PURCHASE AND SALE AGREEMENT
Exhibit 10.35
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 International
Properties, Inc., a Delaware corporation (“IPI”).
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 IPI), Pure Cycle is obligated to pay
such investors certain proceeds it receives from the sale of “Export Water” (as defined in the
CAA).
B. IPI is referenced in Section 2.1(g), (n), and (s)(iii) of the CAA and is entitled to
receive “Gross Proceeds” (as defined in the CAA) totaling $150,000, $150,000, and $339,966.50,
respectively, under these subsections of the CAA (collectively, the “IPI Gross Proceeds”).
C. Pure Cycle has offered to purchase from IPI all of its rights to receive payments under the
CAA at a discount to the face amount of the IPI Gross Proceeds in consideration of the issuance of
certain shares of the capital stock of Pure Cycle, and IPI 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. IPI hereby unconditionally and irrevocably
sells, transfers, assigns and conveys to Pure Cycle, and Pure Cycle hereby purchases and accepts
from IPI, all of its right, title and interest in and to the CAA, including without limitation:
(i) the right of IPI to receive monies and other property or assets due and to become due to IPI
pursuant to the CAA (including, without limitation, the IPI Gross Proceeds) and (ii) all rights of
IPI 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 IPI under the CAA.
2. Purchase Price. In consideration of the sale of the Transferred Interest, Pure
Cycle hereby agrees to issue and deliver 28,889 shares of common stock of Pure Cycle to IPI (the
“PC Shares”). The PC Shares shall bear the legend restricting transfer set forth in Section 8
hereof.
3. Effect of Purchase. Upon issuance to IPI of the PC Shares, all rights of IPI
relating in any way to the CAA will be owned by Pure Cycle. Pure Cycle and IPI agree that this
Agreement constitutes an assignment to Pure Cycle of all of IPI’s rights, title and interest in and
to the CAA as of the date hereof, and that as of the date hereof IPI shall cease to possess any
rights with respect to the CAA.
4. Representations and Warranties of IPI.
(a) Authority. IPI 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 IPI; and this Agreement is the valid and binding
obligation of IPI, 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 IPI under
the CAA. IPI 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”). IPI 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. IPI 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 IPI is a party or by
which it is bound; (ii) conflict with or violate any order, judgment, decree, statute, rule or
regulation applicable to IPI; (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. IPI 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. IPI
acknowledges that the consideration being paid hereunder represents the result of an arms’ length
negotiation between Pure Cycle and IPI and represents the fair market value of the Transferred
Interest. IPI has read and understands the public filings made by Pure Cycle with the U.S.
Securities and Exchange Commission (the “SEC”). In addition, IPI 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. IPI 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. IPI 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. IPI 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. IPI 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. IPI 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. IPI 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 IPI 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) IPI Release. IPI, on behalf of itself and its officers, directors, 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 IPI now has, has ever had or
may hereafter have against Pure Cycle in connection with, related to or arising out of (i) IPI’s
interest in the CAA, (ii) the financing transactions pursuant to which IPI 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 IPI 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 IPI in connection with, related to or arising out of (i) IPI’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 IPI 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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IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of
the date set forth above.
PURE CYCLE CORPORATION,
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INTERNATIONAL PROPERTIES, INC., | |
a Delaware corporation
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a Delaware corporation | |
By: /s/ Xxxx Xxxxxxx
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By: /s/ Xxxxxxxx X. Xxxxxxxxxx | |
Xxxx Xxxxxxx, President
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Xxxxxxxx X. Xxxxxxxxxx, President |
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