PURCHASE AND SALE AGREEMENT
Exhibit 10.34
THIS PURCHASE AND SALE AGREEMENT (the “Agreement”) is entered into as of October 1, 2007 by
and between Pure Cycle Corporation, a Delaware corporation (“Pure Cycle”), and Warwick Partners,
L.P., a Delaware limited partnership (“CAA Holder”).
RECITALS
A. Pursuant to the Comprehensive Amendment Agreement No. 1, dated as of April 11, 1996 (the
“CAA”), between Pure Cycle and certain investors (including CAA Holder), Pure Cycle is obligated to
pay such investors certain proceeds it receives from the sale of “Export Water” (as defined in the
CAA).
B. CAA Holder is referenced in Section 2.1(i), (r), and (t)(i) of the CAA and is entitled to
receive “Gross Proceeds” (as defined in the CAA) totaling $250,000, $204,915, and $295,085,
respectively, under these subsections of the CAA (collectively, the “CAA Holder Gross Proceeds”).
C. Pure Cycle has offered to purchase from the CAA Holder all of its rights to receive
payments under the CAA at a discount to the face amount of the CAA Holder Gross Proceeds in
consideration of the issuance of certain shares of the capital stock of Pure Cycle, and CAA Holder
has accepted the offer, on and subject to the terms set forth herein.
AGREEMENT
In consideration of the mutual promises herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of CAA Interest. CAA Seller hereby unconditionally and
irrevocably sells, transfers, assigns and conveys to Pure Cycle, and Pure Cycle hereby purchases
and accepts from CAA Holder, all of its right, title and interest in and to CAA, including without
limitation: (i) the right of CAA Holder to receive monies and other property or assets due and to
become due to the CAA Holder pursuant to the CAA (including, without limitation, the CAA Holder
Gross Proceeds) and (ii) all rights of the CAA Holder to compel performance and otherwise exercise
all remedies thereunder (collectively, the “Transferred Interest”). Pure Cycle hereby assumes all
of the obligations, liabilities, responsibilities and commitments of the CAA Holder under the CAA.
2. Purchase Price. In consideration of the sale of the Transferred Interests, Pure
Cycle hereby agrees to issue and deliver 33,856 shares of common stock of Pure Cycle (the “PC
Shares”) to CAA Holder. The PC Shares shall bear the legend restricting transfer set forth in
Section 8 hereof.
3. Effect of Purchase. Upon issuance to the CAA Holder of the PC Shares, all rights
of the CAA Holder relating in any way to the CAA will be owned by Pure Cycle. Pure Cycle and CAA
Holder agree that this Agreement constitutes an assignment to Pure Cycle of all of the CAA Holder’s
rights, title and interest in and to the CAA as of the date hereof, and that as of the date hereof
the CAA Holder shall cease to possess any rights with respect to the CAA.
4. Representations and Warranties of the CAA Holders.
(a) Authority. The CAA Holder represents that it has all requisite right, power, and
authority to execute, deliver and perform its obligations under this Agreement; this Agreement has
been duly and validly authorized, executed and delivered by the CAA Holder; and this Agreement is
the valid and binding obligation of the CAA Holder, enforceable against it in accordance with its
terms, except as enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance, redemption, reinstatement, and
other laws affecting the rights or remedies of creditors generally or (ii) general principles of
equity.
(b) Ownership. The Transferred Interest represents the entire interest of the CAA
Holder under the CAA. The CAA Holder owns the Transferred Interest and passes to Pure Cycle good
and marketable title to the Transferred Interest, free and clear of any lien, encumbrance, pledge,
option, adverse interest, charge or assessment of any kind (a “Lien”). The CAA holder represents
that it has not taken any action to sell or otherwise transfer the Transferred Interest, to
mortgage, hypothecate or otherwise encumber the Transferred Interest, or to grant any Lien on the
incidents of ownership of the Transferred Interest, including any right of first offer or other
contractual obligation.
(c) No Conflicts. The CAA Holder represents that the execution, delivery and
performance by it of this Agreement does not and will not (i) conflict with, violate, result in a
breach of or constitute a default under any agreement, instrument or obligation to which such CAA
Holder is a party or by which it is bound; (ii) conflict with or violate any order, judgment,
decree, statute, rule or regulation applicable to the CAA Holder; (iii) result in the creation or
imposition of any Lien against or upon the Transferred Interest; or (iv) require any consent,
approval or authorization of, or filing with, any governmental authority or any other third party.
(d) Investment Representations. The CAA Holder understands that the valuation of
interests in the CAA and the common stock of Pure Cycle is uncertain and that such value derives
significantly from future transactions and developments that are largely unknown and unknowable.
The CAA Holder acknowledges that the consideration being paid hereunder represents the result of an
arms’ length negotiation between Pure Cycle and the CAA Holder and represents the fair market value
of the Transferred Interest. The CAA Holder has read and understands the public filings made by
Pure Cycle with the U.S. Securities and Exchange Commission (the “SEC”). In addition, the CAA
Holder has been given the opportunity to solicit from Pure Cycle all information relevant to
valuation of rights under the CAA and regarding Pure Cycle’s business and operations and has
received all the information requested. The CAA Holder has made an investigation of the pertinent
facts related to Pure Cycle, the PC Shares, and the likelihood of payment under the CAA and has
reviewed all information regarding Pure Cycle to the extent it deems necessary in order to be fully
informed with respect thereto. The CAA Holder is an “accredited investor” within the meaning of
Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”), and is knowledgeable
and experienced in securities, financial and business matters and in transactions of this nature,
and has made its own assessment of the value of the PC Shares and of its rights under the CAA. The
CAA Holder is capable of evaluating the merits and risks of this transaction and is able to bear a
complete loss of the investment in the PC Shares. The CAA Holder understands that subsequent
events may prove that values of interests in the CAA were higher or lower than the valuation
indicated by the PC Shares paid hereunder.
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(e) Restricted Stock. The CAA Holder represents that it has been advised and
understands that the PC Shares have not been registered under the Securities Act or any state
securities laws and that the PC Shares are being issued in reliance upon exemptions from such
registration requirements. The CAA Holder acknowledges that the PC Shares are “restricted
securities” as that term is defined in Rule 144 promulgated by the SEC under the Securities Act and
may not be sold or transferred by the CAA Holder unless such PC Shares are subsequently registered
under that act and applicable state securities laws or are transferred pursuant to an exemption
from such registration requirements.
5. Representations and Warranties of Pure Cycle.
(a) Authority. Pure Cycle has all corporate right, power, and authority to execute,
deliver and perform its obligations under this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by Pure Cycle. This Agreement is the valid and binding
obligation of Pure Cycle, enforceable against Pure Cycle in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance, redemption, reinstatement, and other laws affecting
the rights or remedies of creditors generally or (ii) general principles of equity.
(b) No Conflicts. The execution, delivery and performance by Pure Cycle of this
Agreement does not and will not (i) conflict with, violate, result in a breach of or constitute a
default under any agreement, instrument or obligation to which Pure Cycle is a party or by which
Pure Cycle is bound; (ii) conflict with or violate any order, judgment, decree, statute, rule or
regulation applicable to Pure Cycle; or (iii) except as required by Form 8-K under the Securities
and Exchange Act of 1934, require any consent, approval or authorization of, or filing with, any
governmental agency.
(c) PC Shares. The PC Shares are duly authorized validly issued, fully paid and
non-assessable.
6. Release.
(a) CAA Holder Release. The CAA Holder, on behalf of itself and its partners,
officers, employees, affiliates, and agents, hereby fully and forever releases and discharges Pure
Cycle and its officers, directors, agents, employees, affiliates, successors and predecessors from
any and all claims, demands, proceedings, causes of actions, orders, obligations, contracts,
agreements, debts, guarantees, damages, expenses, costs, attorneys’ fees and liabilities
whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity, which
the CAA Holder now has, has ever had or may hereafter have against Pure Cycle in connection with,
related to or arising out of (i) the CAA Holder’s interest in the CAA, (ii) the financing
transactions pursuant to which the CAA Holder acquired its interest in the CAA and (iii) the
business, operations, management, financing, or other matters relating to Pure Cycle, provided that
this release shall not apply with respect to any claims arising out of this Agreement.
(b) Pure Cycle Release. Pure Cycle, on behalf of itself and its officers, directors,
employees and agents, hereby fully and forever releases and discharges the CAA Holder and its
partners, officers, agents, employees, affiliates, successors and predecessors from any and all
claims, demands, proceedings, causes of actions, orders, obligations, contracts, agreements, debts,
guarantees, damages, expenses, costs, attorneys’ fees and liabilities whatsoever, whether known or
unknown, suspected or unsuspected, both at law and in equity, which Pure Cycle now has, has ever
had or may hereafter have against the CAA Holder in connection with, related to or arising out of
(i) the CAA Holder’s interest in the CAA and (ii) the financing transactions pursuant to which Pure
Cycle entered into the CAA.
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7. Survival. Each of the covenants, representations and warranties of the CAA Holder
and Pure Cycle made herein shall survive the delivery of the PC Shares.
8. Restrictive Legend. The PC Shares issued hereunder shall bear the following (or
substantially equivalent) legend on the face or reverse side thereof:
“These shares have not been registered under the Securities Act of
1933, as amended, or applicable state securities laws, and may not
be sold, transferred or otherwise disposed of unless the same are
registered or unless an exemption from such registration is
available and Pure Cycle Corporation has received evidence of such
exemption satisfactory to it (which may include, among other things,
an option of counsel satisfactory to the corporation).
9. Entire Agreement; Amendments; Waivers. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect thereto. This Agreement may not be
modified orally, but only by an agreement in writing signed by the party against whom any waiver or
amendment may be sought to be enforced. No action taken pursuant to this Agreement and no
investigation by or on behalf of any party hereto shall be deemed to constitute a waiver by such
party of compliance with any representation, warranty, covenant or agreement herein. The waiver by
any party hereto of any condition or of a breach of another provision of this Agreement shall not
be construed as a waiver of any other condition or subsequent breach. The waiver by any party of
any part of any condition precedent to its obligations under this Agreement shall not preclude it
from seeking redress for breach of this Agreement other than with respect to the condition waived.
10. Binding Effect. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, legal representatives, successors and permitted
assigns.
11. Headings and Exhibits. The section, exhibit and other headings in this Agreement
are for reference purposes only and shall not affect the meaning or interpretation of this
Agreement.
12. Counterparts. For the convenience of the parties hereto, this Agreement may be
executed in any number of original or facsimile counterparts, each of which, when executed, shall
be deemed to be an original and all of such counterparts together shall be deemed to be one and the
same Agreement.
13. Governing Law. This Agreement shall be construed and enforced in accordance with
the laws of the State of Colorado, without giving effect to the principles of conflicts of law of
such state.
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[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of
the date set forth above.
PURE CYCLE CORPORATION, a Delaware corporation |
WARWICK PARTNERS, L.P., a Delaware limited partnership |
|
| By: PROVIDENCE PARTNERS, L.P., its general partner | ||
By: /s/ Xxxx Xxxxxxx
|
||
Xxxx Xxxxxxx, President
|
By: PACIFIC EQUITY LIMITED, its general partner | |
| By: /s/ Xxxxxxx X. Xxxxxx | ||
| Xxxxxxx X. Xxxxxx, authorized officer |
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