and assigns of the parties hereto, and the
use of it shall be subject in all respect to the Service
Agreement. Any conflict between this grant and the Service
Agreement shall be governed by the terms of the Service
Agreement.
IN WITNESS WHEREOF, Rangeview Metropolitan District,
acting by and through its water activity enterprise, has executed
this grant, and has caused its seal to be hereunto affixed; and
Pure Cycle Corporation has accepted this grant and affixed its
corporate seal hereto, the day and year first above written.
RANGEVIEW METROPOLITAN DISTRICT,
acting by and through its water
activity enterprise
By:
Title:
PURE CYCLE CORPORATION
By:
Title:
<PAGE>
STATE OF COLORADO )
) SS.
COUNTY OF )
The foregoing grant of right-of-way was acknowledged
before me this day of , 199_, by
, as of Rangeview Metropolitan District,
acting by and through its water activity enterprise.
WITNESS my hand and official seal.
My commission expires: .
Notary Public
[SEAL]
STATE OF COLORADO )
) SS.
COUNTY OF )
The foregoing grant of right-of-way was acknowledged
before me this day of , 199_, by
, as of Pure Cycle Corporation, a Delaware
corporation.
WITNESS my hand and official seal.
My commission expires: .
Notary Public
[SEAL]
<PAGE>
=============
DOCUMENT 10.3
=============
AGREEMENT FOR SALE OF EXPORT WATER
THIS AGREEMENT FOR SALE OF EXPORT WATER ("Agreement")
is made and entered into as of the 11th day of April, 1996, by
and among RANGEVIEW METROPOLITAN DISTRICT, a quasi-municipal
corporation and political subdivision of the State of Colorado,
acting by and through its water activity enterprise
("Rangeview"), and PURE CYCLE CORPORATION, a Delaware corporation
("Pure Cycle").
RECITALS
(74) On November 14, 1990, Rangeview and Inco Securities
Corporation ("Inco") entered into an Option Agreement for Sale
and Operation of Production Right which was subsequently amended
by Amendment Agreement No. 1 on February 12, 1991 and by a
Rangeview board resolution in December 1993 (collectively, the
"Option Agreement").
(75) Pursuant to the Option Agreement, Inco had the right to
purchase certain water rights which were leased to Rangeview
pursuant to a lease entered into between OAR Incorporated, a
Colorado corporation ("OAR"), and the State of Colorado, acting
by and through the State Board of Land Commissioners (the "Land
Board"), denominated Lease Number S-37280, dated April 26, 1982
and amended at various subsequent times (the "Original Lease").
OAR transferred and assigned its rights and obligations under the
Original Lease to Rangeview.
(76) Inco has assigned its rights and obligations under the
Option Agreement to Pure Cycle.
(77) On October 28, 1994, a lawsuit entitled Apex Investment
Fund II, L.P., et al. v. Colorado State Board of Land
Commissioners, et al., Case No. 95CV5405, was filed in the
District Court of the City and County of Denver (the "Lawsuit")
to resolve certain rights under the Original Lease.
(78) As part of the settlement of the Lawsuit, the Land
Board and Rangeview have entered into an Amended and Restated
Lease (the "Lease") which supersedes the Original Lease. A copy
of this Agreement is attached to the Lease as Exhibit C.
As part of the settlement of the Lawsuit, Pure Cycle,
Inco and Rangeview have agreed to supersede the Option Agreement
with this Agreement.
AGREEMENT
In consideration of the mutual promises, covenants,
representations and warranties set forth herein, the existence
and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
35.
Certain Definitions
(1) CFC Agreement. "CFC Agreement" shall mean the Amended
and Restated Option and Purchase Agreement among the Land Board,
H.F. Riebesell, Jr. ("Riebesell"), Pure Cycle and Inco, attached
to the Settlement Agreement (as defined below) as Exhibit 6.
(2) Comprehensive Amendment Agreement. "Comprehensive
Amendment Agreement" shall mean the Comprehensive Amendment
Agreement No. 1 among Pure Cycle, Inco, the Land Board and
others, attached to the Settlement Agreement as Exhibit 8.
(3) Effective Date. This Agreement shall be binding on the
date that it is fully executed and delivered by both parties
hereto subject only, as a condition subsequent, to the occurrence
of the Effective Date (as that term is defined in the Settlement
Agreement).
(4) Export Water. "Export Water" shall have the meaning
set forth in the Lease.
(5) Export Water Purchaser. "Export Water Purchaser" shall
have the meaning set forth in the Lease.
(6) Lowry Range. "Lowry Range" shall mean have the meaning
set forth in the Lease.
(7) Memorandum. "Memorandum" shall mean the Memorandum of
Agreement among Pure Cycle, OAR and Riebesell which is attached
to the CFC Agreement as Exhibit C and to the OAR Agreement (as
defined below) as Exhibit C.
(8) OAR Agreement. "OAR Agreement" shall mean the Amended
and Restated Option and Purchase Agreement among OAR, Pure Cycle
and Inco attached to the Settlement Agreement as Exhibit 5.
(9) Rangeview Bonds and Notes. "Rangeview Bonds and Notes"
shall mean Rangeview Metropolitan District Water Revenue Bonds,
Series 1988 M, in the principal amount of $17,771,000, Rangeview
Metropolitan District Water Revenue Notes, Series 1987 A-L, in
the principal amount of $5,000,000, and Rangeview Metropolitan
District Water Revenue Notes, Series 1988 A-L, in the principal
amount of $2,142,858.
<PAGE>
(10) Service Agreement. "Service Agreement" shall mean the
agreement attached to the Lease as Exhibit B entitled Service
Agreement pursuant to which Rangeview engages Pure Cycle to
provide water service to Water Users, subject to the terms and
conditions set forth in the Lease.
(11) Settlement Agreement. "Settlement Agreement" shall
mean the settlement agreement for the Lawsuit dated the date
hereof to which the Lease is attached as Exhibit A.
(12) Water Rights. "Water Rights" shall have the meaning
set forth in the Lease.
(13) Water Users. "Water Users" shall have the meaning set
forth in the Lease.
All capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Lease.
36.
Export Water Purchase and Sale
(1) Export Water Purchase and Sale. Subject to the terms
and conditions set forth in this Agreement and subject to rights
of first refusal, if any such rights exist, to the Export Water
(as defined below) which may be held by Arapahoe County or East
Cherry Creek Valley Water and Sanitation District ("ECCV"),
Rangeview hereby agrees to sell, convey, assign, transfer, and
deliver to Pure Cycle, and Pure Cycle hereby agrees to purchase
from Rangeview as of the Effective Date, the right to divert and
sell outside the Lowry Range the use of up to a total gross
volume of 1,165,000 acre feet of Export Water included in the
Water Rights. The Export Water to be conveyed pursuant to this
Agreement shall include all rights afforded to and be subject to
all obligations imposed upon such Export Water under the Lease
and the Deed (as defined in Section 3.2(a)). The parties are
specifically not acknowledging the validity of any rights of
first refusal in the Export Water which may be asserted by
Arapahoe County and ECCV.
(2) Title. Rangeview hereby represents and warrants that
it has the right to sell the Export Water, subject to the terms
of the Lease, and the Export Water is free and clear of all
security interests, liens, pledges, charges and encumbrances
granted by Rangeview.
(3) Purchase Price. In exchange for the Export Water and
the rights granted to Pure Cycle hereunder and under the Service
Agreement, Pure Cycle hereby agrees to convey, assign, transfer
and deliver, as of the Effective Date, the Rangeview Bonds and
Notes to Rangeview for retirement in accordance with the
Settlement Agreement.
<PAGE>
37.
Closing
(1) Closing. The closing hereunder (the "Closing") shall
be held at a mutually agreeable time, date and place which is
coincident with the date the Settlement Agreement is executed.
It shall be a condition precedent to the Closing that the
following documents shall have been executed and delivered by all
parties thereto:
1. the Settlement Agreement;
2. the Lease;
3. the OAR Agreement;
4. the CFC Agreement;
5. the Comprehensive Amendment Agreement; and
6. the Memorandum.
(2) Closing Documents. At the Closing, the following items
(collectively the "Closing Documents") shall be delivered to
Davis, Graham & Stubbs LLP ("DGS"), to be held in trust for
distribution on the Effective Date:
1. This Agreement and the Service Agreement shall be
executed and delivered by both parties.
2. All Rangeview Bonds and Notes not currently being held
by Colorado National Bank ("CNB") pursuant to the Escrow
Agreement among CNB, Inco, OAR, Colorado Water Consultants,
Incorporated ("CWC"), and others dated August 12, 1991 (the
"Escrow Agreement"), shall be delivered by Pure Cycle along with
an assignment of such Bonds and Notes in the form attached hereto
as Exhibit A (the "Bond Assignment").
3. A deed in the form attached hereto as Exhibit B (the
"Deed") executed by the Land Board and Rangeview conveying the
Export Water to Pure Cycle shall be delivered by Rangeview.
4. A title opinion from a law firm reasonably acceptable
to Pure Cycle, substantially in the form attached hereto as
Exhibit C, verifying that Rangeview and the Land Board have good
and marketable title to the Export Water (the "Title Opinion")
shall be delivered by Rangeview.
<PAGE>
5. Three original mortgages in the form attached to the
CWC Agreement as Exhibit E (the "Mortgage") granting a mortgage
in favor of the Land Board shall be executed and delivered by
Pure Cycle.
(3) Delivery.
1. On the Effective Date, DGS shall deliver the Closing
Documents as follows:
a. An executed original of this Agreement and the Service
Agreement shall be delivered to each of Pure Cycle and Rangeview.
delivered to Rangeview.
c. The Title Opinion and the Deed shall be delivered to
Pure Cycle.
d. The Deed and the Mortgage shall be delivered to the
clerk and recorder's office of Arapahoe County and to the
Colorado Department of Natural Resources-State Engineer Division
of Water Resources for recording and the third original Mortgage
shall be filed with the Secretary of State's Office in the
Uniform Commercial Code records.
In addition, DGS shall deliver the documents and
consideration described in Section 3.3 of each of the OAR
Agreement and the CFC Agreement.
<PAGE>
2. If the Settlement Agreement is terminated, DGS shall
return the Bond Assignment to Pure Cycle and the Rangeview Bonds
and Notes delivered by Pure Cycle pursuant to Section 3.2(b) to
Pure Cycle, or, if applicable, to the person who delivered such
bonds and notes to Pure Cycle pursuant to the Settlement
Agreement, and DGS shall destroy all other Closing Documents.
38.
Royalties
As between Rangeview and Pure Cycle, Pure Cycle shall
be responsible for and shall timely pay directly to the Land
Board all royalties payable to the Land Board by the Export Water
Contractor pursuant to the Lease. Notwithstanding the foregoing,
Rangeview may, at its option, pay to the Land Board any royalties
due but not paid by Pure Cycle on the Export Water in order to
prevent a default under the Lease. In such case, Rangeview shall
be entitled to interest on any royalties paid by Rangeview on the
Export Water at the rate of two percent (2%) per month from the
date paid by Rangeview and Rangeview may exercise any other
remedies it may have, including its termination rights under
Section 6.6 of the Lease.
39.
Representations and Warranties
(1) Authority. Each of the parties represents and warrants
that it has all requisite power, corporate and otherwise, to
execute, deliver and perform its obligations pursuant to this
Agreement, that the execution, delivery and performance of this
Agreement and the documents to be executed and delivered pursuant
to this Agreement have been duly authorized by it, and that upon
execution and delivery, this Agreement and all documents to be
executed and delivered pursuant to this Agreement will constitute
its legal, valid and binding obligation, enforceable against it
in accordance with their terms. Except as otherwise described in
this Agreement, the execution, delivery and performance of this
Agreement do not and will not require any further consent of any
person or entity other than those from which the parties have,
prior to the Closing, acquired consents and approvals. Each
party hereto shall provide the other party prior to the Closing
with any corporate, district or other documents reasonably
required to verify this representation.
<PAGE>
(2) Compliance with Other Laws and Agreements. To the best
of its knowledge, Rangeview represents and warrants that the
execution, delivery and performance of this Agreement by
Rangeview (a) is of the type contemplated by law and is within
the authority of Rangeview under existing laws governing
Rangeview; (b) will not violate any provision of law; (c) will
not, with or without the giving of notice or the passage of time,
conflict with or result in any breach of any of the terms or
conditions of, or constitute a default under, the organizational
documents, bylaws, rules and regulations, or other contracts or
obligations of Rangeview; or (d) will not conflict with, violate,
result in a breach of, constitute a default under, result in an
acceleration, termination, cancellation or forfeiture of, or give
rise to a right of power in any third party to declare any of the
foregoing under, any mortgage, lease, agreement, indebtedness, or
other instrument, order, judgment or decree to which Rangeview is
a party or by which Rangeview or its assets are bound. Rangeview
further represents and warrants that the execution, delivery and
performance of this Agreement will not result in the creation of
any security interest, lien, pledge, charge, claim or encumbrance
upon its assets except as expressly set forth herein.
(3) Litigation. To the best of its knowledge and except as
disclosed to Pure Cycle and acknowledged by Pure Cycle's
attorneys, Rangeview represents and warrants that except for the
Lawsuit, there are no outstanding judgments, actions, suits,
proceedings, orders or investigations against it and there is no
litigation, action, suit, proceeding or investigation pending or
threatened, or, to its knowledge, contemplated against or
affecting Rangeview which individually or in the aggregate might
materially and adversely affect the actions contemplated herein,
or which questions the validity of any action taken or to be
taken pursuant to or in connection with the provision of this
Agreement, and Rangeview has no reason to believe any of the
foregoing are threatened or contemplated.
(4) Representations Accurate. Rangeview and Pure Cycle
represent and warrant that all statements, including the
Recitals, contained in this Agreement and in any certificate,
schedule, exhibit, or other instrument given or to be given to
Pure Cycle by Rangeview or to Rangeview by Pure Cycle in or
pursuant to this Agreement are or will be true, accurate and
complete in all material respects, and no certificate, schedule,
exhibit, or other instrument given or to be given to Pure Cycle
by Rangeview or to Rangeview by Pure Cycle pursuant hereto
contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
(5) Brokerage. Each party hereto represents and warrants
to the other party that it has not incurred any obligations or
liabilities, contingent or otherwise, for brokerage or finder's
fees or agent's commissions or other like payment in connection
with this Agreement or the transactions contemplated hereby for
which any party will have any liability.
(6) Review. Rangeview hereby represents and warrants that
it shall give Pure Cycle the opportunity to review all documents
pertinent to this Agreement in its possession prior to the
Closing hereunder.
(7) Quantity of Water. To Rangeview's knowledge, based
upon the decrees, Rangeview hereby represents and warrants that
the amount of water purchased is available for itle Opinion
EXHIBIT A OF DOCUMENT 10.3
==========================
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells,
transfers and assigns unto Rangeview Metropolitan District
$17,771,000 of Rangeview Metropolitan District Water Revenue
Bonds, Series 1988 M, and all rights thereunder and hereunder,
and hereby irrevocably constitutes and appoints
attorney to transfer the within Bond on the books kept for
registration thereof, with full power of substitution in the
premises.
Dated: April ___, 1996 PURE CYCLE CORPORATION,
a Delaware corporation
Insert Social Security number By:
or other Thomas P. Clark, President
identifying number of assignee
NOTE: The signature to
this assignment must
correspond with the name
as it appears on the face
of this Bond in every
particular, without
alteration or any change
whatsoever.
Signature Guaranteed
By:
EXHIBIT B OF DOCUMENT 10.3
=========================
BARGAIN AND SALE DEED
This Bargain and Sale Deed (the "Deed") is dated the
11th day of April, 1996, among the State of Colorado, acting by
and through the State Board of Land Commissioners (the "Land
Board"), whose address is 620 Centennial Building, 1313 Sherman
Street, Denver, Colorado 80203, and Rangeview Metropolitan
District, a quasi-municipal corporation and political subdivision
of the State of Colorado, acting by and through its water
activity enterprise ("Rangeview"), whose address is 141 Union
Boulevard, Suite 150, Lakewood, Colorado 80228 (Rangeview and
Land Board being collectively referred to herein as "Grantors"),
and Pure Cycle Corporation, a Delaware corporation ("Grantee"),
whose address is 5650 York Street, Commerce City, Colorado 80022.
<PAGE>
WITNESSETH, that Rangeview, for and in consideration of delivery
from Pure Cycle to Rangeview of Rangeview Metropolitan District
Water Revenue Bonds, Series 1988M, Rangeview Metropolitan
District Water Revenue Notes, Series 1988A-L, Rangeview
Metropolitan District Water Revenue Notes, Series 1987A-L, and
other good and valuable consideration, the receipt of which is
hereby acknowledged by Rangeview; and the Land Board, for and in
consideration of (a) Rangeview's agreement to obtain and
extinguish all said notes and bonds, (b) other consideration
contained in the Amended and Restated Lease Agreement
No. S-37280, dated April 11, 1996 between Rangeview and the Land
Board, which Lease is recorded with the Arapahoe County Clerk and
Recorder at Book No. _______, Page No. _______ (Reception
No. _________) (the "Lease"), and (c) other good and valuable
consideration, the receipt of which is hereby acknowledged by the
Land Board; do hereby severally grant, bargain, sell, convey,
assign and confirm unto Grantee, its successors and assigns
forever, the Export Water (as that term is defined in the Lease)
which is located on and under that certain real property
consisting of approximately 24,567.21 acres, more or less,
according to U.S. Government survey, in Arapahoe County,
Colorado, more particularly described as follows (the "Lowry
Range"):
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all and 34:
all.
Township 5 South, Range 65 West of
the 6th P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66
West of the 6th P.M.,
Section 36: all
(a street address of the Lowry Range does not exist);
<PAGE>
TOGETHER WITH all rights afforded to the Export Water under the
Lease;
SUBJECT TO the reservations, exceptions, terms, and
conditions, including, without limitation, provisions concerning
royalty payments, quality of water, abandonment, shared use of
transmission lines and facilities, default and termination of
rights to Export Water, set forth in the Lease, which
reservations, exceptions terms and conditions, and the rights of
the Land Board and Rangeview with respect thereto, shall not be
modified or superseded by any provision in this Deed, it being
understood and agreed that the provisions hereof are merely
cumulative of the provisions of the Lease;
FURTHER SUBJECT TO rights of first refusal, if any such
rights exist, to the Export Water which may be held by the County
of Arapahoe, Colorado, or East Cherry Creek Valley Water and
Sanitation District;
AND SUBJECT FURTHER TO the covenants, conditions and
restrictions set forth herein and in the water decrees by which
such water is adjudicated, which decrees shall remain in the name
of the Land Board subject to the provisions of the Lease;
TO HAVE AND TO HOLD the Export Water, and its
appurtenances, unto Grantee, its successors and assigns forever.
40.
Decrees
Rangeview represents that the following water decrees
currently adjudicate the water rights of which the Export Water
is a part:
Case Nos. 83CW330, 83CW373, 89CW048, and
89CW164, District Court, Water Division 1,
and plan for augmentation to allow use of not
nontributary Denver aquifer groundwater as
pending in Case No. 94CW048, and application
to change decreed well locations as pending
in Case No. 94CW049, District Court, Water
Division 1.
41.
Royalties and Reporting
(1) Payment to Land Board. As between Rangeview and
Grantee, Grantee shall be responsible for and shall timely pay
directly to the Land Board all royalties payable to the Land
Board by the Export Water Purchaser (as that term is defined in
the Lease) pursuant to the Lease. Notwithstanding the foregoing,
Rangeview may, at its option, pay to the Land Board any royalties
due but not paid by Grantee on the Export Water in order to
prevent a default under the Lease. In such case, Rangeview shall
be entitled to interest on any royalties paid by Rangeview on the
Export Water at the rate of two percent (2%) per month from the
date paid by Rangeview and Rangeview may exercise any other
remedies it may have, including its termination rights under
Section 6.6 of the Lease.
(2) Reporting. In addition to any requirements under the
Lease, Grantee shall prepare the following reports:
1. Grantee shall report to Rangeview the quantity of
Export Water delivered (including any recharged or stored water
pursuant to Section 6.2(a) of the Lease), the exact amount of
Gross Revenues or, if applicable, Retail Sales Price (as those
terms are defined in the Lease) relating to the sale or other
disposition of Export Water, and the entity to whom the Export
Water was delivered. The report shall be due within twenty (20)
days after the end of each calendar year, until such time as
Rangeview notifies Grantee that production of Export Water and
Non-Export Water (as defined in the Lease) has reached 500 acre
feet in a calendar year, and thereafter, on or before the
twentieth (20th) day following the end of each calendar quarter
during the term of the Lease.
<PAGE>
2. Grantee shall prepare and keep full, complete, and
proper books, records and accounts of all Export Water (including
any recharged or stored water pursuant to Section 6.2(a) of the
Lease) sales or dispositions and shall document such transactions
as may be required by law. Said books, records, and accounts of
Grantee shall be open at all reasonable times, upon ten (10)
days' prior written notice, to the inspection of Rangeview, the
Land Board and their respective representatives who may, at
Rangeview's or the Land Board's expense, as applicable, copy or
extract all or a portion of said books, records, and accounts for
a period of up to five (5) years after the date such books,
records and accounts are made. The Land Board's right to
inspection shall not prejudice the Land Board's right to collect
payments due pursuant to the Lease. Rangeview or the Land Board
may, upon no less than fourteen (14) days' prior written notice
to Grantee, cause a partial or complete audit of the entire
records and operations of Grantee for a five (5) year period
preceding the date of the audit relating to the use of Export
Water pursuant to this Deed to be made at Rangeview's or the Land
Board's expense, as applicable, by an auditor selected by
Rangeview or the Land Board, as applicable. Within fourteen (14)
days following Rangeview's or the Land Board's notice, as
applicable, Grantee shall make available to Rangeview's or the
Land Board's auditor, as applicable, the books and records the
auditor reasonably deems necessary or desirable for the purpose
of making the audit. Any deficiency in the payment of royalties
determined upon such audit shall be immediately due and payable
to the Land Board, together with interest thereon at the rate of
two percent (2%) per month from the date or dates such amounts
should have been paid. If such deficiency is in excess of two
percent (2%) of the royalty previously paid, then Grantee shall
pay to the auditing party the actual cost of the audit at the
time the deficiency is paid.
42.
General Provisions
(1) Notice. All notices required by this Deed or the Lease
shall be in writing and shall be delivered to the person to whom
the notice is directed at the address set forth below, either in
person, by courier service or by United States mail as a
certified item, return receipt requested, addressed to the
address stated below. Notices delivered in person or by courier
service shall be deemed given when delivered to the person to
whom the notice is directed. Notices delivered by mail shall be
deemed given on the date of delivery as indicated on the return
receipt. The parties may change the stated address by giving ten
(10) days' written notice of such change pursuant to this
Section.
If to Rangeview:
Rangeview Metropolitan District
141 Union Boulevard, Suite 150
Lakewood, Colorado 80228
Attention: President
<PAGE>
If to the Land Board:
Board of Land Commissioners
Attention: President
620 Centennial Building
1313 Sherman Street
Denver, Colorado 80203
and
Office of the Attorney General
Attention: State Land Board Attorney
1525 Sherman Street, Fifth Floor
Denver, Colorado 80203
If to Grantee:
Pure Cycle Corporation
5650 York Street
Commerce City, Colorado 80022
Attention: President
(2) Construction. Where required for proper
interpretation, words in the singular shall include the plural,
and the masculine gender shall include the neuter and the
feminine, and vice versa, as is appropriate. The article and
section headings are for convenience and are not a substantive
portion of this Deed. This Deed shall be construed as if it were
equally drafted in all aspects by all parties. All capitalized
terms herein not otherwise defined shall have the same meaning as
provided with respect to such terms in the Lease.
(3) Severability. If any clause or provision of this Deed
is illegal, invalid or unenforceable under present or future
laws, then, and in that event, it is the intention of the parties
hereto that the remainder of this Deed shall not be affected
thereby. It is also agreed that in lieu of each clause or
provision of this Deed that is illegal, invalid or unenforceable,
there shall be added as a part of this Deed a clause or provision
as similar in terms to such illegal, invalid or unenforceable
clause or provision as may be possible and be legal, valid and
enforceable.
(4) Governing Law. This Deed shall be governed by and
construed in accordance with the laws of the State of Colorado
and applicable federal law.
<PAGE>
(5) No Oral Amendment or Modifications. No amendments,
waivers or modifications of the terms and provisions contained in
this Deed, and no acceptances, consents or waivers by the Land
Board or Rangeview under this Deed, shall be valid or binding
unless in writing and executed by the party to be bound thereby.
Any covenant, condition or restriction contained in this Deed may
be terminated, extended, modified or amended, as to the whole of
the Export Water or any portion thereof, only by the written
consent of the Land Board and Rangeview. No such termination,
extension, modification or amendment shall be effective unless
and until a proper instrument in writing has been executed and
recorded in the records of the Clerk and Recorder of Arapahoe
County.
(6) Binding Effect. This Deed shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns. The covenants, conditions, and
restrictions contained in this Deed and, where applicable, the
Lease, shall be construed as covenants running with the Export
Water, and every person who now or hereafter owns or acquires any
right, title, estate or interest in or to the Export Water is and
shall be conclusively deemed to have consented and to have agreed
to every covenant, condition, and restriction contained in this
Deed and, where applicable, the Lease, whether or not any
reference to such covenant, condition, or restriction is
contained in the instrument by which such person acquires an
interest in the Export Water.
IN WITNESS WHEREOF, the Land Board has caused this Deed
to be executed by the State Board of Land Commissioners and
sealed with the official seal of the Land Board. Rangeview has
similarly executed this Deed this _____ day of April, 1996.
STATE OF COLORADO
STATE BOARD OF LAND COMMISSIONERS
Maxine F. Stewart, President
<PAGE>
APPROVED AS TO FORM:
GALE A. NORTON, Attorney
General
STEPHEN K. ERKENBRACK, Chief
Deputy Attorney General
TIMOTHY M. TYMKOVICH,
Solicitor General
Richard A. Westfall
Special Deputy Solicitor
General
State of Colorado
RANGEVIEW METROPOLITAN
DISTRICT, ACTING BY AND THROUGH ITS
WATER ACTIVITY ENTERPRISE
ATTEST:
By: By:
Title: Title:
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of April, 1996 by Maxine F. Stewart, as President,
of the State of Colorado, State Board of Land Commissioners.
Witness my hand and official seal.
My commission expires:
Notary Public
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of April, 1996 by ____________________, as
President, and by ____________________, as Secretary, of
Rangeview Metropolitan District.
Witness my hand and official seal.
My commission expires:
Notary Public
EXHIBIT C OF DOCUMENT 10.3
==========================
Exhibit C
April 22, 1996
Board of Directors
Rangeview Metropolitan District
141 Union Boulevard, Suite 150
Lakewood, Colorado 80228-1556
Ladies and Gentlemen:
At your request, we have examined title to water rights
underlying certain property in Arapahoe County, Colorado, as
described in Exhibit A hereto (hereinafter the "Subject
Property"). This opinion is provided pursuant to paragraph 3.2
of that certain Agreement for Sale of Export Water, between
Rangeview Metropolitan District, acting by and through its water
activity enterprise, and Pure Cycle Corporation, a Delaware
corporation, dated April , 1996. Pursuant to that agreement,
Rangeview Metropolitan District is to convey to Pure Cycle
Corporation, the right to divert and sell outside the Subject
Property the use of up to a total gross volume of 1,165,000 acre-
feet of the non-tributary and not non-tributary water included in
the Water Rights known as the Export Water. Capitalized terms
used but not defined herein shall have the meanings given to such
terms in the Lease (as defined in paragraph (c) below).
<PAGE>
DOCUMENTS REVIEWED
Our opinion is based on the review of the following
materials:
(a) Arapahoe County Clerk and Recorder's
Grantor/Grantee Index beginning January 1, 1937 through April 22,
1996.
(b) Records at the office of the State Engineer.
(c) Amended and Restated Lease Agreement between the
State of Colorado, acting by and through the State Board of Land
Commissioners, Lessor, and Rangeview Metropolitan District,
acting by and through its water activity enterprise, Lessee,
dated April, 1996, (the "Lease") and Agreement for Sale of Export
Water described above.
(d) Findings of Fact, Conclusions of Law and decree of
the Water Court entered in Case No. 83CW330 by the District
Court, Water Division No. 1 on June 28, 1985.
(e) Findings of Fact, Conclusions of Law and Judgment
and Decree entered in Case No. 83CW373 by the District Court,
Water Division No. 1, on September 1, 1987.
(f) Findings of Fact, Conclusions of Law and Judgment
and Decree entered in Case No. 89CW048 by the District Court,
Water Division No. 1, on April 16, 1993.
(g) Findings of Fact, Conclusions of Law and Judgment
and Decree entered in Case No. 89CW164 by the District Court,
Water Division No. 1, on November 3, 1995.
(h) District Court, Water Division No. 1, records for
the cases described above.
CONCLUSIONS
The Colorado Supreme Court has adopted the following
definition of "marketable title:"
The term "marketable title," when applied to
real estate, means a title free from
reasonable doubt . . .. It means a title
that is reasonably free from such doubts as
will affect the market value of the estate;
one which a reasonably prudent person with
knowledge of all the facts and their legal
bearing would be willing to accept.
<PAGE>
Morley v. Gieseker, 142 Colo. 490, 351 P.2d 392, 393 (1960);
White v. Evans, 120 Colo. 200, 208 P.2d 922, 926 (1949); Federal
Farm Mortgage Corp. v. Schmidt, 109 Colo. 467, 126 P.2d 1036,
1038 (1942). "The title must be such as to make it reasonably
certain that it will not be called into question in the future so
as to subject the purchaser to the hazard of litigation with
reference thereto." Morley, 351 P.2d at 393; White, 208 P.2d at
926 (quoting Simpson v. Klipstein, 89 N.J. Eq. 543, 105 A. 218,
219 (1918)).
Based on our review of the documents described above,
as of April 22, 1996, it is our opinion that Rangeview
Metropolitan District, as Lessee, and the State of Colorado,
acting by and through the State Board of Land Commissioners, as
owner of the Subject Property and Lessor, have good and
marketable title to the Export Water as described in the
Agreement for Sale of Export Water, subject to the validity of
and the terms and conditions contained in the following:
(a) Lease No. S-37280 granted by the State of
Colorado, acting by and through its State Board of Land
Commissioners to OAR, Incorporated, dated April 26, 1982, and
amendments thereto dated February 22, 1983, December 19, 1983,
and November 26, 1984, and recorded at Book 5059, Page 261; Book
5059, Page 267; Book 5059, Page 268 and Book 5059, Page 273, and
amendment dated June 6, 1986.
(b) The Consent Judgment entered by the District Court
of the City and County of Denver in Apex Investment Fund II,
L.P., et al. v. Colorado State Board of Land Commissioners, et
al., as filed in the District Court of the City and County of
Denver in Case No. 95CV5405.
(c) The Lease.
(d) Agreement for Sale of Export Water, between
Rangeview Metropolitan District and Pure Cycle Corporation, a
Delaware corporation dated June 11, l988.
(e) Right of first refusal, if any, of East Cherry
Creek Valley Water and Sanitation District to any part of the
Export Water.
This letter does not include analysis or opinions with
respect to the physical availability or quality of the Export
Water.
Very truly yours,
HOLLY I. HOLDER, P.C.
<PAGE>
EXHIBIT D OF DOCUMENT 10.3
==========================
Exhibit D Aquifers
Exhibit D
Aquifers
Arapahoe
Dawson
Denver
Laramie Fox-Hills
=============
DOCUMENT 10.4
=============
AMENDED AND RESTATED
OPTION AND PURCHASE AGREEMENT
This Amended and Restated Option and Purchase Agreement
(this "Agreement") is made and entered into as of the 11th day of
April, 1996, by and among OAR, Incorporated, a Colorado
corporation ("Seller"), Pure Cycle Corporation, a Delaware
corporation ("Buyer"), and INCO Securities Corporation ("INCO").
RECITALS
43. On November 8, 1990, Seller and INCO entered into an
Option and Purchase Agreement which was subsequently amended by
Amendment Agreement No. 1 on February 12, 1991 and by Amendment
Agreement No. 2 on August 12, 1992 (collectively, the "Original
Agreement").
44. On October 28, 1994, a lawsuit entitled Apex Investment
Fund II, L.P., et al. v. Colorado State Board of Land
Commissioners, et al., Case No. 95CV5405, was filed in the
District Court of the City and County of Denver (the "Lawsuit").
The counterclaims in the Lawsuit question the validity of the OAR
Bonds and Notes (as defined in Section 1.1).
<PAGE>
45. On the date hereof, INCO assigned all of its rights and
obligations under the Original Agreement to Buyer.
46. The parties desire to amend and restate the Original
Agreement to facilitate settlement of the Lawsuit.
AGREEMENT
In consideration of the mutual promises, covenants,
representations and warranties set forth herein, the existence
and sufficiency of which are hereby acknowledged by the parties
hereto, the parties agree as follows:
47.
DEFINITIONS AND PRIOR CLOSINGS
(1) "OAR Bonds" consist of Water Revenue Bonds, Series 1988
M, issued by the Rangeview Metropolitan District, a quasi-
municipal corporation and political subdivision of the State of
Colorado (the "District"), dated December 7, 1988, in the
principal amount of $12,439,840. The "OAR Notes" consist of
Water Revenue Notes, Series 1987 A-L, issued by Lowry Range
Metropolitan District (now the District) on August 3, 1987 in the
original aggregate principal amount of $5,000,000. The "OAR
Second Closing Assets" are a portion of the OAR Bonds with a face
value of $1,046,390. The "OAR Interim Closing Assets" are a
portion of the OAR Bonds with a face value of $2,124,490. The
"August 12, 1992 Closing Assets" are a portion of the OAR Bonds
with a face value of $3,640,000.
(2) The parties agree that an option to purchase the OAR
Bonds and the OAR Notes (the "Option") was acquired on
November 8, 1990 by payment of an option payment in accordance
with the Original Agreement, that the OAR Second Closing Assets
were purchased in accordance with the Original Agreement on
February 12, 1991, that the OAR Interim Closing Assets were
purchased in accordance with the Original Agreement on August 13,
1991, and that the August 12, 1992 Closing Assets were purchased
in accordance with the Original Agreement on August 12, 1992. On
August 12, 1992, the option extension fee required by the
Original Agreement was also paid and Seller extended until on or
before August 12, 2007 the Option to purchase all or any portion
of the remaining OAR Bonds with a collective face value of
$5,628,960 and the remaining OAR Notes with a collective face
value of $5,000,000 (the "OAR Closing Assets"), at a price of
$5,658,800, plus 9% per annum from August 12, 1992 to the date of
the purchase. In light of the foregoing, the parties acknowledge
that all references to events related to the closings of the
purchase of the Option, the Second Closing Assets, the Interim
Closing Assets, and the August 12, 1992 Closing Assets have been
deleted in this Agreement.
(3) This Agreement amends and restates the Original
Agreement with respect to remaining performance rights and
obligations, but does not supersede the Original Agreement to the
extent that the Original Agreement governed the prior closings
hereunder or contained provisions which were intended to survive
through or beyond the purchase of the OAR Closing Assets.
<PAGE>
(4) Subject to the terms and conditions set forth in this
Agreement, Seller agrees to sell Buyer the OAR Closing Assets for
the Closing Consideration set forth in Article 2.
49.
PURCHASE PRICE
At the Closing (as defined in Section 3.1), Buyer and
Seller shall enter into the agreement attached hereto as
Exhibit A entitled Comprehensive Amendment Agreement No. 1
pursuant to which the Buyer grants Seller a right to a portion of
the proceeds from the sale of certain water rights (the "Closing
Consideration") which right shall represent the consideration for
the OAR Closing Assets. In addition, the parties shall enter
into the Second Amended and Restated Closing Escrow Instructions
attached hereto as Exhibit B (the "Amended Escrow Instructions")
which shall supersede and replace the Escrow Instructions entered
into pursuant to the Original Agreement. Buyer shall also sign
an agreement in the form of Schedule 3 to the Amended Escrow
Instructions to assume the fees and expenses of the Escrow Agent
(as defined in the Amended Escrow Instructions). Buyer and
Seller shall also enter into a Memorandum of Agreement in the
form attached hereto as Exhibit C (the "MOA") which is to be
recorded in the real property records of Arapahoe County and the
records of the Colorado Department of Natural Resources State
Engineer, Division of Water Resources, regarding Seller's rights
in the Closing Consideration and a release of the MOA in the form
attached hereto as Exhibit D (the "Termination").
50.
CLOSING
(1) The closing (the "Closing") hereunder shall be held on
a mutually agreeable time and date which is coincident with the
date the settlement agreement for the Lawsuit, to which this
Agreement is attached as Exhibit 5, is executed (the "Settlement
Agreement").
(2) The Closing shall be held in the offices of Davis,
Graham & Stubbs LLP ("DGS") at 370 17th Street, Suite 4700,
Denver, Colorado 80202, or at such other place as the parties
shall mutually agree.
(3) This Agreement, the Closing Consideration, the Amended
Escrow Instructions and all other documents delivered in
connection with the Closing shall be held in trust by DGS for
distribution on the Effective Date (as defined in the Settlement
Agreement). On the Effective Date, DGS shall deliver (i) the
Amended Escrow Instructions to the Escrow Agent along with the
letter required by the Amended Escrow Instructions from DGS to
authorize release of the OAR Closing Assets to the District on
Buyer's behalf, (ii) the Closing Consideration to Seller,
(iii) the MOA to the clerk and recorder's office of Arapahoe
County, Colorado and the Colorado Department of Natural
Resources State Engineer, Division of Water Resources, for
recordation, (iv) the Termination to Hopper and Kanouff, a
professional corporation ("H and K"), c/o Ward E. Terry, Jr.,
Seller's counsel, and (v) a set of original closing documents to
each party. H and K agrees to deliver the Termination (or
partial terminations provided pursuant to Section 8.7, if
applicable) to DGS in exchange for the payments to Seller
required under Section 2.1(a) of the Closing Consideration. If
the Settlement Agreement is terminated, DGS shall destroy all
documents delivered at the Closing and this Agreement, except for
the obligations of DGS hereunder, shall be null and void ab
initio and shall have no force and effect.
51.
SELLER'S REPRESENTATIONS AND COVENANTS
(1) Seller represents and warrants that it has good and
marketable title to the OAR Closing Assets, free and clear of all
security interests, liens, pledges, charges, claims, and
encumbrances, other than the terms and conditions of that certain
Indenture of Mortgage and Trust between the District and Central
Bank of Denver dated December 7, 1988 (the "Trust Indenture"), a
copy of which was attached as Exhibit F to the Original
Agreement.
(2) Seller represents and warrants that (a) it is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado and (b) it has all
requisite corporate power and authority to own and operate its
properties and to carry on its business as and where now being
conducted.
(3) Seller represents and warrants that (a) all necessary
consents and approvals have been obtained by it for the execution
and delivery of this Agreement; (b) the execution and delivery of
this Agreement by Seller has been duly and validly authorized and
approved by all necessary corporate action of Seller, including
all required resolutions of its board of directors and
shareholders; and (c) this Agreement is a valid and binding
obligation of Seller, enforceable against it in accordance with
its terms.
(4) Seller represents and warrants that it has duly and
timely paid all taxes, assessments, governmental charges and
penalties due and payable by it, and there are no suits, actions,
claims, investigations, inquiries or proceedings pending or
threatened, or to its knowledge, contemplated against such Seller
in respect of any taxes, assessments, governmental charges or
penalties.
52.
BUYER'S REPRESENTATIONS AND COVENANTS
(1) Buyer represents that it is acquiring the OAR Closing
Assets for its own account without view to the distribution of
any portion thereof, except for the transfer of the OAR Closing
Assets to the District in compliance with the terms of the
Settlement Agreement for cancellation, and that Buyer has no
present intention of selling or otherwise disposing of any
portion thereof in any transaction which would be in violation of
any federal or state securities law.
(2) Buyer represents that (a) it is aware that no federal
or state agency has made any finding or determination as to the
fairness of this investment, nor any recommendation or
endorsement with respect to this investment; (b) Buyer, by virtue
of its own investment acumen and business experience is, or
together with its advisor is, capable of evaluating the hazards
and merits of participating in this investment; (c) Buyer can
bear the economic risk of this investment; and (d) Buyer warrants
that it was not organized or reorganized for the specific purpose
of acquiring the OAR Closing Assets.
(3) Buyer understands that the OAR Closing Assets have not
been registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws. Buyer agrees that it will
not sell the OAR Closing Assets unless such assets subsequently
are registered under the Act and any applicable state securities
laws or exemptions from such registration requirements are
available.
(4) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
Buyer has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now being
conducted.
(5) Buyer represents and warrants that the execution and
delivery of this Agreement by Buyer has been duly and validly
authorized and approved by all necessary corporate action of
Buyer, including appropriate resolutions of the board of
directors of Buyer, and that this Agreement is a valid and
binding obligation of Buyer, enforceable against it in accordance
with its terms.
53.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO CLOSE
The obligations of Buyer under this Agreement with
respect to the purchase and sale of the OAR Closing Assets shall
be subject to the fulfillment on or prior to the date of the
Closing of each of the following conditions:
1. All of the representations and warranties by Seller
contained in this Agreement shall be true and correct at and as
of the date of the Closing as if restated on and as of such date.
Seller shall have complied with and performed all of the
agreements, covenants and conditions required by this Agreement
to be performed or complied with by it on or prior to the date of
the Closing.
2. Seller shall have delivered to Buyer a copy of a
certificate as to the due incorporation and good standing of
Seller in Colorado certified as of a recent date by the
appropriate governmental authority.
3. The Settlement Agreement shall have been executed and
delivered by all parties thereto.
4. There shall not have been instituted by any creditor of
the Seller or other third party any suit or proceeding to
restrain or invalidate this transaction or the transactions
contemplated by the Amended and Restated Option and Purchase
Agreement entered into among Buyer, the State of Colorado State
Board of Land Commissioners and H.F. Riebesell, Jr., and INCO
(the "CFC Agreement").
5. All conditions precedent set forth in Article 6 of the
CFC Agreement to Buyer's obligations to purchase the CFC Closing
Assets (as that term is defined in the CFC Agreement) shall have
been satisfied.
54.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller under this Agreement with
respect to the purchase and sale of the OAR Closing Assets shall
be subject to the fulfillment on or prior to the date of the
Closing of each of the following conditions:
1. All of the representations and warranties by Buyer
contained in this Agreement shall be true and correct at and as
of the date of the Closing as if restated on and as of such date.
Buyer shall have complied with and performed all of the
agreements, covenants and conditions required by this Agreement
to be performed and complied with by it on or prior to the date
of the Closing.
2. Buyer shall have delivered to Seller a copy of a
certificate as to the due incorporation and good standing of
Buyer in Delaware certified as of a recent date by the
appropriate governmental authority.
3. The Settlement Agreement shall have been executed and
delivered by all parties thereto.
4. There shall not have been instituted by any creditor of
the Buyer or INCO or other third party any suit or proceeding to
restrain or invalidate this transaction or the transactions
contemplated by the CFC Agreement.
5. All conditions precedent set forth in Article 7 of the
CFC Agreement to obligations of the Sellers (as defined in the
CFC Agreement) to sell the CFC Closing Assets shall have been
satisfied.
55.
MISCELLANEOUS
(1) All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be
delivered or sent by first class mail, registered or certified,
postage prepaid, by telecopy or by overnight courier to any other
party at its address set forth below or to such other address as
may from time to time be provided by one party to the others in
accordance with this Section 8.1.
1. If to INCO:
INCO Securities Corporation
One New York Plaza
New York, New York 10004
Attention: Richard L. Guido
Telecopy: (212) 612-5873
2. If to Buyer:
Pure Cycle Corporation
5650 York Street
Commerce City, Colorado 80022
Attention: Mark W. Harding
Telecopy: (303) 292-3475
3. If to OAR:
OAR, Incorporated
3525 Diane Place
Greeley, CO 80634
Attention: Willard G. Owens
Notices delivered personally shall be effective upon
delivery. Notices transmitted by telecopy shall be effective
when received. Notices delivered by registered or certified mail
or by overnight courier shall be effective on the date such
notice is delivered to a proper address to which it is addressed,
as set forth on the receipt of such registered or certified mail
or of such courier.
(2) All agreements made and entered into in connection with
this transaction shall be binding upon and inure to the benefit
of the parties hereto, their successors and assigns. Seller
hereby consents to the assignment by INCO to Buyer.
(3) This Agreement (including the Exhibits hereto) and the
Original Agreement, to the extent not superseded hereby,
constitute the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings oral and
written, between the parties with respect to the subject matter
hereof. No alteration, modification or change of this Agreement
shall be valid except by an agreement in writing executed by the
parties hereto. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course
of dealing between or among any of the parties) shall operate as
a waiver of any such right, power or privilege. No waiver of any
default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of
any such right, power or privilege shall preclude the further or
full exercise thereof.
(4) This Agreement may be executed in one or more
counterparts, each of which when so executed shall be an
original, but all of which together shall constitute one
agreement.
(5) If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and
the application of such provision to other persons or
circumstances shall not be affected thereby and shall be enforced
to the greatest extent permitted by law.
(6) This Agreement shall be interpreted, governed and
construed in accordance with the internal laws of the State of
Colorado.
(7) If the payments required under Section 2.1(a) of the
Closing Consideration are made in amounts necessitating partial
terminations of the MOA, Seller agrees to execute partial
terminations substantially in the form of the Partial Termination
of Memorandum of Agreement attached hereto as Exhibit E and to
provide such partial terminations to H and K for delivery to DGS
in exchange for such installment payments.
(8) The representations and warranties herein shall survive
for a period of three years following the Effective Date.
<PAGE>
IN WITNESS WHEREOF the parties have executed this Amended and
Restated Option and Purchase Agreement as of the day and year
first above written.
INCO:
INCO SECURITIES CORPORATION
By:
Title:
SELLER:
OAR, INCORPORATED, a Colorado
corporation
By:
Willard G. Owens, President
BUYER:
PURE CYCLE CORPORATION, a Delaware
corporation
By:
Thomas P. Clark, President
For purposes of Section 3.3:
DAVIS, GRAHAM & STUBBS LLP
By:
Wanda J. Abel, Partner
For purposes of Section 3.3
HOPPER AND KANOUFF, a professional
corporation
By:
Title:
<PAGE>
EXHIBITS
Exhibit A Comprehensive Amendment Agreement No. 1
Exhibit B Amended Escrow Instructions
Exhibit C Memorandum of Agreement
Exhibit D Termination of Memorandum of Agreement
Exhibit E Partial Termination of Memorandum of Agreement
EXHIBIT A TO DOCUMENT 10.4
==========================
For Exhibit A to the Amended and Restated Option Purchase
Agreement, which consists of Comprehensive Amendment Agreement
No. 1 among Inco Securities Corporation, the Company, the State
of Colorado acting through the State Board of Land Commissioners,
and others, see DOCUMENT 10.7.
EXHIBIT B TO DOCUMENT 10.4
==========================
For Exhibit B to the Amended and Restated Option Purchase
Agreement, which consists of Amended Escrow Instructions among
OAR, Incorporated, the Company, the State of Colorado State Board
of Land Commissioners, H.F. Riebesell, Jr., and Colorado National
Bank, see DOCUMENT 10.6.
EXHIBIT C TO DOCUMENT 10.4
==========================
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT ("Memorandum") is made
this 11th day of April, 1996, among Pure Cycle Corporation, a
Delaware corporation ("Pure Cycle"), 5650 York Street, Commerce
City, Colorado 80022, OAR, Incorporated, a Colorado corporation
("OAR"), 3525 Diane Place, Greeley, Colorado 80634, and H.F.
Riebesell, Jr., 5290 DTC Parkway, #150, Englewood, Colorado
80111.
WITNESSETH
56. Pure Cycle, OAR, Riebesell and certain other persons
have entered into a Comprehensive Amendment Agreement No. 1 dated
the date hereof (the "Agreement") pursuant to which OAR,
Riebesell and the State of Colorado, acting through the State
Board of Land Commissioners (the "State"), are entitled to
certain payments upon the sale by Pure Cycle of certain water
(the "Export Water") conveyed to Pure Cycle by the State and
Rangeview Metropolitan District, a quasi-municipal corporation
and political subdivision of the State of Colorado ("Rangeview"),
pursuant to a deed dated the date hereof (the "Deed").
57. As more particularly described in and subject to the
Deed, the Export Water consists of the right to divert, sell and
use up to a total gross volume of 1,165,000 acre feet of non-
tributary and not non-tributary water on and under the
approximately 24,567.21 acres, more or less, according to U.S.
Government survey, in Arapahoe County, Colorado more particularly
described as follows (the "Lowry Range"):
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all; and 34: all
Township 5 South, Range 65 West of
the 6th P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66
West of the 6th P.M.,
Section 36: all.
58. Pursuant to Section 2.1(a) of the Agreement and
provided all Obligations to the State (as such term is defined in
Section 4.1 of the Agreement) then due and payable have been
paid, the first $8,000,000 in Gross Proceeds (as such term is
defined in Section 2.4 of the Agreement) from the sale or other
disposition of the Export Water only is to be paid into a trust
account with Davis, Graham & Stubbs LLP, 370 Seventeenth Street,
Suite 4700, Denver, Colorado 80202 for disbursement to OAR,
Riebesell and the State in accordance with their interests as set
forth in Section 2.1(a) of the Agreement.
<PAGE>
59. Until disbursement of $8,000,000 has been made to OAR,
Riebesell and the State, in accordance with their interest
therein as set forth in Section 2.1(a) of the Agreement and all
Obligations of the State then due and payable have been paid,
sales or other dispositions of the Export Water shall only be
made in the manner and upon the terms set forth in Section 4.1 of
the Agreement. OAR and the other Investors (as defined in the
Agreement) have certain cure rights if the Obligations to the
State have not been paid.
60. Upon disbursement of $8,000,000 to OAR, Riebesell and
the State, in accordance with their interests under
Section 2.1(a) of the Agreement, this Memorandum shall have no
force and effect and the parties agree to file a termination of
this Memorandum.
IN WITNESS WHEREOF, the parties have duly executed this
Memorandum of Agreement as of the date noted above for the
purpose of providing an instrument for recording.
PURE CYCLE CORPORATION
By:
Thomas P. Clark, President
OAR, INCORPORATED
By:
Willard G. Owens, President
H.F. Riebesell, Jr.
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by Thomas P. Clark, as
President of Pure Cycle Corporation, a Delaware corporation.
Witness my hand and official seal.
My commission expires: .
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF _______ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by Willard G. Owens, as
President of OAR, Incorporated, a Colorado corporation.
Witness my hand and official seal.
My commission expires: .
Notary Public
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by H.F. Riebesell, Jr.
Witness my hand and official seal.
My commission expires: .
Notary Public
<PAGE>
EXHIBIT D TO DOCUMENT10.4
=========================
TERMINATION OF MEMORANDUM OF AGREEMENT
THIS TERMINATION OF MEMORANDUM OF AGREEMENT
("Termination") is made this ___ day of __________, 199___, among
Pure Cycle Corporation, a Delaware corporation ("Pure Cycle"),
5650 York Street, Commerce City, Colorado 80022, OAR,
Incorporated, a Colorado corporation ("OAR"), 3525 Diane Place,
Greeley, Colorado 80634, and H.F. Riebesell, Jr., 5290 DTC
Parkway, #150, Englewood, Colorado 80111, or their respective
successors and assigns.
WITNESSETH
61. Pure Cycle, OAR, Riebesell and certain other persons
have entered into a Comprehensive Amendment Agreement No. 1 dated
April __, 1996 (the "Agreement") pursuant to which OAR, Riebesell
and the State of Colorado, acting through the State Board of Land
Commissioners (the "State") were entitled to certain payments
upon the sale by Pure Cycle of certain water (the "Export Water")
conveyed to Pure Cycle by the State and Rangeview Metropolitan
District, a quasi-municipal corporation and political subdivision
of the State of Colorado ("Rangeview"), pursuant to a deed dated
April __, 1996 (the "Deed").
62. On __________, 1996, the parties filed a Memorandum of
Agreement in the clerk and recorder's office of Arapahoe County,
Colorado at Book ____, Page ____, and in the Colorado Department
of Natural Resources_Division of Water Resources, describing
certain provisions of the Agreement (the "Memorandum").
63. As more particularly described in and subject to the
Deed, the Export Water consists of the right to divert, sell and
use up to a total gross volume of 1,165,000 acre feet of non-
tributary and not non-tributary water on and under the
approximately 24,567.21 acres, more or less, according to U.S.
Government survey, in Arapahoe County, Colorado more particularly
described as follows (the "Lowry Range"):
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all and 34: all.
Township 5 South, Range 65 West of the 6th
P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66
West of the 6th P.M.,
Section 36: all.
64. Pursuant to Section 2.1(a) of the Agreement and
provided all Obligations to the State (as such term is defined in
Section 4.1 of the Agreement) then due and payable have been
paid, the first $8,000,000 in Gross Proceeds (as such term is
defined in Section 2.4 of the Agreement) from the sale or other
disposition of the Export Water was to be paid into a trust
account with Davis, Graham & Stubbs LLP, 370 Seventeenth Street,
Suite 4700, Denver, Colorado 80202 for disbursement to OAR,
Riebesell and the State in accordance with Section 2.1(a) of the
Agreement.
<PAGE>
65. In accordance with the terms of the Agreement,
$8,000,000 has now been disbursed to OAR, Riebesell and the State
and, as of the date of the payment of the full amount of such
disbursements, all Obligations to the State due and payable as of
such date, which are due and payable prior to the payments
contemplated in Section 2.1(a) of the Agreement, have been paid
in full to the State. The conditions of the Agreement have been
fulfilled and the purpose of the Memorandum has been satisfied.
Therefore, the Memorandum is hereby terminated and released of
record.
IN WITNESS WHEREOF, the parties have duly executed this
Termination of Memorandum of Agreement effective as of the date
noted above for the purpose of providing an instrument for
recording.
PURE CYCLE CORPORATION
By:
Thomas P. Clark, President
OAR, INCORPORATED
By:
Willard G. Owens, President
H.F. Riebesell, Jr.
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by Thomas P. Clark, as
President of Pure Cycle Corporation, a Delaware corporation.
Witness my hand and official seal.
My commission expires: .
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF _______ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by Willard G. Owens, as
President of OAR, Incorporated, a Colorado corporation.
Witness my hand and official seal.
My commission expires: .
Notary Public
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by H.F. Riebesell, Jr.
Witness my hand and official seal.
My commission expires: .
Notary Public
<PAGE>
EXHIBIT E OF DOCUMENY 10.4
==========================
PARTIAL TERMINATION OF MEMORANDUM OF AGREEMENT
THIS PARTIAL TERMINATION OF MEMORANDUM OF AGREEMENT
("Partial Termination") is made this ___ day of __________,
199___, among Pure Cycle Corporation, a Delaware corporation
("Pure Cycle"), 5650 York Street, Commerce City, Colorado 80022,
OAR, Incorporated, a Colorado corporation ("OAR"), 3525 Diane
Place, Greeley, Colorado 80634, and H.F. Riebesell, Jr., 5290 DTC
Parkway, #150, Englewood, Colorado 80111, or their respective
successors or assigns.
WITNESSETH
66. Pure Cycle, OAR, Riebesell and certain other persons
have entered into a Comprehensive Amendment Agreement No. 1 dated
April __, 1996 (the "Agreement") pursuant to which OAR, Riebesell
and the State of Colorado, acting through the State Board of Land
Commissioners (the "State"), were entitled to certain payments
upon the sale by Pure Cycle of certain water (the "Export Water")
conveyed to Pure Cycle by the State and Rangeview Metropolitan
District, a quasi-municipal corporation and political subdivision
of the State of Colorado ("Rangeview"), pursuant to a deed dated
April __, 1996 (the "Deed").
67. On __________, 1996, the parties filed a Memorandum of
Agreement in the clerk and recorder's office of Arapahoe County,
Colorado at Book ____, Page ____, and in the Colorado Department
of Natural Resources_Division of Water Resources, describing
certain provisions of the Agreement (the "Memorandum").
<PAGE>
68. As more particularly described in and subject to the
Deed, the Export Water consists of the right to divert, sell and
use up to a total gross volume of 1,165,000 acre feet of non-
tributary and not non-tributary water on and under the
approximately 24,567.21 acres, more or less, according to U.S.
Government survey, in Arapahoe County, Colorado more particularly
described as follows (the "Lowry Range"):
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all and 34: all.
Township 5 South, Range 65 West of the 6th
P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66 West of
the 6th P.M.,
Section 36: all.
69. Pursuant to Section 2.1(a) of the Agreement and
provided all Obligations to the State (as such term is defined in
Section 4.1 of the Agreement) then due and payable have been
paid, the first $8,000,000 in Gross Proceeds (as such term is
defined in Section 2.4 of the Agreement) from the sale or other
disposition of the Export Water was to be paid into a trust
account with Davis, Graham & Stubbs LLP, 370 Seventeenth Street,
Suite 4700, Denver, Colorado 80202 for disbursement to OAR,
Riebesell and the State in accordance with Section 2.1(a) of the
Agreement. OAR and the other Investors (as defined in the
Agreement) have certain cure rights if the Obligations to the
State have not been paid.
<PAGE>
70. In accordance with the terms of the Agreement,
$___________ has now been disbursed to OAR, Riebesell and the
State and as of the date of such disbursements all Obligations to
the State due and payable as of such date, which are due and
payable prior to the payments contemplated in Section 2.1(a) of
the Agreement, have been paid in full to the State. Certain
conditions of the Agreement have been partially fulfilled and the
purpose of the Memorandum has been partially satisfied.
Accordingly the Memorandum is effective hereafter only with
respect to Gross Proceeds of $____________ and the Memorandum
shall hereafter so reflect.
IN WITNESS WHEREOF, the parties have duly executed this
Partial Termination of Memorandum of Agreement effective as of
the date noted above for the purpose of providing an instrument
for recording.
PURE CYCLE CORPORATION
By:
Thomas P. Clark, President
OAR, INCORPORATED
By:
Willard G. Owens, President
H.F. Riebesell, Jr.
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by Thomas P. Clark, as
President of Pure Cycle Corporation, a Delaware corporation.
Witness my hand and official seal.
My commission expires: .
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF _______ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by Willard G. Owens, as
President of OAR, Incorporated, a Colorado corporation.
Witness my hand and official seal.
My commission expires: .
Notary Public
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me
this _____ day of ________________, 1996 by H.F. Riebesell, Jr.
Witness my hand and official seal.
My commission expires: .
Notary Public
<PAGE>
=============
DOCUMENT 10.5
=============
AMENDED AND RESTATED
OPTION AND PURCHASE AGREEMENT
This Amended and Restated Option and Purchase Agreement
(this "Agreement") is made and entered into as of the 11th day of
April, 1996, by and among the State of Colorado acting by the
State Board of Land Commissioners (the "State") and
H.F. Riebesell, Jr. ("Riebesell") (collectively, "Sellers"), and
Pure Cycle Corporation, a Delaware corporation ("Buyer"), and
INCO Securities Corporation ("INCO").
RECITALS
71. On November 8, 1990, the State's predecessor-in-
interest, Colorado Water Consultants, Incorporated, now known as
Colorado Financial Consultants, Inc. ("CFC"), and INCO entered
into an Option and Purchase Agreement which was subsequently
amended by Amendment Agreement No. 1 on February 12, 1991 and by
Amendment Agreement No. 2 on August 12, 1992 (collectively, the
"Original Agreement"). Pursuant to Amendment Agreement No. 2,
Carlton Allderdice ("Allderdice") and Riebesell were added as
parties to the Original Agreement. On April 26, 1995, CFC and
Allderdice each assigned to the State all of their remaining
right, title, and interest in the CFC Bonds and Notes (as defined
in Section 1.1) subject to, among other things, the Original
Agreement.
72. On the date hereof, INCO assigned all of its rights and
obligations under the Original Agreement to Buyer.
73. On October 28, 1994, a lawsuit entitled Apex Investment
Fund II, L.P., et al. v. Colorado State Board of Land
Commissioners, et al., Case No. 95CV5405, was filed in the
District Court of the City and County of Denver (the "Lawsuit").
The counterclaims in the Lawsuit question the validity of the CFC
Bonds and Notes.
74. The parties (other than the State) desire to amend and
restate the Original Agreement to facilitate settlement of the
Lawsuit and the State as owner of certain CFC Bonds and Notes
subject to the Original Agreement is willing to sell such CFC
Bonds and Notes to Buyer in exchange for the consideration
described herein to facilitate settlement of the Lawsuit.
AGREEMENT
In consideration of the mutual promises, covenants,
representations and warranties set forth herein, the existence
and sufficiency of which are hereby acknowledged by the parties
hereto, the parties agree as follows:
75.
DEFINITIONS AND PRIOR CLOSINGS
(1) "CFC Bonds" consist of Water Revenue Bonds, Series 1988
M, issued by the Rangeview Metropolitan District, a quasi-
municipal corporation and political subdivision of the State of
Colorado (the "District"), dated December 7, 1988, in the
principal amount of $5,331,360. The "CFC Notes" consist of Water
Revenue Notes, Series 1988 A-L, issued by the District, dated
December 7, 1988, in the original aggregate principal amount of
$2,142,858. The "CFC Second Closing Assets" are a portion of the
CFC Bonds with a face value of $448,453. The "CFC Interim
Closing Assets" are a portion of the CFC Bonds with a face value
of $910,496. The "August 12, 1992 Closing Assets" are a portion
of the CFC Bonds with a face value of $1,560,000 ($780,000 in
face value owned by each of Allderdice and Riebesell).
(2) The parties agree that an option to purchase the CFC
Bonds and the CFC Notes (the "Option") was acquired on
November 8, 1990 by payment of an option payment in accordance
with the Original Agreement, that the CFC Second Closing Assets
were purchased in accordance with the Original Agreement on
February 12, 1991, that the CFC Interim Closing Assets were
purchased in accordance with the Original Agreement on August 13,
1991, and that the August 12, 1992 Closing Assets were purchased
in accordance with the Original Agreement on August 12, 1992. On
August 12, 1992, the option extension fee required by the
Original Agreement was also paid and CFC, Allderdice and
Riebesell extended until on or before August 12, 2007 the Option
to purchase all or any portion of the remaining CFC Bonds with a
collective face value of $2,412,411 and the remaining CFC Notes
with a collective face value of $2,142,858 (in the aggregate
$942,858-CFC, $1,806,206-Allderdice, and $1,806,205-Riebesell)
(the "CFC Closing Assets"), at an aggregate price of $2,425,200
($502,016-CFC, $961,592-Allderdice, and $961,592-Riebesell), plus
9% per annum from August 12, 1992 to the date of the purchase.
In light of the foregoing, the parties acknowledge that all
references to events related to the closings of the purchase of
the Option, the Second Closing Assets, the Interim Closing
Assets, and the August 12, 1992 Closing Assets have been deleted
in this Agreement.
<PAGE>
(3) This Agreement amends and restates the Original
Agreement with respect to remaining performance rights and
obligations, but does not supersede the Original Agreement to the
extent that the Original Agreement governed the prior closings
hereunder or contained provisions which were intended to survive
through or beyond the purchase of the CFC Closing Assets.
(4) Subject to the terms and conditions set forth in this
Agreement, Sellers agree to sell to Buyer the CFC Closing Assets
for the Closing Consideration set forth in Article 2.
77.
PURCHASE PRICE
At the Closing (as defined in Section 3.1), Buyer and
Sellers shall enter into the agreement attached hereto as
Exhibit A entitled Comprehensive Amendment Agreement No. 1 (the
"Comprehensive Agreement") pursuant to which the Buyer grants
Sellers a right to a portion of the proceeds from the sale of
certain water rights, which right shall represent the
consideration for the CFC Closing Assets. In addition, the
parties, other than INCO, shall enter into the Second Amended and
Restated Closing Escrow Instructions attached hereto as Exhibit B
(the "Amended Escrow Instructions") which shall supersede and
replace the Escrow Instructions entered into pursuant to the
Original Agreement. Buyer shall also sign an agreement in the
form of Schedule 3 to the Amended Escrow Instructions to assume
the fees and expenses of the Escrow Agent (as defined in the
Amended Escrow Instructions). Buyer and Riebesell shall also
enter into two Memorandum Agreements in the form attached hereto
as Exhibit C (the "MOA") which are to be recorded in the real
property records of Arapahoe County and the records of the
Colorado Department of Natural Resources - State Engineer
Division of Water Resources regarding Riebesell's rights in the
Closing Consideration and two releases of the MOA in the form
attached hereto as Exhibit D (the "MOA Releases"). Buyer and the
State shall also enter into three originals of a Mortgage in the
form attached hereto as Exhibit E (the "Mortgage") which are to
be recorded in the real property records of Arapahoe County,
Colorado, with the Colorado Department of Natural Resources
State Engineer Division of Water Resources, and in the Uniform
Commercial Code records of the Colorado Secretary of State's
Office, regarding the State's rights in certain water rights in
the event Buyer defaults under the Closing Consideration, and
three original releases of the Mortgage in the form attached
hereto as Exhibit F (the "Mortgage Releases").
78.
CLOSING
(1) The closing (the "Closing") hereunder shall be held on
a mutually agree-able time and date which is coincident with the
date the settlement agreement for the Lawsuit, to which this
Agreement is attached as Exhibit 6, is executed (the "Settlement
Agreement").
(2) The Closing shall be held in the offices of Davis,
Graham & Stubbs LLP ("DGS"), at 370 Seventeenth Street, Suite
4700, Denver, Colorado 80202, or at such other place as the
parties shall mutually agree.
(3) This Agreement, the Comprehensive Agreement, the
Amended Escrow Instructions and all other documents delivered in
connection with the Closing shall be held in trust by DGS for
distribution on the Effective Date (as defined in the Settlement
Agreement). On the Effective Date, DGS shall deliver (i) the
Amended Escrow Instructions to the Escrow Agent, along with the
letter from DGS required by the Amended Escrow Instructions to
authorize release of the CFC Closing Assets to the District on
Buyer's behalf; (ii) the Comprehensive Agreement to Seller;
(iii) the MOA and the Mortgage to the clerk and recorder's office
of Arapahoe County, Colorado and the Colorado Department of
Natural Resources State Engineer Division of Water Resources
for recordation and the third original mortgage to the Colorado
Secretary of State's Office for filing in the Uniform Commercial
Code records; (iv) the MOA Releases and the Mortgage Releases to
the Attorney General of the State of Colorado (the "Attorney
General"); and (v) a set of original closing documents to each
party. The Attorney General agrees to deliver the MOA Releases
(or partial releases provided pursuant to Section 8.7, if
applicable) to DGS in exchange for the payments to Riebesell
required under Section 2.1(a) of the Comprehensive Agreement and
the Mortgage Releases (or partial releases provided pursuant to
Section 8.7, if applicable) to DGS in exchange for the payments
to the State required under Sections 2.1(a) and (b) of the
Comprehensive Agreement. If the Settlement Agreement is
terminated, DGS shall destroy all documents delivered at the
Closing and this Agreement, except for the obligations of DGS
hereunder, shall be null and void ab initio and shall have no
force and effect.
79.
SELLERS' REPRESENTATIONS AND COVENANTS
(1) Riebesell represents and warrants that it has good and
marketable title to the CFC Closing Assets, free and clear of all
security interests, liens, pledges, charges, claims, and
encumbrances, other than the terms and conditions of that certain
Indenture of Mortgage and Trust between the District and Central
Bank of Denver dated July 15, 1989 (the "Trust Indenture"), a
copy of which was attached as Exhibit F to the Original
Agreement.
(2) The State represents that it has not granted any
security interest, lien, pledge, charge, claim or encumbrance on
the CFC Closing Assets.
(3) Each Seller represents and warrants that (a) all
necessary consents and approvals have been obtained by it for the
execution and delivery of this Agreement; (b) the execution and
delivery of this Agreement by such Seller has been duly and
validly authorized and approved by all necessary administrative
action of such Seller, including all required resolutions of
administrative officials and of its officers and board of
directors, as applicable; provided, however, that the State does
not represent that it has authority to amend the Original
Agreement or to enter into the Amended Escrow Instructions,
except to the extent such authority may exist by virtue of its
ownership of a portion of the CFC Closing Assets; and (c) this
Agreement is a valid and binding obligation of such Seller,
enforceable against it in accordance with its terms provided the
Settlement Agreement becomes effective.
(4) Each Seller represents and warrants that it has duly
and timely paid all taxes, assessments, governmental charges and
penalties due and payable by it, and there are no suits, actions,
claims, investigations, inquiries or proceedings pending or
threatened, or to its knowledge, contemplated against such Seller
in respect of any taxes, assessments, governmental charges or
penalties.
80.
BUYER'S REPRESENTATIONS AND COVENANTS
(1) Buyer represents that it is acquiring the CFC Closing
Assets for its own account without view to the distribution of
any portion thereof, except for the transfer of the CFC Closing
Assets to the District in compliance with the terms of the
Settlement Agreement for cancellation, and that Buyer has no
present intention of selling or otherwise disposing of any
portion thereof in any transaction which would be in violation of
any federal or state securities law.
(2) Buyer represents that (a) it is aware that no federal
or state agency has made any finding or determination as to the
fairness of this investment, nor any recommendation or
endorsement with respect to this investment; (b) Buyer, by virtue
of its own investment acumen and business experience is, or
together with its advisor is, capable of evaluating the hazards
and merits of participating in this investment; (c) Buyer can
bear the economic risk of this investment; and (d) Buyer warrants
that it was not organized or reorganized for the specific purpose
of acquiring the CFC Closing Assets.
(3) Buyer understands that the CFC Closing Assets have not
been registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws. Buyer agrees that it will
not sell the CFC Closing Assets unless such assets subsequently
are registered under the Act and any applicable state securities
laws or exemptions from such registration requirements are
available.
(4) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
Buyer has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now being
conducted.
(5) Buyer represents and warrants that the execution and
delivery of this Agreement by Buyer has been duly and validly
authorized and approved by all necessary corporate action of
Buyer, including appropriate resolutions of the board of
directors of Buyer, and that this Agreement is a valid and
binding obligation of Buyer, enforceable against it in accordance
with its terms.
81.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO CLOSE
The obligations of Buyer under this Agreement with
respect to the purchase and sale of the CFC Closing Assets shall
be subject to the fulfillment on or prior to the date of the
Closing of each of the following conditions:
1. All of the representations and warranties by each
Seller contained in this Agreement shall be true and correct at
and as of the date of the Closing as if restated on and as of
such date. Each Seller shall have complied with and performed
all of the agreements, covenants and conditions required by this
Agreement to be performed or complied with by it on or prior to
the date of the Closing.
2. The Settlement Agreement shall have been executed and
delivered by all parties thereto.
3. There shall not have been instituted by any creditor of
either Seller or other third party any suit or proceeding to
restrain or invalidate this transaction or the transactions
contemplated by the Amended and Restated Option and Purchase
Agreement entered into among Buyer, OAR, Incorporated and INCO
(the "OAR Agreement").
4. All conditions precedent set forth in Article 6 of the
OAR Agreement to Buyer's obligations to purchase the OAR Closing
Assets (as that term is defined in the OAR Agreement) shall have
been satisfied.
82.
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
The obligations of each Seller under this Agreement
with respect to the purchase and sale of the CFC Closing Assets
shall be subject to the fulfillment on or prior to the date of
the Closing of each of the following conditions:
1. All of the representations and warranties by Buyer
contained in this Agreement shall be true and correct at and as
of the date of the Closing as if restated on and as of such date.
Buyer shall have complied with and performed all of the
agreements, covenants and conditions required by this Agreement
to be performed and complied with by it on or prior to the date
of the Closing.
2. Buyer shall have delivered to Sellers a copy of a
certificate as to the due incorporation and good standing of
Buyer in Delaware certified as of a recent date by the
appropriate governmental authority.
3. The Settlement Agreement shall have been executed and
delivered by all parties thereto.
4. There shall not have been instituted by any creditor of
Buyer or Inco or other third party any suit or proceeding to
restrain or invalidate this transaction or the transactions
contemplated by the OAR Agreement.
5. All conditions precedent set forth in Article 7 of the
OAR Agreement to obligations of the Seller (as defined in the OAR
Agreement) to sell the OAR Closing Assets shall have been
satisfied.
83.
MISCELLANEOUS
(1) All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be
delivered or sent by first class mail, registered or certified,
postage prepaid, by telecopy or by overnight courier to any other
party at its address set forth below or to such other address as
may from time to time be provided by one party to the others in
accordance with this Section.
1. If to INCO:
INCO Securities Corporation
One New York Plaza
New York, New York 10004
Attention: Richard L. Guido
Telecopy: (212) 612-5873
2. If to Buyer:
Pure Cycle Corporation
5650 York Street
Commerce City, Colorado 80022
Attention: Mark W. Harding
Telecopy: (303) 292-3475
3. If to Sellers:
If to the State:
Colorado State Board of Land Commissioners
620 Centennial Building
1313 Sherman Street
Denver, Colorado 80203
Attention: President
Telecopy: ___________________
with a copy to:
Office of the Attorney General
1525 Sherman Street, Fifth Floor
Denver, Colorado 80203
Attention: State Land Board Attorney
Telecopy: ___________________
If to Riebesell:
H.F. Riebesell, Jr.
Hall & Evans, L.L.C.
1200 Seventeenth Street, Suite 1200
Telecopy: (303) 628-3368
Notices delivered personally shall be effective upon
delivery. Notices transmitted by telecopy shall be effective
when received. Notices delivered by registered or certified mail
or by overnight courier shall be effective on the date such
notice is delivered to a proper address to which it is addressed,
as set forth on the receipt of such registered or certified mail
or of such courier.
(2) All agreements made and entered into in connection with
this transaction shall be binding upon and inure to the benefit
of the parties hereto, their successors and assigns. Each Seller
hereby consents to the assignment by INCO to Buyer. INCO and
Buyer hereby consent to the assignments of rights by Allderdice
and CFC to the State and agree that they will not look to the
State for the enforcement of obligations of CFC or Allderdice, by
claim, setoff or otherwise.
(3) This Agreement (including the Exhibits hereto) and the
Original Agreement, to the extent not superseded hereby,
constitute the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings oral and
written, between the parties with respect to the subject matter
hereof. No alteration, modification or change of this Agreement
shall be valid except by an agreement in writing executed by the
parties hereto. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course
of dealing between or among any of the parties) shall operate as
a waiver of any such right, power or privilege. No waiver of any
default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of
any such right, power or privilege shall preclude the further or
full exercise thereof.
(4) This Agreement may be executed in one or more
counterparts, each of which when so executed shall be an
original, but all of which together shall constitute one
agreement.
(5) If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and
the application of such provision to other persons or
circumstances shall not be affected thereby and shall be enforced
to the greatest extent permitted by law.
(6) This Agreement shall be interpreted, governed and
construed in accordance with the internal laws of the State of
Colorado.
(7) If the payments required under Section 2.1(a) to
Riebesell and the payments required under Sections 2.1(a) and (b)
to the State under the Comprehensive Agreement are made in
amounts necessitating partial releases of the MOA and the
Mortgage, Riebesell and the State agree to execute partial
releases substantially in the forms attached hereto as Exhibit G
and Exhibit H, respectively, and to provide such partial releases
to the Attorney General for delivery to DGS in exchange for such
installment payments.
(8) The parties acknowledge that the State does not have
knowledge as to the accuracy of Recitals A and B except the last
sentence of Recital A or as to the accuracy of the factual
statements in Section 1.1 and 1.2.
(9) Pure Cycle further agrees to indemnify and hold
harmless the State against and from all damages, claims, costs,
and expenses (including reasonable attorneys' fees) based upon
any claims which OAR, Owens, Riebesell or any party to the
Comprehensive Agreement or the Escrow Agent may have or assert
against CFC or Allderdice as a result of the State's ownership of
the CFC Closing Assets. If Allderdice or CFC should challenge
the validity of the State's actions under this Agreement, the
Amended Escrow Instructions or the Comprehensive Agreement, Pure
Cycle and the State shall jointly seek a declaratory judgment of
the State's rights under such agreements and of the rights of
Guaranty Bank and Trust. If at the time of such challenge or
thereafter the funds become available to make the payments
contemplated by the Comprehensive Agreement, Pure Cycle and the
Escrow Agent may interplead such funds in an appropriate court
proceeding. If a declaratory judgment is entered against the
State, the State shall turn over any funds already received from
Pure Cycle pursuant to the Comprehensive Agreement to Allderdice
or Guaranty Bank and Trust in accordance with their interests as
determined by the declaratory judgment. In no event shall Pure
Cycle be required to pay both the State and Allderdice.
<PAGE>
IN WITNESS WHEREOF the parties have executed this
Amended and Restated Option and Purchase Agreement as of the day
and year first above written.
INCO:
INCO SECURITIES CORPORATION
By:
Title:
SELLERS:
THE STATE OF COLORADO STATE BOARD
OF LAND COMMISSIONERS
APPROVED AS TO FORM:
President
Gale A. Norton, Attorney General Engineer
of the State of Colorado
Register
H.F. Riebesell, Jr.
BUYER:
PURE CYCLE CORPORATION, a Delaware
corporation
By:
Thomas P. Clark, President
<PAGE>
For purposes of Section 3.3 and
applicable portions of Section 8.9
DAVIS, GRAHAM & STUBBS LLP
By:
Wanda J. Abel, Partner
For purposes of Section 3.3
ATTORNEY GENERAL OF THE STATE OF
COLORADO
GALE A. NORTON
Attorney General
STEPHEN ERKENBRACK
Chief Deputy Attorney General
TIMOTHY J. TYMKOVICH
Solicitor General
Richard A. Westfall
Special Deputy Solicitor General
EXHIBITS
Exhibit A Comprehensive Amendment Agreement No. 1
Exhibit B Amended Escrow Instructions
Exhibit C Memorandum of Agreement
Exhibit D MOA Release
Exhibit E Mortgage
Exhibit F Mortgage Release
Exhibit G Partial MOA Release
Exhibit H Partial Mortgage Release
<PAGE>
EXHIBIT A TO DOCUMENT 10.5
==========================
For Exhibit A to the Amended and Restated Option Purchase
Agreement, which consists of Comprehensive Amendment Agreement
No. 1 among Inco Securities Corporation, the Company, the State
of Colorado acting through the State Board of Land Commissioners,
and others, see DOCUMENT 10.7.
<PAGE>
EXHIBIT B TO DOCUMENT 10.5
==========================
For Exhibit B to the Amended and Restated Option Purchase
Agreement, which consists of Amendment Escrow Instructions among
OAR, Incorporated, the Company, the State of Colorado State Board
of Land Commissioners, H.F. Riebesell, Jr., and Colorado National
Bank, see DOCUMENT 10.6.
<PAGE>
EXHIBIT C TO DOCUMENT 10.5
==========================
For Exhibit C to the Amended and Restated Option Purchase
Agreement, which consists of a Memorandum of Agreement, see
Exhibit C to DOCUMENT 10.4.
<PAGE>
EXHIBIT D TO DOCUMENT 10.5
==========================
For Exhibit D to the Amended and Restated Option Purchase
Agreement, which consists of a Termination of Memorandum of
Agreement, see Exhibit D to DOCUMENT 10.4.
<PAGE>
EXHIBIT E TO DOCUMENT 10.5
==========================
MORTGAGE DEED, SECURITY AGREEMENT, AND
FINANCING STATEMENT
This Mortgage Deed, Security Agreement, and Financing
Statement ("Mortgage Deed") is dated the 11th day of April, 1996,
between the State of Colorado, acting by and through the State
Board of Land Commissioners (the "Land Board" or "Mortgagee"),
whose address is 620 Centennial Building, 1313 Sherman Street,
Denver, Colorado 80203, and Pure Cycle Corporation, a Delaware
corporation ("Pure Cycle" or "Mortgagor"), whose address is
5650 York Street, Commerce City, Colorado 80022. The Land Board
is the Secured Party/Creditor and Pure Cycle is the Debtor.
WITNESSETH, that in order to secure the payment of
certain obligations under an agreement entitled Comprehensive
Amendment Agreement No. 1 among Pure Cycle, the Land Board, and
others dated April 11, 1996 (the "Comprehensive Agreement"), the
Mortgagor does hereby grant, bargain, sell, convey, and assign
unto the Mortgagee, its successors and assigns, the Export Water
(as that term is defined in the Amended and Restated Lease
Agreement No. S-38280, dated April 11, 1996, between Rangeview
Metropolitan District, a quasi-municipal corporation and
political subdivision of the State of Colorado, acting by and
through its water activity enterprise, and the Land Board
recorded with the Arapahoe County Clerk and Recorder at
Book No. ________, Page No. ________ (Reception No. ________),
which definition of Export Water is incorporated by this
reference) which Export Water is located on and under that
certain real property consisting of approximately 24,567.21
acres, more or less, according to U.S. Government Survey, in
Arapahoe County, Colorado, more particularly described as follows
(the "Lowry Range"):
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all and 34:
all.
Township 5 South, Range 65 West of
the 6th P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66
West of the 6th P.M.,
Section 36: all
(a street address of the Lowry Range does not exist);
TO HAVE AND TO HOLD the same, together with all and
singular the privileges and appurtenances thereunto belonging
forever; provided always, that if the Mortgagor or its successor
or assigns shall pay or cause to be paid to the Mortgagee, or its
successors or assigns, the obligations under the Comprehensive
Agreement in accordance with the terms of the Comprehensive
Agreement and shall in the meantime keep and perform the
covenants and agreements herein contained, then these presents
shall be null and void, but otherwise remain in full force and
effect.
This Mortgage Deed shall constitute a security
agreement and financing statement, in accordance with the Uniform
Commercial Code of Colorado, with respect to all personal
property and fixtures included within the Export Water located on
and under the Lowry Range. Mortgagor, as Debtor, does hereby
grant a security interest in the Export Water, and all its
substitutions, additions, replacements and proceeds, to the
Mortgagee, as Secured Party.
<PAGE>
That the Mortgagor, for itself and its successors and
assigns, covenants and agrees to and with the Mortgagee, its
successors and assigns, that it holds the said premises free and
clear of all liens and encumbrances, that the Mortgagor will pay
in due season all taxes and assessments levied on said premises;
that it will pay the costs and attorneys' fees incurred by the
Mortgagee, or its successors and assigns in any foreclosure
action, other suit or proceeding, by reason hereof; and that upon
default in the payment of the obligations under the Comprehensive
Agreement or any part thereof, or upon the breach of any of the
covenants or agreements herein contained; this Mortgage Deed may
be forthwith foreclosed.
IN WITNESS WHEREOF, the Mortgagor has executed this
Mortgage Deed on the date set forth above.
PURE CYCLE CORPORATION
Attest:
By: By:
Mark W. Harding, Secretary Thomas P. Clark,
President
Tax Payer ID No.
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of April, 1996, on behalf of Pure Cycle
Corporation, by Thomas P. Clark, as President, and by Mark W.
Harding, as Secretary.
Witness my hand and official seal.
My commission expires:
Notary Public
<PAGE>
EXHIBIT F TO DOCUMENT 10.5
==========================
RELEASE OF MORTGAGE AND TERMINATION STATEMENT
This Release of Mortgage and Termination Statement
("Release") is dated the ____ day of __________________, 19____,
between the State of Colorado, acting by and through the State
Board of Land Commissioners (the "Land Board" or Mortgagee"),
whose address is 620 Centennial Building, 1313 Sherman Street,
Denver, Colorado 80203, and Pure Cycle Corporation, a Delaware
corporation ("Pure Cycle" or "Mortgagor"), whose address is
5650 York Street, Commerce City, Colorado 80022.
WHEREAS, the Mortgagor conveyed and granted a security
interest in certain real property, personal property, and
fixtures to the Mortgagee as described in the Mortgage Deed,
Security Agreement, and Financing Statement dated April 11, 1996,
and recorded with the Arapahoe County Clerk and Recorder at
Book ________, Page No. ________ (Reception No. __________) (the
"Mortgage Deed") to secure the payment of certain obligations
under an agreement entitled Comprehensive Amendment Agreement
No. 1, among PureCycle, the Land Board and others, dated
April 11, 1996 (the "Comprehensive Agreement"); and
WHEREAS, the obligations under the Comprehensive
Agreement have been fully paid and satisfied in accordance with
the Comprehensive Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the payment as provided in the Comprehensive Agreement, the
receipt and sufficiency of which are hereby acknowledged, the
undersigned does hereby remise, release and forever quitclaim
unto the present owner or owners of said real property, its
successors and assigns forever, all of the right, title and
interest which the undersigned has by virtue of the above
described Mortgage Deed in and to the Export Water (as that term
is defined in the Amended and Restated Lease Agreement
No. S-38280, dated April 11, 1996, between Rangeview Metropolitan
District, a quasi-municipal corporation and political subdivision
of the State of Colorado, acting by and through its water
activity enterprise, and the Land Board) which is located on and
under that certain real property consisting of approximately
24,567.21 acres, more or less, according to U.S. Government
Survey, in Arapahoe County, Colorado, more particularly described
as follows (the "Lowry Range"):
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all and 34:
all.
Township 5 South, Range 65 West of
the 6th P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19
feet.
Township 5 South, Range 66
West of the 6th P.M.,
Section 36: all
(a street address of the Lowry Range does not exist);
TO HAVE AND TO HOLD THE SAME, together with all and
singular the privileges and appurtenances thereunto belonging
forever. By this Release, the said Mortgage Deed is to be
considered fully and absolutely released, cancelled, and forever
discharged.
This Release shall further constitute a termination of
all security interests and of the Mortgage Deed as a financing
statement.
<PAGE>
PURE CYCLE CORPORATION
ATTEST:
By: By:
Title: Title:
Tax Payer ID No.
STATE OF COLORADO
STATE BOARD OF LAND
COMMISSIONERS
President
APPROVED AS TO FORM:
Attorney General of the
State of Colorado
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of __________, _______, by ____________________,
as President, of the State of Colorado, State Board of Land
Commissioners.
Witness my hand and official seal.
My commission expires:
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of _______________, ________, by
____________________, as President, and by ____________________,
as Secretary, of Pure Cycle Corporation.
Witness my hand and official seal.
My commission expires:
Notary Public
<PAGE>
EXHIBIT G TO DOCUMENT 10.5
==========================
For Exhibit G to the Amended and Restated Option Purchase
Agreement, which consists of a Partial Termination of Memorandum
Agreement, see Exhibit E to DOCUMENT 10.4.
<PAGE>
EXHIBIT H TO DOCUMENT 10.5
==========================
C&S 512628.3 Exhibit H
PARTIAL RELEASE OF MORTGAGE AND TERMINATION STATEMENT
This Release of Mortgage and Termination Statement
("Release") is dated the ____ day of __________________, 19____,
between the State of Colorado, acting by and through the State
Board of Land Commissioners (the "Land Board" or Mortgagee"),
whose address is 620 Centennial Building, 1313 Sherman Street,
Denver, Colorado 80203, and Pure Cycle Corporation, a Delaware
corporation ("Pure Cycle" or "Mortgagor"), whose address is
5650 York Street, Commerce City, Colorado 80022.
WHEREAS, the Mortgagor conveyed and granted a security
interest in certain real property, personal property, and
fixtures to the Mortgagee as described in the Mortgage Deed,
Security Agreement, and Financing Statement dated April 11, 1996,
and recorded with the Arapahoe County Clerk and Recorder at
Book ________, Page No. ________ (Reception No. __________) (the
"Mortgage Deed") to secure the payment of certain obligations
under an agreement entitled Comprehensive Amendment Agreement
No. 1, among Pure Cycle, the Land Board and others, dated
April 11, 1996 (the "Comprehensive Agreement"); and
WHEREAS, the obligations under the Comprehensive
Agreement have been partially paid and satisfied to the extent of
$__________ in accordance with the Comprehensive Agreement;
NOW, THEREFORE, in consideration of the premises and
the payment as provided in the Comprehensive Agreement, the
receipt and sufficiency of which are hereby acknowledged, the
undersigned does hereby remise, release and forever quitclaim
unto the present owner or owners of said real property, its
successors and assigns forever, all of the right, title and
interest which the undersigned has by virtue of the above
described Mortgage Deed in and to a total gross volume of
__________ acre feet of the Export Water (as that term is defined
in the Amended and Restated Lease Agreement No. S-38280, dated
April 11, 1996, between Rangeview Metropolitan District, a quasi-
municipal corporation and political subdivision of the State of
Colorado, acting by and through its water activity enterprise,
and the Land Board) which is located on and under that certain
real property consisting of approximately 24,567.21 acres, more
or less, according to U.S. Government Survey, in Arapahoe County,
Colorado, more particularly described as follows (the "Lowry
Range"):
<PAGE>
Township 5 South, Range 64 West of
the 6th P.M.,
Sections 7 through 10: all;
Sections 15 through 22: all;
Sections 27 through 34: all.
Township 4 South, Range 65 West of
the 6th P.M.,
Sections 33: all and 34:
all.
Township 5 South, Range 65 West of
the 6th P.M.,
Section 3: all; Sections 10
through 15: all, less certain
surface rights granted for the
Aurora Reservoir (but including the
water under the Aurora Reservoir)
in Section 15; Sections 22 through
27: all, less certain surface
rights granted for the Aurora
Reservoir (but including the water
under the Aurora Reservoir) in
Section 22; Sections 35 and 36:
all; Section 34: north
2,183.19 feet.
Township 5 South, Range 66
West of the 6th P.M.,
Section 36: all
(a street address of the Lowry Range does not exist);
TO HAVE AND TO HOLD THE SAME, together with all and
singular the privileges and appurtenances thereunto belonging
forever. By this Partial Release, the said Mortgage Deed is to
be considered released, cancelled, and forever discharged with
respect to a total gross volume of __________ acre feet of the
Export Water but shall remain in effect with respect to the
remaining Export Water.
This Release shall further constitute a partial
termination of all security interests and of the Mortgage Deed as
a financing statement.
ATTEST: PURE CYCLE CORPORATION
By: By:
Title: Title:
Tax Payer ID No.
<PAGE>
APPROVED AS TO FORM: STATE OF COLORADO
STATE BOARD OF LAND
COMMISSIONERS
Attorney General of the
State of Colorado President
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of __________, _______, by ____________________,
as President, of the State of Colorado, State Board of Land
Commissioners.
Witness my hand and official seal.
My commission expires:
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me
this _____ day of _______________, ________, by
____________________, as President, and by ____________________,
as Secretary, of Pure Cycle Corporation.
Witness my hand and official seal.
My commission expires:
Notary Public
<PAGE>
=============
DOCUMENT 10.6
=============
AMENDED ESCROW INSTRUCTIONS
April 11, 1996
Colorado National Bank
950 17th Street, Suite 2410
Denver, Colorado 80202
Attention: Corporate Trust Services
Re: Second Amended and Restated Closing Escrow
Instructions -- Willard Owens Transaction
Ladies and Gentlemen:
This letter contains instructions to Colorado National
Bank (the "Escrow Agent") with respect to the closing of certain
transactions described in the Option and Purchase Agreement by
and between OAR, Incorporated and INCO Securities Corporation
(the "OAR Agreement"); the Option and Purchase Agreement by and
between Colorado Water Consultants, Incorporated and INCO
Securities Corporation (the "CWC Agreement") each dated
November 8, 1990, and amended August 12, 1991, August 12, 1992,
and the date hereof. Subject to Paragraph D, this letter
completely amends and restates the Amended and Restated Closing
Escrow Instructions -- Willard Owens Transaction dated August 12,
1992 (the "1992 Instructions"), but specifically does not amend
or restate the Escrow Agreement dated August 12, 1991, by and
between the Escrow Agent, OAR, Incorporated ("OAR"), Willard G.
Owens ("Owens"), Colorado Water Consultants, Incorporated
("CWC"), INCO Securities Corporation ("INCO") and the other
parties listed in the signature page thereof (the "Escrow
Agreement"). The transaction originally consisted of the sale
and conveyance of $8,041,371 of Rangeview Metropolitan District
Water Revenue Bonds, Series 1988 M (the "Rangeview Bonds");
$5,000,000 Lowry Range Metropolitan Water District Revenue Notes,
Series 1987 A-L (the "Lowry Notes"); and $2,142,858 of Rangeview
Metropolitan District Water Revenue Notes, Series 1988 A-L (the
"Rangeview Notes") by OAR, CWC, Carlton Allderdice ("Allderdice")
and H.F. Riebesell, Jr. ("Riebesell") to INCO.
The State of Colorado, acting by and through the State
Board of Land Commissioners (the "State"), is the assignee of all
rights of Allderdice and CWC, now known as Colorado Financial
Consultants, Inc., in the Rangeview Bonds, Lowry Notes and
Rangeview Notes. A copy of such assignment is attached hereto as
Schedule 1.
<PAGE>
Pure Cycle Corporation ("Pure Cycle") is the assignee
of all rights and obligations of INCO pursuant to the OAR
Agreement, the CWC Agreement and the Escrow Agreement. A copy of
such assignment is attached hereto as Schedule 2. In addition,
Pure Cycle has agreed to assume the obligation of OAR, the State
(formerly CWC and Allderdice) and Owens set forth in paragraph 7
of the Escrow Agreement to pay one-half of the Escrow Agent's
Fees and Expenses (as those terms are defined in the Escrow
Agreement). A copy of such assumption is attached hereto as
Schedule 3.
Pursuant to paragraph 8 of the Escrow Agreement, the
State, Pure Cycle and Riebesell hereby notify the Escrow Agent
that their new addresses for notice are as set forth on
Schedule 4 attached hereto.
If any date referenced herein as a deadline for the
delivery of any documents required to be delivered hereunder is a
Saturday, Sunday or federal legal holiday, such deadline shall be
extended until the end of the next day which is not a Saturday,
Sunday or federal legal holiday.
It is specifically acknowledged by all of the parties
hereto that the Escrow Agent is not a party to and shall not be
bound by any agreements between any or all of the parties hereto
except the Escrow Agreement and this Second Amended and Restated
Closing Escrow Instructions -- Willard Owens Transaction.
84. SALE AND CONVEYANCE OF FINAL CLOSING BONDS
(1) Parties to Sale and Conveyance of Final Closing Bonds.
The parties involved in the sale and conveyance of the Rangeview
Bonds, the Lowry Notes and the Rangeview Notes (collectively, the
"Bonds") are OAR, the State and Riebesell (collectively, "Bond
Sellers"); Pure Cycle; Escrow Agent; the Attorney General of the
State of Colorado ("State's Attorney"); and Davis, Graham &
Stubbs LLP ("Pure Cycle's Attorney").
(2) Documents. The following fully executed original
documents (the "Documents") have been delivered to Escrow Agent.
1. Rangeview Bonds
a. Certificate or certificates, issued in
the name of OAR, representing Rangeview Bonds in the face amount
of $5,628,960.
b. Certificate or certificates, issued in
the name of Riebesell, representing Rangeview Bonds in the face
amount of $1,206,205.
<PAGE>
c. Certificate or certificates, issued in the name of Carlton
E. Allderdice ("Allderdice"), representing Rangeview Bonds in the
face amount of $1,206,206.
d. Assignment or assignments signed by OAR,
with a signature guaranty assigning Rangeview Bonds in the face
amount of $5,628,960 in blank ("Rangeview Bond OAR Assignments").
e. Assignment or assignments signed by
Riebesell with a signature guaranty assigning Rangeview Bonds in
the face amount of $1,206,205 in blank ("Rangeview Bonds
Riebesell Assignments").
f. Assignment or assignments signed by
Allderdice with a signature guaranty assigning Rangeview Bonds in
the face amount of $1,206,206 in blank (the "Rangeview Bonds
Allderdice Assignments").
2. Lowry Notes
a. Certificate or certificates, issued in
the name of OAR, representing Lowry Notes in the face amount of
$5,000,000.
b. Assignment or Assignments signed by OAR
with a signature guaranty assigning Lowry Notes in the face
amount of $5,000,000 in blank ("Lowry Assignments").
3. Rangeview Notes
a. Certificate or certificates, issued in
the name of Colorado Water Consultants, Incorporated ("CWC"),
representing Rangeview Notes in the face amount of $942,858.
b. Assignment or Assignments signed by CWC
with a signature guaranty assigning Rangeview Notes in the face
amount of $942,858 in blank ("Rangeview Notes CWC Assignment or
Assignments").
c. Certificate or certificates, issued in
the name of Allderdice, representing Rangeview Notes in the face
amount of $600,000.
<PAGE>
d. Assignment or assignments signed by
Allderdice with a signature guaranty assigning Rangeview Notes in
the face amount of $600,000 in blank ("Rangeview Notes Allderdice
Assignments").
e. Certificate or certificates, issued in
the name of Riebesell, representing Rangeview Notes in the face
amount of $600,000.
f. Assignment or assignments signed by
Riebesell with a signature guaranty assigning Rangeview Notes in
the face amount of $600,000 in blank ("Rangeview Notes Riebesell
Assignments").
4. Letter from Jensen Byrne Parsons Ruh & Tilton
P.C. identifying any and all encumbrances on the Bonds or stating
that no encumbrances exist ("Bond Encumbrance Letter").
(3) Closing Instructions. Escrow Agent is authorized,
directed and agrees to take the following actions:
Upon (i) notification to Escrow Agent by fax or
original writing, in the form attached hereto as
Schedule 5, from State's Attorney and Pure Cycle's
Attorney to proceed with the Closing Instructions in
accordance with this Section C and (ii) receipt of a
release from Guaranty Bank and Trust Company releasing
the encumbrance identified in the Bond Encumbrance
Letter, Escrow Agent shall deliver the certificates
representing the Rangeview Bonds, the Lowry Notes and
the Rangeview Notes, together with the Rangeview Bonds
OAR Assignments, the Rangeview Bonds Riebesell
Assignments, the Rangeview Bonds Allderdice
Assignments, the Lowry Assignments, the Rangeview Notes
CWC Assignments, the Rangeview Notes Riebesell
Assignments and the Rangeview Notes Allderdice
Assignments, to the Rangeview Metropolitan District at
the following address:
141 Union Boulevard, Suite 150
Lakewood, Colorado 80228
(4) Termination. The parties to the original transaction
are parties in a lawsuit pending in the District Court for the
City and County of Denver, State of Colorado, styled Apex
Investment Fund II, L.P. et al. v. Colorado State Board of Land
Commissioners, et al., Case No. 94-CV-5405, Courtroom I (the
"Litigation"). The parties to the Litigation have reached a
settlement agreement (the "Settlement Agreement") which is
subject to certain conditions. If those conditions do not occur,
the Settlement Agreement will be terminated, and these
instructions will not be required. Therefore, if, (a) Escrow
Agent receives notification by fax or original writing from
State's Attorney and Pure Cycle's Attorney that the Settlement
Agreement has been terminated or (b) on or before 5:00 p.m. on
August 12, 1996, notifications from the State's Attorney and Pure
Cycle's Attorney and the release from Guaranty Bank and Trust
Company have not been received by Escrow Agent in accordance with
Section C Closing Instructions, whichever is earlier, these
instructions shall be null and void ab initio and shall have no
force and effect. Escrow Agent shall thereafter continue to hold
the Documents in accordance with the 1992 Instructions.
<PAGE>
Please indicate your acceptance of and agreement to the
terms and provisions of these Second Amended and Restated Closing
Escrow Instructions by signing nine copies hereof and returning
the same to the undersigned.
Sincerely,
OAR, Incorporated
By:
Willard G. Owens,
President
Pure Cycle Corporation
By:
Thomas P. Clark,
President
Approved as to Form:
State of Colorado State Board of
Land Commissioners
___________________________
Gale A. Norton
Attorney General of the President
State of Colorado
<PAGE>
Engineer
Register
H.F. Riebesell, Jr.
ACCEPTED AND AGREED to this ______ day of April, 1996.
COLORADO NATIONAL BANK
as Escrow Agent
By:_______________________________
Title:____________________________
SCHEDULE 1 TO DOCUMENT 10.6
===========================
ASSIGNMENT
For good and valuable consideration, the receipt of
which is hereby acknowledged, the undersigned do hereby assign to
The Colorado State Board of Land Commissioners (or its designee),
hereinafter the "Assignee," all of the undersigneds' right, title
and interest in and to any and all Rangeview Metropolitan
District Water Revenue Bonds and Notes, and also any other direct
or indirect interest that they or either of them presently may
have in the exploration, developing or leasing of the ground
water resources which are the subject of that certain civil
action filed in the District Court, City and County of Denver,
State of Colorado, bearing Case No. 94-CV-5405. The foregoing
shall include, without limitation:
85. Certificate or Certificates, issued in the name of
Carlton Allderdice, representing Rangeview Bonds in the face
amount of $1,206,206.00 (including, without limitation, the Bond
identified as Series 1988M);
86. Certificate or Certificates, issued in the name of
Carlton Allderdice, representing Rangeview Notes in the face
amount of $600,000.00 (including, without limitation, the Note
identified as Series 1988L);
87. Certificate or Certificates, issued in the name of
Colorado Water Consultants, Inc. (now named Colorado Financial
Consultants, Inc.), representing Rangeview Notes in the face
amount of $942,858.00 (including, without limitation, the notes
identified as Series 1988A-K, inclusive).
The foregoing assignment is subject to (1) that certain
Option Purchase Agreement entered into as of November 8, 1990,
and amended as of February 12, 1991, and as of August 12, 1992,
that certain Escrow Agreement dated August 12, 1991, those
certain Escrow Closing Instructions, amended and restated as of
August 12, 1992 and certain related and closing documents,
(2) the lien of the Guaranty Bank and Trust Company which is the
subject of that certain "Bond Encumbrance Letter" from Jensen
Byrne Parsons Ruh & Tilton, P.C. to INCO Securities Corporation
dated August 12, 1991, and also (3) the $27,000 assignment
described in that certain letter agreement dated August 12, 1992
between INCO Securities Corporation, OAR Incorporated, and
Colorado Water Consultants, Incorporated.
The Assignee specifically does not assume or agree to
perform any of the obligations of the undersigned with respect to
any of the documents or agreements referred to herein.
Dated: April 28, 1995.
COLORADO FINANCIAL CONSULTANTS, INC.
By: /s/ Carlton E. Allderdice, President
Carlton E. Allderdice, President
/s/ Carlton E. Allderdice
Carlton E. Allderdice
<PAGE>
SCHEDULE 2 TO DOCUMENT 10.6
===========================
ASSUMPTION
Pure Cycle Corporation, a Delaware Corporation, hereby
assumes all obligations of any party to that certain Escrow
Agreement, by and among OAR, Incorporated, Willard G. Owens in
his individual and representative capacities, Colorado Water
Consultants, Incorporated, INCO Securities Corporation, Richard
F. Meyers, in his individual and representative capacities,
Carlton Allderdice, H. F. Riesbesell, and Colorado National Bank
of Denver as Escrow Agent, dated as of August 12, 1991
("Agreement"), to pay all fees and expenses of the Escrow Agent
under the Agreement which have not been paid as of the date of
this Assumption and which hereafter accrue and become due and
payable.
Executed and delivered this ___ day of April, 1996.
PURE CYCLE CORPORATION
By:
Thomas P. Clark, President
SCHEDULE 3 TO DOCUMENT 10.6
===========================
ASSUMPTION
Pure Cycle Corporation, a Delaware Corporation, hereby
assumes all obligations of any party to that certain Escrow
Agreement, by and among OAR, Incorporated, Willard G. Owens in
his individual and representative capacities, Colorado Water
Consultants, Incorporated, INCO Securities Corporation, Richard
F. Meyers, in his individual and representative capacities,
Carlton Allderdice, H. F. Riesbesell, and Colorado National Bank
of Denver as Escrow Agent, dated as of August 12, 1991
("Agreement"), to pay all fees and expenses of the Escrow Agent
under the Agreement which have not been paid as of the date of
this Assumption and which hereafter accrue and become due and
payable.
Executed and delivered this ___ day of April, 1996.
PURE CYCLE CORPORATION
By:
Thomas P. Clark, President
<PAGE>
ASSIGNMENT
The undersigned irrevocably assigns to Pure Cycle
Corporation, a Delaware corporation, this 11th day of April,
1996, all of the undersigned's right, title and interest in the
following:
(1) Escrow Agreement, by and among OAR, Incorporated,
Willard G. Owens in his individual and representative capacities,
Colorado Water Consultants, Incorporated, INCO Securities
Corporation, Richard F. Meyers in his individual and
representative capacities, Carlton Allderdice, H. F. Riebesell,
and Colorado National Bank of Denver as Escrow Agent, dated as of
August 12, 1991, and those certain Escrow Closing Instructions,
amended and restated as of August 12, 1992;
(2) Option and Purchase Agreement by and among OAR,
Incorporated, a Colorado corporation, and INCO Securities
Corporation, a Delaware corporation, as amended by Amendment No.
1 on February 12, 1991 and Amendment No. 2 on August 12, 1992
(the "OAR Option Agreement");
(3) Option and Purchase Agreement, by and between Colorado
Water Consultants, Incorporated, a Colorado corporation, and INCO
Securities Corporation, a Delaware corporation, dated as of
November 8, 1990, as amended by Amendment No. 1 on February 12,
1991 and Amendment No. 2 on August 12, 1992 (the "CWC Option
Agreement");
(4) Option Agreement for Sale and Operation of Production
Right, by and between Rangeview Metropolitan District, a quasi-
municipal corporation and political subdivision of the State of
Colorado, and INCO Securities Corporation, dated as of November
14, 1990, as amended by Amendment No. 1 on February 12, 1991;
(5) All of the undersigned's rights to receive all accrued
but unpaid interest owed by the Rangeview Metropolitan District,
Arapahoe County, Colorado, associated with the Lowry Range
Metropolitan District Water Revenue Notes, Series 1987 A-D, dated
August 7, 1987, to the extent of $63,000;
(6) All of the undersigned's rights to receive all accrued
but unpaid interest owed by the Rangeview Metropolitan District,
Arapahoe County, Colorado, associated with the Rangeview
Metropolitan District Water Revenue Notes, Series 1988 A-D, dated
December 7, 1988, to the extent of $27,000;
(7) Right of First Refusal Agreement by and among INCO
Securities Corporation and Richard F. Meyers, Mark W. Harding,
Thomas P. Clark, Thomas Lamm and Rowena Rogers dated August 12,
1992; and
<PAGE>
(8) The assignment to Pure Cycle Corporation hereunder
includes the right of Pure Cycle Corporation to exercise the
options granted under the OAR Option Agreement and the CWC Option
Agreement and INCO Securities Corporation waives performance of
the provisions of Section 5.04 of the Water Rights
Commercialization Agreement dated as of December 11, 1990,
amended February 12, 1991, and further amended August 12, 1992.
IN WITNESS WHEREOF, this Assignment has been executed
as of the date first set forth above.
INCO SECURITIES CORPORATION
By:
Title:
<PAGE>
SCHEDULE 4 TO DOCUMENT 10.6
===========================
SCHEDULE 4
Notices:
88. If to State:
Board of Land Commissioners
Attn: Register
620 Centennial Building
1313 Sherman Street
Denver, Colorado 80203
Telecopy: (303) ___-____
With a copy to:
Office of Attorney General
Attn: State Land Board Attorney
1525 Sherman Street, Fifth Floor
Denver, Colorado 80203
Attn: David F. Steinhoff
Telecopy: (303) 866-3558
89. If to Pure Cycle:
Pure Cycle Corporation
5650 York Street
Commerce City, Colorado 80022
Attn: Mark W. Harding
Telecopy: (303) 292-3475
90. If to Riebesell:
H.F. Riebesell, Jr., Esq.
Hall & Evans, L.L.C.
1200 Seventeenth Street, Suite 1700
Denver, Colorado 80202
Telecopy: (303) 628-3368
<PAGE>
=============
DOCUMENT 10.7
=============
COMPREHENSIVE AMENDMENT AGREEMENT NO. 1
THIS COMPREHENSIVE AMENDMENT AGREEMENT NO. 1 (the "Agreement") is
made and entered into as of the 11th day of April, 1996, by and
among Inco Securities Corporation, a Delaware corporation
("INCO"), Pure Cycle Corporation, a Delaware corporation
("PureCycle"), Landmark Water Partners, L.P., a Delaware limited
partnership ("Landmark I"), Landmark Water Partners II, L.P., a
Delaware limited partnership ("Landmark II"), Warwick
Partners, L.P., a Delaware partnership ("Warwick"), Auginco,
a Colorado general partnership ("Auginco"), Gregory M. Morey
("Morey"), Amy Leeds ("Leeds"), Anders C. Brag ("Brag"), Newell
Augur, Jr. ("Augur"), Bill Peterson ("Peterson"), Stuart Sundlun
("Sundlun"), Alan C. Stormo ("Stormo"), D.W. Pettyjohn
("Pettyjohn"), Beverly A. Beardslee ("BAB"), Bradley Kent
Beardslee ("BKB"), Robert Douglas Beardslee ("RDB"), Apex
Investment Fund II, L.P., a Delaware limited partnership
("Apex"), The Environmental Venture Fund, L.P., a Delaware
limited partnership ("EV Fund"), The Environmental Private Equity
Fund II, L.P., a Delaware limited partnership ("EV Fund II"),
Productivity Fund II, L.P., a Delaware limited partnership
("PFund"), Proactive Partners, L.P., a California limited
partnership ("Proactive"), Asra Corporation, a Delaware
corporation ("ASRA"), and International Properties, Inc., a
Delaware corporation ("IPI"), OAR, Incorporated, a Colorado
corporation ("OAR"), Willard G. Owens ("Owens"), H.F. Riebesell,
Jr. ("Riebesell"), and the State of Colorado acting through the
State Board of Land Commissioners (the "State"). Apex, EV Fund,
EV Fund II, and PFund are collectively referred to herein as the
"Apex Group." The Apex Group, Landmark II, Warwick, Auginco,
Morey, Leeds, and Brag are collectively referred to herein as the
"August 1992 Funding Group". ASRA, IPI, Apex, EV Fund, and PFund
are collectively referred to herein as the "PureCycle Funding
Group." Apex, EV Fund II, Auginco, Brag, Augur, Peterson,
Sundlun, and Proactive are collectively referred to herein as the
"Series A Stockholders."
<PAGE>
Par Def: 1=A.RECITALS
91. INCO and OAR are parties to a certain Option and
Purchase Agreement dated as of November 8, 1990, amended
February 12, 1991, and further amended August 12, 1992, and INCO,
PureCycle and OAR are parties to an Amended and Restated Option
Purchase Agreement dated April 11, 1996, pursuant to which INCO
has assigned all of its rights and obligations under the Option
Purchase Agreement to PureCycle and PureCycle, in consideration
of the sale of the OAR Closing Assets (as defined in the Amended
and Restated Option Purchase Agreement) to it by OAR as part of
the settlement of the Lawsuit (as defined in Recital F), is
granting OAR the right to a portion of the proceeds from the sale
of certain water rights as provided in this Agreement (the Option
and Purchase Agreement, as amended, and the Amended and Restated
Option Agreement are collectively referred to herein as the "OAR
Option Agreement") and INCO is a party to a certain Option and
Purchase Agreement dated as of November 8, 1990, amended
February 12, 1991, further amended August 12, 1992, and further
amended April 11, 1996, between INCO and Colorado Water
Consultants, Incorporated (the "CWC Option Agreement" and,
together with the OAR Option Agreement, the "Rangeview Option
Agreements"), pursuant to which INCO has acquired an option to
purchase certain outstanding bonds and notes issued by the
Rangeview Metropolitan District in an aggregate principal amount
of $24,914,058 (which notes and bonds are referred to as the
"Rangeview Bonds"), a quasi-municipal corporation and political
subdivision of the State of Colorado (the "District"). Colorado
Water Consultants, Incorporated ("CWC"), has assigned its rights
to a portion of the Rangeview Bonds to Carlton Allderdice
("Allderdice") and Riebesell. Carlton Allderdice and CWC have
assigned their remaining rights in the Rangeview Bonds to the
State. The State has assumed no obligations of CWC or Allderdice
under the CWC Option Agreement or any other agreement to which
CWC or Allderdice is a party.
92. INCO is a party to a certain Option Agreement For Sale
and Operation of Production Right with the District, dated as of
November 14, 1990 and amended by Amendment No. 1 on February 12,
1991 and by a District board resolution in December 1993 (the
"Inco Agreement"), pursuant to which INCO has acquired certain
rights to 10,000 acre-feet of water per year (the "Original Water
Rights"). By executing this Agreement, the State does not
concede that INCO acquired such rights, which issue has been
resolved by the Settlement Agreement (as defined in Recital F).
93. PureCycle and INCO entered into a certain Water Rights
Commercialization Agreement (the "Commercialization Agreement")
dated as of December 11, 1990, amended February 12, 1991, and
further amended August 12, 1992, providing for, among other
things, the development and marketing of the Original Water
Rights and an agreed upon distribution of proceeds in the event
of a sale of the Original Water Rights.
94. PureCycle has sold a portion of its profit interest in
the Commercialization Agreement pursuant to the following
agreements:
(a) Interim Funding Agreement (the "Interim Funding
Agreement") entered into August 12, 1991 among INCO, PureCycle,
Landmark I, and CPV, Inc. ("CPV") (CPV's interest in the Interim
Funding Agreement has since been acquired by Owens);
(b) Investment Agreement entered into September 23, 1991
among PureCycle, Stormo, and Pettyjohn;
(c) Investment Agreement entered into September 30, 1991
between PureCycle and BAB;
<PAGE>
(d) Investment Agreement entered into September 30, 1991
among PureCycle, BKB, and RDB;
(e) Investment Agreement entered into November 20, 1991
between PureCycle and ASRA;
(f) Investment Agreement entered into November 20, 1991
between PureCycle and IPI;
(g) Investment Agreement entered into December 10, 1991
among PureCycle, Apex, EV Fund, and PFund;
(h) Funding Agreement (the "Funding Agreement") entered
into August 12, 1992 among INCO, PureCycle, and the August 1992
Funding Group;
(i) Stock Purchase Agreement (the "Stock Purchase
Agreement") entered into May 25, 1994 among PureCycle and the
Series A Stockholders.
The Investment Agreements described in (b) through (g)
above are collectively referred to herein as the "Investment
Agreements."
The Interim Funding Agreement, the Investment
Agreements, the Funding Agreement, and the Stock Purchase
Agreement are collectively referred to herein as the "Rangeview
Profit Agreements."
95. Pursuant to the conveyance of the OAR Closing Assets
and the CWC Closing Assets (as defined in the CWC Agreement)
under the OAR Option Agreement and the CWC Option Agreement as
part of the settlement of the Lawsuit, the Interim Funding
Agreement, the Funding Agreement, and an Agreement dated
October 27, 1994 among PureCycle, the Apex Group, Proactive,
Auginco, Brag, Leeds and Pettyjohn (the "Assignment Agreement"),
the following parties own Rangeview Bonds in the following
amounts:
Bondholders Face Value of
Rangeview Bonds
INCO $2,101,841
PureCycle $16,836,966
Landmark I $1,213,994
Owens $1,213,994
Landmark II $728,000
Warwick $520,000
Apex $802,833
EV Fund $288,629
EV Fund II $555,056
PFund $244,225
Proactive $222,022
Auginco $ 42,184
Brag $ 55,506
Leeds $ 44,404
Pettyjohn $ 44,404
$24,914,058
The foregoing parties are collectively referred to herein as the
"Rangeview Bondholders."
<PAGE>
96. The District's right to sell the Original Water Rights
derive from a lease between the District and the State
denominated Lease Number S-37280, dated April 26, 1982 and
amended at various subsequent times (the "Lease"). A lawsuit was
filed in the District Court in and for the City and County of
Denver, State of Colorado (the "Denver District Court") on
October 28, 1994 styled Apex Investment Fund II, L.P., et al. v.
Colorado State Board of Land Commissioners, et al., Case
No. 94-CV-5405 (Courtroom I) (the "Lawsuit"), in which the
parties have asserted various claims relating to the status and
validity of the Lease and the Rangeview Bonds. The parties to
the Lawsuit have reached a settlement agreement, to which this
Agreement is attached as Exhibit 8 (the "Settlement Agreement"),
which requires, among other things, (i) an amended and restated
Lease which is attached to the Settlement Agreement as Exhibit 1
(the "Amended and Restated Lease"), (ii) superseding the Inco
Agreement with a new agreement for sale of export water (the
"Export Water Agreement") which is attached to the Amended and
Restated Lease as Exhibit C, (iii) amending the Rangeview Profit
Agreements, and (iv) conveyance of the Rangeview Bonds by
PureCycle to the District for cancellation.
97. Pursuant to a deed granted pursuant to the Export Water
Agreement (the "Export Water Deed"), PureCycle will acquire
certain rights to 1,165,000 acre-feet of water (the "Export
Water") in lieu of the Original Water Rights.
98. The parties hereto believe the settlement of the
Lawsuit is in their best interest because it will, among other
things, enable the Export Water to be marketed and sold without
further dispute from the State; and therefore, the parties are
desirous of entering into this Agreement to facilitate the
settlement of the Lawsuit.
AGREEMENT
Now, therefore, in consideration of the recitals,
covenants herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
99. Effective Date. This Agreement shall be binding on the
date it is fully executed and delivered by the parties hereto
subject only, as a condition subsequent, to the occurrence of the
Effective Date (as that term is defined in the Settlement
Agreement). If the Settlement Agreement is terminated, this
Agreement shall be null and void ab initio and shall have no
force and effect.
100. Application of Rangeview Proceeds.
(1) The first $32,026,232 of Gross Proceeds (as defined in
Section 2.4) from the marketing, sale or other disposition of the
Export Water by INCO, PureCycle, or the Export Water Contractor
(as defined in Section 6.1 of the Amended and Restated Lease),
after payment of royalties pursuant to the Amended and Restated
Lease, shall, as a condition of any sales documents entered into
between the Export Water Contractor and the Export Water
Purchaser (as defined in the Amended and Restated Lease), be
deposited by the Export Water Purchaser directly into a trust
account with Davis, Graham & Stubbs LLP ("DGS") (or a successor
who shall be appointed in accordance with the procedures set
forth in Section 16 of the Settlement Agreement) who shall
disburse the proceeds within ten (10) business days in the
following manner and order:
<PAGE>
1. the first $8,000,000 - to
OAR (provided OAR has provided DGS with the Termination of
Memorandum required by the OAR Option Agreement), Riebesell
(provided Riebesell has provided DGS with the release required by
the CWC Option Agreement), and the State (provided the State has
provided DGS with a release of its mortgage on the Export Water
to the extent of such payment) on a pro rata basis with 70% of
all funds available for distribution going to OAR, 11.895% going
to Riebesell, and 18.105% going to the State until OAR has
received $5,600,000, Riebesell has received $951,600, and the
State has received $1,448,400;
2. the next $1,110,232 - to the
State;
3. the next $2,450,000 - to INCO,
Landmark I, and Owens (the "Interim Funding Group") on a pro rata
basis with 59.2% of all funds available for distribution going to
INCO, 20.4% going to Landmark I, and 20.4% going to Owens until
INCO has received $1,450,000 and Landmark I and Owens have each
received $500,000;
4. the next $200,000 - to
Stormo and Pettyjohn on a pro rata basis with 50% of all funds
available for distribution going to Stormo and 50% going to
Pettyjohn until each has received $100,000;
5. the next $50,000 - to BAB;
6. the next $50,000 - to BKB
and RDB on a pro rata basis with 50% of all funds available for
distribution going to BKB and 50% going to RDB until each has
received $25,000;
7. the next $300,000 - to ASRA
and IPI on a pro rata basis with 50% of all funds available for
distribution going to ASRA and 50% going to IPI until each has
received $150,000;
8. the next $175,500 - to
PureCycle
9. the next $3,475,000 - to the
August 1992 Funding Group on a pro rata basis with 71.94% of all
funds available for distribution going to the Apex Group, 10.07%
going to Landmark II, 7.19% going to Warwick, 2.16% going to
Auginco, 2.88% going to Morey, 2.88% going to Leeds, and 2.88%
going to Brag until the Apex Group has received $2,500,000,
Landmark II has received $350,000, Warwick has received $250,000,
Auginco has received $75,000, Morey has received $100,000, Leeds
has received $100,000 and Brag has received $100,000;
<PAGE>
10. the next $2,450,000 - to the
members of the Interim Funding Group on a pro rata basis as
described in (c) above;
11. the next $200,000 - to
Stormo and Pettyjohn on a pro rata basis as described in (d)
above;
12. the next $50,000 - to BAB;
13. the next $50,000 - to BKB
and RDB on a pro rata basis as described in (f) above;
14. the next $300,000 - to ASRA
and IPI on a pro rata basis as described in (g) above;
15. the next $74,500 - to
PureCycle;
16. the next $101,000 - to Apex,
EV Fund, and PFund on a pro rata basis with 66 2/3% of all funds
available for distribution going to Apex, 20% going to EV Fund,
AND 13 1/3% going to PFund until Apex has received $67,333.67,
EV Fund has received $20,200.00, and PFund has received
$13,466.33;
17. the next $1,150,000 - to Apex,
EV Fund, and PFund on a pro rata basis with 66 2/3% of all funds
available for distribution going to Apex, 20% going to EV Fund,
and 13 1/3% going to PFund until Apex has received $766,670.50,
EV Fund has received $230,000.00, and PFund has received
$153,329.50;
18. the next $2,850,000 - to the
August 1992 Funding Group on a pro rata basis as described in
(i) above until the Apex Group has received $2,050,290,
Landmark II has received $286,995, Warwick has received $204,915,
Auginco has received $61,560, Morey has received $82,080, Leeds
has received $82,080 and Brag has received $82,080.
The remaining up to $8,990,000 of proceeds shall be divided
50% to the August 1992 Funding Group and the other parties
described in (t) below in the proportions described in (t)
below and the remaining 50% shall be divided equally among
(i) INCO, (ii) the members of the Interim Funding Group, and
(iii) the members of the PureCycle Funding Group and paid on
an equal basis with no group or party having priority over
the other as set forth in the following example:
<PAGE>
19. (i) $1,498,334 - to
INCO;
a. $1,498,334 - to the
members of the Interim Funding Group on a pro rata basis with 20%
of all funds available for distribution going to INCO, 40% going
to Landmark I, and 40% going to Owens until INCO has received
$299,667 and Landmark I and Owens have each received $599,333;
b. $1,498,333 - to the
members of the PureCycle Funding Group and the then current
holders of PureCycle Series A Convertible Preferred Stock on a
pro rata basis with 22.69% of all funds available for
distribution going to ASRA, 22.69% going to IPI, 34.26% going to
Apex, 10.28% going to EV Fund, 6.85% going to PFund and 3.23%
going to the then current holders of PureCycle Series A
Convertible Preferred Stock until ASRA and IPI have each received
$339,966.50, Apex has received $513,269.23, EV Fund has received
$153,980.00, PFund has received $102,650.77, and the then current
holders of PureCycle Series A Convertible Preferred Stock have
received $48,500;
20. (i) $4,495,000 - to
the August 1992 Funding Group, the then current holders of
PureCycle Series A Convertible Preferred Stock, and PureCycle on
a pro rata basis with 10% of all funds available for distribution
going to the Apex Group, 9.19% going to Landmark II, 6.56% going
to Warwick, .3% going to Auginco, .4% going to Morey, .4% going
to Leeds, .4% going to Brag, and 70.11% going to the then current
holders of PureCycle Series A Convertible Preferred Stock, and
2.64% going to PureCycle until the Apex Group has received
$449,710, Landmark II has received $413,005, Warwick has received
$295,085, Auginco has received $13,440, Morey has received
$17,920, Leeds has received $17,920, Brag has received $17,920,
the then current holders of PureCycle Series A Convertible
Preferred Stock have received $3,151,500, and PureCycle has
received $118,500.
<PAGE>
Upon payment to a party hereto of the amounts specified
in Section 2.1, the Rangeview Profit Agreements applicable to
such party and this Agreement shall be terminated with respect to
such party and such party shall not have any further interest in
the Rangeview Profit Agreements, this Agreement, or the projects
related to the Export Water contemplated thereby and hereby.
Nothing in the preceding sentence shall affect the rights of the
State under the Amended and Restated Lease.
(2) As of the Effective Date, each Rangeview Bondholder
(other than PureCycle) hereby sells, transfers and assigns unto
PureCycle all right, title and interest free and clear of all
liens, security interests, and other encumbrances in and to
Rangeview Bonds in the principal amount set forth opposite such
Rangeview Bondholder's name in Recital E hereof, plus all accrued
interest thereon. Each Rangeview Bondholder further agrees to
execute any further documentation (such as an assignment form
with the signature guaranteed under the Securities Transfer
Agents Medallion Program) which may be required to effectively
transfer title and record ownership in such Rangeview Bonds to
PureCycle. Upon execution of this Agreement, each Rangeview
Bondholder (other than PureCycle) shall deliver such bondholders'
Rangeview Bonds and any assignments requested pursuant to this
section to PureCycle to be delivered to the Escrow Agent (as that
term is defined in the Settlement Agreement) to be held pursuant
to the terms of the Settlement Agreement.
(3) Sections 2.1 and 2.2 amend and supersede Sections 6.02
and 6.05 of the Commercialization Agreement, Section 5 of the
Interim Funding Agreement, Section 1.3 of the Investment
Agreements, Section 4 of the Funding Agreement, and Exhibit B to
the Stock Purchase Agreement in their entirety. In addition,
Section 1.2 supersedes Section 4 of the Assignment Agreement.
Any reference to Sections 6.02 or 6.05 in the Commercialization
Agreement, Section 5 in the Interim Funding Agreement, Section
1.3 in the Investment Agreements, Section 4 in the Funding
Agreement, and Exhibit B in the Stock Purchase Agreement shall
hereafter be deemed to be a reference to Sections 2.1 and 2.2 of
this Agreement. Except as specifically set forth herein, the
Rangeview Profit Agreements remain in full force and effect. The
parties acknowledge that OAR represents that it is not a party to
the Commercialization Agreement or the Rangeview Profit
Agreements, nor shall it be deemed a party to such agreements as
a result of executing this Agreement. OAR assumes no obligations
under any agreements to which it is not a party by entering into
this Agreement. OAR's rights to distributions under
Section 2.1(a) arise out of this Agreement, the OAR Option
Agreement and the Settlement Agreement.
(4) For purposes of this Agreement, the term "Gross
Proceeds" shall mean the total funds received from the sale of
Export Water to one or more Export Water Purchasers for Cash
Equivalent (as defined Section 4.1 hereof) reduced only by the
amount of the Obligations to the State (as defined in Section
4.1). The term "Gross Revenues" as defined and used in the
Amended and Restated Lease shall control the determination of the
Obligations to the State but otherwise shall have no bearing and
effect on the definition of Gross Proceeds used in this
Agreement. In the case of an installment sale of the Export
Water, Gross Proceeds shall be deemed to be received only to the
extent of actual funds (but not including negotiable promissory
notes evidencing such installment sale) deposited in the trust
account maintained by DGS as provided in Section 2.1 hereof. The
parties hereto agree that, notwithstanding the definition of
"Gross Revenues" as set forth in Article I and Section 7.2(c) of
the Amended and Restated Lease, no costs (other than the
Obligations to the State) directly or indirectly incurred in
connection with the withdrawal, treatment, delivery, marketing or
sale of the Export Water shall be deducted from the Gross
Proceeds so long as the amount set forth in Section 2.1 remains
unpaid.
<PAGE>
101. PureCycle Series A Convertible Preferred Stock. Each
Series A Stockholder acknowledges that the remaining adjusted
purchase price of the Rangeview Bonds pursuant to the Option
Agreements (as that term is defined in the Certificate of
Designations, Powers, Preferences and Rights of Series A
Convertible Preferred Stock filed by PureCycle with the Secretary
of State of Delaware on May 25, 1994 (the "Series A
Certificate")) with PPI or Purchase Price Interest (as those
terms are defined in the Series A Certificate) is $9,110,232 and
that PPI is $1,026,232. Each Series A Stockholder agrees that
such Series A Stockholder will not transfer the shares of
PureCycle Series A Convertible Preferred Stock owned by such
Series A Stockholder until the transferee of such shares
acknowledges that PPI is $1,026,232. Each Series A Stockholder
further agrees to return the stock certificate(s) representing
such stockholder's PureCycle Series A Convertible Preferred Stock
to PureCycle to be legended with a reference to the foregoing
agreements.
102. Conditions on Sale of Export Water; Lease Amendments.
(1) The parties, including PureCycle, agree that until
Gross Proceeds in an amount of $8,000,000 have been deposited in
the trust account with DGS and have been distributed by DGS in
accordance with Section 2.1(a) hereof and all payments then due
and payable to the State for royalties as provided under the
Amended and Restated Lease have been paid in full ("Obligations
to the State"), the Export Water shall be sold or otherwise
disposed of to one or more purchasers only for cash, cashier's
check, certified funds, wire transfer or negotiable promissory
note(s) adequately secured by a perfected security interest in
the Export Water sold to cover any amount owed under such note(s)
(referred to herein collectively as "Cash Equivalent") in either
(i) a lump sum payment or (ii) installment payments providing for
a down payment of not less than the Obligations to the State then
due with respect to the sales, plus (a) twenty percent (20%) of
the total contract price or (b) twenty percent (20%) of
$8,000,000, if less than the contract price, with the final
payment being required to be made no later than five (5) years
after the closing date of such sale.
(2) PureCycle further agrees that it will not sell or
otherwise dispose of the Export Water in a transaction where the
price received per acre foot for the portion of the Export Water
sold or otherwise disposed of would result in Gross Proceeds of
less than $8,000,000, if all of the Export Water were sold at
that price.
(3) Pursuant to the Export Water Deed, the District has
agreed that it shall not enter into any amendments to the Amended
and Restated Lease that affect PureCycle's rights and/or
obligations under the Export Water Deed without PureCycle's prior
written approval. PureCycle agrees that it will not approve of
any amendments to the Amended and Restated Lease which would
adversely affect the right of the parties to receive the payments
contemplated pursuant to Section 2.1(a) of this Agreement.
(4) PureCycle shall provide the parties in Section 2.1(a)
with written notice of and access to contemplated sales documents
for the sale or other disposition of the Export Water ten (10)
days in advance of such sale or other disposition.
(5) The provisions of this Section 4 may be amended or
waived only with the consent of all of the parties entitled to
payment of the proceeds to be paid pursuant to Section 2.1(a).
103. Records. PureCycle shall prepare and keep full,
complete, and proper books, records and accounts of all Export
Water sales or dispositions and shall document such transactions.
Said books, records, and accounts shall be open at all reasonable
times, upon fourteen (14) days' prior written notice, to the
inspection of a designated representative of the parties hereto
other than PureCycle (collectively, the "Investors") for the
purpose of verifying the accuracy of payments made pursuant to
Section 2.1. The designated representative may, at the
Investors' expense, copy, extract and/or audit all or a portion
of said books, records, and accounts for a period of up to five
(5) years after the date such books, records and accounts are
made. Any deficiency in the payment of amounts due pursuant to
Section 2.1 determined upon such inspection or audit shall be
immediately due and payable by PureCycle, together with interest
at the prime rate specified in the Wall Street Journal, Western
Edition (the "Prime Rate"), plus two percent (2%) from the date
or dates such amounts should have been paid.
<PAGE>
104. Right to Cure. In the event PureCycle takes or fails
to take any action which, unless cured, would result in a
termination of PureCycle's rights to any portion of the Export
Water, PureCycle shall provide written notice to a designated
representative of the Investors within five (5) days following
the occurrence of any such action or failure, and the Investors,
or any of them, may, without prejudice to any other remedies such
Investors may have, cure such action or failure on PureCycle's
behalf and shall be entitled to reimbursement from PureCycle for
any amount paid to cure such action or failure plus all costs and
damages associated therewith and interest at the Prime Rate, plus
two percent (2%), from the date or dates such amounts were paid.
105. No Agency, Partnership or Joint Venture. The parties
hereto are independent contractors and nothing contained in this
Agreement shall be deemed to create the relationship of partners,
joint venturers, or of principal and agent, or of any association
or relationship between the parties other than as expressly
provided in this Agreement. Each party acknowledges that it does
not have, and it shall not make representations to any third
party, either directly or indirectly, indicating that it has any
authority to act for or on behalf of any other party or to
obligate them in any way whatsoever.
106. Press Releases.
(1) Each party shall limit any comments to the public or
the press regarding this Agreement to the terms and benefits of
the Settlement Agreement.
(2) This Section 8 shall not, however, be construed to
(i) prohibit disclosure to the Denver District Court as
contemplated by the Settlement Agreement, (ii) prohibit any party
from making any disclosures which it is required to make by law,
rule, regulation or court order (including applicable securities
laws) or which it is advised by counsel to make to comply with
such law, rule, regulation or court order or from filing this
Agreement with, or disclosing the terms of this Agreement to, any
institutional lender to such party, and (iii) prohibit any party
from disclosing to its partners, investors and broker/dealers
such terms of this transaction as would customarily be disclosed
to them in connection with transactions of the type contemplated
hereby.
107. Release. Upon execution of this Agreement, each party
to this agreement who is not a party to the Settlement Agreement
shall execute and deliver to PureCycle a release in the form of
Exhibit A attached hereto. Such releases shall be delivered by
PureCycle to the Escrow Agent to be held pursuant to the terms of
the Settlement Agreement.
108. Brokers. Each party represents to the others that it
has not engaged a broker in connection with this transaction, and
no brokerage fees are payable by any party on account hereof.
<PAGE>
109. Expenses. All legal and other costs and expenses
incurred in connection with the preparation of this Agreement and
the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses.
110. Successors and Assigns. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns.
111. Amendment. This Agreement may be amended only by a
writing signed by the parties affected by such amendment.
112. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall together constitute one and
the same instrument.
113. Governing Law. With respect to relationships among
PureCycle, OAR, Riebesell, and the State, this Agreement shall be
governed by Colorado law. With respect to relationships between
PureCycle and each other party, the governing law provision of
the applicable Rangeview Profit Agreement shall govern.
114. Attorneys' Fees. In the event any party finds it
necessary to employ legal counsel or to bring an action at law or
other proceeding against another party to enforce any of the
terms, covenants, or conditions of this Agreement, the party
prevailing in any such action or other proceeding shall be paid
all reasonable attorneys' fees by such other party, and in the
event any judgment is secured by such prevailing party, all such
attorneys' fees, as determined by a court and not by jury, shall
be included in any such judgment.
115. Recitals. The parties acknowledge that the State
represents that it is not a party to the Rangeview Profit
Agreements, the Commercialization Agreement or the Rangeview
Option Agreements except the April __, 1996 amendment to the CWC
Option Agreement and that the State represents that it does not
have knowledge as to the accuracy of the Recitals except with
respect to the last two sentences of Recital A, the last sentence
of Recital B and Recitals F-H.
116. State Obligations. The parties acknowledge and agree
that the State is a party to this Agreement merely to facilitate
the contemplated amendments and to receive the payments under
Sections 2.1(a) and (b) and that the State assumes no obligations
under any agreements to which it is not a party.
117. Inconsistencies. To the extent any provisions of this
Agreement are inconsistent with the provisions of the
Commercialization Agreement or the Rangeview Profit Agreements,
the terms of this Agreement shall control.
118. Indemnity. PureCycle, its successors and assigns,
shall indemnify, defend and hold harmless the Investors, their
respective officers, directors, shareholders, partners,
successors and assigns ("Indemnitees") from and against all
claims and costs (including reasonable attorneys' fees) actually
incurred by any such Indemnitee as a result of a breach by
PureCycle, its successors and assigns, of this Agreement, the
Export Water Agreement or the payment of Obligations to the State
which results in a nonpayment of Gross Proceeds to the Investors
under Section 2.1 of this Agreement when such Gross Proceeds are
or were available from the sale or other disposition of Export
Water.
<PAGE>
IN WITNESS WHEREOF, this Comprehensive Amendment
Agreement No. 1 has been executed on behalf of each of the
parties hereto as of the day and date first above written.
INCO SECURITIES CORPORATION,
a Delaware corporation
By:
Title:
PURE CYCLE CORPORATION,
a Delaware corporation
By:
Thomas P. Clark, President
LANDMARK WATER PARTNERS, L.P.
By: COMPTON CAPITAL, LTD.,
its general partner
By:
Earl A. Samson, III,
President
LANDMARK WATER PARTNERS II, L.P.,
a Delaware limited partnership
By: COMPTON CAPITAL PARTNERS,
INC., its general partner
By:
Earl A. Samson, III,
President
<PAGE>
WARWICK PARTNERS, L.P.,
a Delaware limited partnership
By: PROVIDENCE PARTNERS, L.P.,
its general partner
By: PACIFIC EQUITY LIMITED,
its general partner
By:
Herbert A. Denton, authorized
officer
AUGINCO,
a Colorado general partnership
By:
Harrison H. Augur, general
partner
Gregory M. Morey
Amy Leeds
Anders C. Brag
Newell Augur, Jr.
<PAGE>
Bill Peterson
Stuart Sundlun
Alan C. Stormo
D.W. Pettyjohn
Beverly A. Beardslee
Robert Douglas Beardslee
Bradley Kent Beardslee
<PAGE>
APEX INVESTMENT FUND II, L.P.,
a Delaware limited partnership
By: Apex Management
Partnership, L.P., General
Partner of Apex Investment
Fund II, L.P.
By:
George Middlemas, General
Partner
THE ENVIRONMENTAL VENTURE
FUND, L.P.,
a Delaware limited partnership
By: Environmental Venture
Management, L.P., General
Partner of The Environmental
Venture Fund, L.P.
By: First Analysis
Corporation, General Partner of
Environmental Venture
Management, L.P.
By:
Bret Maxwell, General Partner
THE ENVIRONMENTAL PRIVATE EQUITY
FUND II, L.P.,
a Delaware limited partnership
By: Environmental Private
Equity Management II, L.P.,
General Partner of
The Environmental Private Equity
Fund II, L.P.
By: First Analysis EPEF
Management II, L.P., General
Partner of Environmental Private
Equity Management II, L.P.
<PAGE>
By: First Analysis
Corporation, General Partner of
First Analysis EPEF
Management II, L.P.
By:
Bret Maxwell, General Partner
PRODUCTIVITY FUND II, L.P.,
a Delaware limited partnership
By: First Analysis Management
Company II, L.P., General
Partner of Productivity
Fund II, L.P.
By: First Analysis
Corporation, General Partner of
First Analysis Management
Company II, L.P.
By:
Bret Maxwell, General Partner
PROACTIVE PARTNERS, L.P.,
a California limited partnership
By:
Charles McGettigan, General
Partner
ASRA CORPORATION,
a Delaware corporation
By:
Title:
<PAGE>
INTERNATIONAL PROPERTIES, INC.,
a Delaware corporation
By:
Title:
OAR, Incorporated,
a Colorado corporation
By:
Willard G. Owens, President
Willard G. Owens
H. F. Riebesell, Jr.
STATE OF COLORADO STATE BOARD OF
LAND COMMISSIONERS
President
Engineer
Register
<PAGE>
Approved as to form:
GALE A. NORTON
Attorney General of the State of
Colorado
STEPHEN K. ERKENBRACK
Chief Deputy Attorney General
TIMOTHY M. TYMKOVICH
Solicitor General
Richard A. Westfall
Special Deputy Solicitor General
For purposes of Section 2 only:
DAVIS GRAHAM & STUBBS LLP
By:
Wanda J. Abel, Partner
<PAGE>
EXHIBIT A TO DOCUMENT 10.7
==========================
Exhibit A
RELEASE
In consideration for ten dollars ($10.00) and other
consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned on behalf of themselves, their
parents, subsidiaries, affiliates and all other related companies
and their successors, and assigns, fully, finally and
unequivocally release the Colorado State Board of Land
Commissioners, the past and present Land Board Commissioners, the
State of Colorado, and Rangeview Metropolitan District, and their
directors, employees, agents, attorneys, advisors, successors,
and assigns, from any and all claims, controversies, actions,
causes of actions, suits, demands, obligations, debts, losses,
damages, or liabilities which may exist in law or equity, whether
known or unknown, fixed or contingent, asserted or unasserted,
presently existing or arising in the future, including, but not
limited to claims which are or could have been raised based on
acts or omissions to date, of any kind and nature whatsoever
arising out of or in any way connected with (1) any matters that
were or could have been raised in the lawsuit pending in the
District Court for the City and County of Denver, styled Apex
Investment Fund II L.P., et al. v. Colorado State Board of Land
commissioners, et al., Case No. 94-CV-5405 (the "Litigation"),
and (2) any matters arising out of or in any way related to the
Lease between the Land Board and Rangeview Metropolitan District
and its predecessor OAR, Incorporated, the Rangeview Notes and
Bonds, the Lowry Range, and the Rangeview Metropolitan District.
This Release shall be effective on the Effective Date
of the Settlement Agreement and Mutual Release dated
____________________ between the Land Board and the other parties
to the Litigation.
Dated:____________________
By:
Its:
<PAGE>
RELEASE
In consideration for ten dollars ($10.00) and other
consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned on behalf of themselves, their
parents, subsidiaries, affiliates and all other related companies
and their successors, and assigns, fully, finally and
unequivocally release the Colorado State Board of Land
Commissioners, the past and present Land Board Commissioners, the
State of Colorado, and Rangeview Metropolitan District, and their
past and present directors, employees, agents, attorneys,
advisors, successors, and assigns, from any and all claims,
controversies, actions, causes of actions, suits, demands,
obligations, debts, losses, damages, or liabilities which may
exist in law or equity, whether known or unknown, fixed or
contingent, asserted or unasserted, presently existing or arising
in the future, including, but not limited to claims which are or
could have been raised based on acts or omissions to date, of any
kind and nature whatsoever arising out of or in any way connected
with (1) any matters that were or could have been raised in the
lawsuit pending in the District Court for the City and County of
Denver, styled Apex Investment Fund II L.P., et al. v. Colorado
State Board of Land commissioners, et al., Case No. 94-CV-5405
(the "Litigation"), and (2) any matters arising out of or in any
way related to the Lease between the Land Board and Rangeview
Metropolitan District and its predecessor OAR, Incorporated, the
Rangeview Notes and Bonds, the Lowry Range, and the Rangeview
Metropolitan District.
This Release shall be effective on the Effective Date
of the Settlement Agreement and Mutual Release dated
____________________ between the Land Board and the other parties
to the Litigation.
Dated:____________________
By:
Its:
