EXHIBIT 10.1
WATER SERVICE AGREEMENT
for the
HILLS at SKY RANCH
THIS AGREEMENT is entered into this 14th day of May 2004 by and between
ICON LAND II, LLC, a Colorado limited liability company ("DEVELOPER"); PURE
CYCLE CORPORATION, a Delaware corporation ("PURECYCLE"), 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
WHEREAS, pursuant to a "Water Service Agreement for the Sky Ranch PUD"
entered into between PURECYCLE; RANGEVIEW; Airpark Metropolitan District, a
quasi-municipal corporation and political subdivision of the State of Colorado
("AMD"); and Icon Investors I, LLC, a Colorado limited liability company dated
October 31, 2003 (the "Sky Ranch WSA"), PURECYCLE and RANGEVIEW have agreed to
provide water service to the approximately 772-acre Sky Ranch PUD in
unincorporated Arapahoe County Colorado(Arapahoe County Case No. Z01-010)
subject to the terms and conditions therein.
WHEREAS, DEVELOPER wishes to develop an approximately 160-acre tract (the
"Property") which lies adjacent to the Sky Ranch PUD and being generally the
Northwest quarter of Section 10 in Township 4 South, Range 65 West of the 6th
Principal Meridian, Arapahoe County, Colorado. The Property is designated the
Hills at Sky Ranch PUD.
WHEREAS, subject to the terms and conditions of the "Amended and Restated
Lease Agreement" ("Lease") dated April 4, 1996 between the State of Colorado
Board of Land Commissioners ("Land Board") and RANGEVIEW and the Agreement for
Sale of Export Water ("Export Water Agreement") dated April 11, 1996 between
PURECYCLE and RANGEVIEW, the Land Board conveyed to RANGEVIEW, which
subsequently conveyed to PURECYCLE, certain rights to surface water and
groundwater on and beneath the Land Board's property known as the Lowry Range,
which water rights are more specifically outlined in Section 6.1 of the Lease.
WHEREAS, PURECYCLE serves as the service provider for RANGEVIEW.
WHEREAS, pursuant to Section 8.3 of the Lease, RANGEVIEW and PURECYCLE have
the right to provide a water delivery system for use by customers both on and
off the Lowry Range, which system shall be developed pursuant to a unified
master plan.
WHEREAS, facilities developed for use by customers off the Lowry Range
shall be integrated with facilities developed for use by customers within the
Lowry Range.
WHEREAS, PURECYCLE and RANGEVIEW are capable of providing domestic water
service to the Property subject to the terms and conditions of the Lease.
WHEREAS, in order to efficiently provide water service to the Property,
DEVELOPER desires to enter into an agreement with PURECYCLE and RANGEVIEW to
finance, acquire, design, construct, operate and maintain certain water
facilities to serve the Property, under the terms set forth below.
WHEREAS, PURECYCLE desires to reserve certain Export Water Rights to
provide water service to the Property subject to terms and conditions contained
herein.
WHEREAS, to make water service available on a schedule which will
accommodate anticipated development of the Property, PURECYCLE and RANGEVIEW are
relying in part upon DEVELOPER's timely payment of certain fees and charges and
also on their timely execution of other obligations, all as identified in this
Agreement.
WHEREAS, the Water Facilities will benefit and enhance the value of the
Property.
WHEREAS, the execution of this Agreement will serve a public purpose and
promote the health, safety, prosperity and general welfare by providing for the
planned and orderly provision of domestic water service.
NOW THEREFORE, in consideration of the above recitals, the mutual promises
and covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.01 Definitions. As used herein unless the context indicates otherwise,
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the words defined below and capitalized throughout the text of this Agreement
shall have the respective meanings set forth below:
(a) Agreement: This Water Service Agreement and any amendments hereto
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made in accordance herewith.
(b) Corporation Stop: The valve which connects to a water main by its
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upstream connection and to the Customer's water service pipeline by its
downstream connection.
(c) Customer: Customer shall refer to an end user of water from
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PURECYCLE's Water Facilities whose property and place of use are located
within the Property.
(d) Dedicated Export Water: The Dedicated Export Water is the Export
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Water subject to this Agreement as defined in Article 5 herein.
(e) Dedicated Groundwater: Groundwater from the Arapahoe and
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Laramie-Fox Hills aquifers underlying the Property, in an amount yet to be
determined through the proper adjudication of the groundwater rights in the
Water Court for Colorado, Water Division No. 1, and which DEVELOPER is
obligated to dedicate to PURECYCLE pursuant to Section 2.01(e)(i) herein.
(f) DEVELOPER: ICON LAND II, LLC, a party to this Agreement, and its
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employees, agents, officers, directors, successors and assigns.
Hills at Sky Ranch WSA Page 2 of 29
(g) Davis, Graham and Stubbs LLP Trust Account: The trust account
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established and maintained by Davis, Graham and Stubbs LLP at Bank One,
Colorado, NA for the collection and disbursement of certain fees and
charges collected by PURECYCLE pursuant to Sections 4.02, 5.03 and 5.04
herein. Funds from the trust account shall be used to release outstanding
security interests on the Dedicated Export Water.
(h) Effective Date: The Effective Date of this Agreement as defined in
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Section 9.01 herein.
(i) Equivalent Residential Unit (EQR): The measure of demand placed
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upon the Water Facilities by a typical and average single-family detached
residence, as determined under Rangeview's Rules and Regulations and as
further described in Section 2.01(d).
(j) Export Water: Water from the Lowry Range that PURECYCLE can use
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outside of the Lowry Range service area, as more specifically defined in
Section 6.1 of the Lease.
(k) Export Water Agreement: The Agreement for Sale of Export Water by
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and among RANGEVIEW and PURECYCLE executed April 11, 1996.
(l) Export Water Deed: The Bargain and Sale Deed among the Land Board,
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RANGEVIEW and PURECYCLE executed April 11, 1996, as recorded on July 31,
1996 at Reception No. A6097803 in the Arapahoe County Clerk and Recorder's
Office, together with any and all amendments thereto.
(m) Lease: The Amended and Restated Lease Agreement between RANGEVIEW
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and the State of Colorado, acting by and through the Land Board (Lease No.
S-37280), executed April 4, 1996, as recorded on July 31, 1996 at Reception
No. A6097802 in the Arapahoe County Clerk and Recorder's Office, together
with any and all amendments thereto.
(n) Person: Any individual, corporation, joint venture, estate, trust,
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partnership, association or other legal entity other than DEVELOPER,
PURECYCLE or RANGEVIEW.
(o) PURECYCLE: Pure Cycle Corporation, a party to this Agreement, and
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its employees, agents, officers, directors, successors, and assigns.
(p) Property: The real property consisting of approximately 160 acres
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generally being the Northwest quarter of Section 10, Township 4 South,
Range 65 West of the 6th P.M., Arapahoe County, Colorado.
(q) RANGEVIEW: Rangeview Metropolitan District, a party to this
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Agreement, and its employees, agents, officers, directors, successors, and
assigns.
(r) Rangeview's Rules and Regulations: The Rules and Regulations
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adopted by RANGEVIEW, as they may be amended from time to time.
(s) Sky Ranch WSA: The "Water Service Agreement for the Sky Ranch PUD"
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entered into between PURECYCLE; RANGEVIEW; Airpark Metropolitan District, a
quasi-municipal corporation and political subdivision of the State of
Colorado; and Icon Investors I, LLC, a Colorado limited liability company,
dated October 31, 2003 and including all amendments thereto.
Hills at Sky Ranch WSA Page 3 of 29
(t) Water Facilities: Those facilities required for the production,
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treatment, storage, and delivery of both potable and irrigation water to,
on, or for the Property, all as more particularly described hereunder.
(u) Water Tap: The written authorization, in the form of sequentially
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numbered tap licenses issued by PURECYCLE, to connect to the Water
Facilities, as governed by Rangeview's Rules and Regulations. Unless
otherwise provided for herein, a Water Tap shall be assumed to be for one
EQR.
(v) Water Tap Fee: Collective reference to the Water System
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Development Charge and the Water Resource Charge, both as defined and
established in Article 12 of Rangeview's Rules and Regulations.
1.02 Interpretation. In this Agreement, unless the context otherwise
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requires:
(a) The terms "herein," "hereunder," "hereby," "hereto," "hereof" and
any similar term, refer to this Agreement as a whole and not to any
particular Article, Section or subdivision hereof; the term "heretofore"
means before the date of execution of this Agreement; the term "now" means
at the date of execution of this Agreement; and the term "hereafter" means
after the date of execution of this Agreement.
(b) All definitions, terms and words shall include both the singular
and the plural.
(c) Words of the masculine gender include correlative words of the
feminine and neuter genders, and words importing the singular number
include the plural number and vice versa.
(d) The captions or headings of this Agreement are for convenience only
and in no way define, limit or describe the scope or intent of any
provision, Article or Section of this Agreement.
ARTICLE 2
WATER SERVICE
2.01 Conditions of Service. PURECYCLE agrees to provide water service to
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the Property subject to the terms and conditions of this Agreement. The Water
Facilities will include a "dual pipe distribution system" that will provide both
potable water and irrigation water service to the Property.
(a) Development of the Property, along with development at the Sky
Ranch PUD, is anticipated to occur in phases over several years.
Construction of Water Facilities will also occur in phases, as mutually
determined by PURECYCLE and DEVELOPER, to reasonably meet the anticipated
water demands of the Property.
(b) Water service to the Property hereunder shall be generally governed
by and subject to Rangeview's Rules and Regulations (providing inter alia
for rates, fees and charges), which are incorporated herein by reference,
and to the laws, ordinances and regulations of all federal, state and local
governmental entities and agencies having jurisdiction. PURECYCLE
acknowledges that the Water Tap Fees, user charges, service charges, and
any other rates, fees, tolls, and charges imposed in connection with water
service to the
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Property provided by PURECYCLE in connection therewith shall be subject to
Section 8.2 of the Lease. To the extent DEVELOPER or the Customers pay fees
to PURECYCLE in accordance with Rangeview's Rules and Regulations, no
additional fees shall be imposed or collected by RANGEVIEW for water
service to the Property.
(c) Water service to the Property hereunder is subject to the Lease and
the Export Water Deed. If any provision of this Agreement creates or causes
a breach or violation of the Lease or of the Export Water Deed, the parties
shall work together to revise such provision so that it no longer causes
such breach or violation.
(d) Rangeview's Rules and Regulations establish the use of EQRs for
determining the impact of different water customers on the Water Facilities
and for assessing rates and charges. To the extent that they apply to water
service to the Property, the standards for determination of an EQR for
residential and commercial customers shall not be changed during the term
of this Agreement without the prior written consent of DEVELOPER, except
that Developer's consent shall not be required after the 15th Anniversary
of Municipal Water Service established in amended Exhibit C of the Sky
Ranch WSA.
(e) DEVELOPER will secure sufficient water rights to serve the proposed
development of the Property as follows:
(i) DEVELOPER shall authorize PURECYCLE to act, and PURECYCLE
shall diligently act, as DEVELOPER's agent to obtain a decree
adjudicating rights to the Dedicated Groundwater underlying the
property. Within sixty days following the date that a final decree
adjudicating the groundwater underlying the Property is obtained,
DEVELOPER shall transfer and convey to PURECYCLE good and merchantable
title without encumbrances for the Dedicated Groundwater. Conveyance
shall be in the general form of Exhibit A. DEVELOPER shall be entitled
to receive a credit for the Dedicated Groundwater in accordance with
Section 4.03. The amount of groundwater available for adjudication
under the Property is estimated to be 35 acre feet per year (af/y)
from the Upper Arapahoe aquifer, 22 af/y from the Lower Arapahoe
aquifer, and 37 af/yr from the Laramie FoxHills aquifer; for a total
of 94 af/y from the three aquifers. In the event that the final
adjudicated amounts of the Dedicated Groundwater are substantially
different from these estimated amounts, the amount of Export Water to
be dedicated and reserved for the Property and other provisions of
Article 5, including the valuation for the Dedicated Export Water and
the amount of the Option Fees, shall be subject to adjustment in
accordance with Section 4.04.
(ii) In order to assure sufficient and adequate amounts of Export
Water to serve reasonable demands for the Property, PURECYCLE grants
DEVELOPER an option for obtaining water service utilizing Export Water
pursuant to Article 5 below. PURECYCLE's obligations to convey and
deliver Export Water to DEVELOPER shall be expressly subject to the
terms and conditions of the Export Water Deed.
(iii) The parties recognize that the final FDP for the Property
may allow for the development of commercial and residential units in
excess of the number of EQR's provided for under this Agreement.
DEVELOPER may be entitled to purchase additional Water Taps from
PURECYCLE in accordance with the provisions of
Hills at Sky Ranch WSA Page 5 of 29
Rangeview's Rules and Regulations and subject to a definitive
agreement for said additional Water Taps. Nothing in this Section
2.01(e)(iii) shall be deemed to expand or extend DEVELOPER's rights to
purchase Water Taps beyond those rights established elsewhere in this
Agreement.
(f) PURECYCLE shall cause the Water Facilities to be designed, operated
and maintained to comply with applicable requirements of the Federal Safe
Drinking Water Act or such other similar or successor laws.
(g) The responsibilities for the construction, operation, and
maintenance and the ownership and/or transfer of ownership, for the Water
Facilities generally are set out in Article 3 below.
(h) DEVELOPER shall cause domestic wastewater from the Property to be
treated with domestic wastewater from the Sky Ranch PUD. PURECYCLE shall
maintain ownership and dominion over all treated wastewater from the
Property, after reasonable consumptive use treatment losses. Treated
domestic wastewater from the Property shall be of similar quality and be
made available to PURECYCLE for use by PURECYCLE for irrigation,
augmentation, storage, exchange or other purposes until extinction in a
similar manner as wastewater from the Sky Ranch PUD. DEVELOPER shall
provide to PURECYCLE a copy of any wastewater service agreements which it
intends to enter into for the Property for PURECYCLE's review and approval,
with said approval not being unreasonably withheld.
ARTICLE 3
WATER FACILITIES
3.01 Classification of Water Facilities. For the purposes of this
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Agreement, Water Facilities are segregated into four categories: Wholesale,
Retail, Customer, and Special.
(a) Wholesale Facilities. Wholesale Facilities consist of water wells,
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well water collection pipelines, water treatment plants, water storage
tanks, water storage reservoirs, major water pumping stations, water
transmission pipelines, and related appurtenances, all except as may
otherwise be identified as Retail Facilities, Special Facilities, or
Customer Facilities below. PURECYCLE shall own the Wholesale Facilities.
PURECYCLE shall have direct responsibility for the design, construction,
operation and maintenance of the Wholesale Facilities in accordance with
all state and local governmental requirements. DEVELOPER shall convey or
otherwise have transferred to PURECYCLE fee title to or easements
acceptable to PURECYCLE for property required for the Wholesale Water
Facilities to be located on the Property, including but not limited to the
following:
(i) A wellfield allowing for completing, operating, maintaining,
and replacing the wells to each of the underlying Denver Basin
groundwater aquifers. The dedicated area for the wellfield will be
about one acre. PURECYCLE shall work cooperatively with DEVELOPER to
establish acceptable legal boundaries for the wellfield, with approval
by DEVELOPER not being unreasonably withheld.
(b) Retail Facilities. Retail Facilities shall be the water
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distribution system to transport potable and irrigation water from
connection points with the Wholesale Facilities to all areas of use on the
Property. Retail Facilities include, and are limited to, water distribution
Hills at Sky Ranch WSA Page 6 of 29
pipelines ("Water Mains"), valves, fire hydrants, and other appurtenances
related to such distribution system. All Water Mains located on or adjacent
to the Property shall be considered Retail Facilities. DEVELOPER shall be
responsible for the design and construction of the Retail Facilities in
accordance with the minimum design standards and other provisions contained
in Rangeview's Rules and Regulations. Any changes to Rangeview's Rules and
Regulations shall be applied consistently to all customers being governed
by said rules and regulations, and such changes will not be applied
retroactively. All costs for the design and construction of the Retail
Facilities shall be funded independently from any fees, rates and charges
assessed pursuant to Rangeview's Rules and Regulations. Upon completion of
construction, and prior to being placed into operation, DEVELOPER shall
dedicate and transfer, or otherwise cause the dedication and transfer of,
title to all Retail Facilities to RANGEVIEW in accordance with Article 5 of
Rangeview's Rules and Regulations.
(c) Customer Facilities. Customer Facilities consist of water service
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pipelines, piping, meters, plumbing, and related appurtenances used to
convey water from a Water Main to an individual Customer, including the
physical connection of a service line to a Water Main. The dividing point
between the Water Main and the Customer Facilities is the downstream end of
the Corporation Stop. Customer Facilities shall be constructed in
accordance with the requirements contained in Rangeview's Rules and
Regulations and with applicable building codes.
(d) Special Facilities. Special Facilities are specified facilities
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required to provide water service to the Property but which are not
considered Wholesale Facilities, Retail Facilities, or Customer Facilities.
Responsibility for funding, planning, design, construction, operation and
maintenance of the Special Facilities are set out below. Special Facilities
anticipated to serve the Property consist of, and are limited to, the
following: A ratable share of the offsite water transmission pipeline and
the effluent storage reservoir site, which are to be constructed in
conjunction with other water customers of PURECYCLE including those at the
Sky Ranch PUD as contemplated by the Sky Ranch WSA.
3.02 Construction of Wholesale and Special Facilities. PURECYCLE shall use
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all reasonable efforts to cause the Wholesale Facilities and Special Facilities,
having sufficient capacity to meet the demands established in the amended
Exhibit C of the Sky Ranch WSA, to be permitted, designed, acquired,
constructed, installed and made ready to be placed into service according with
the schedule also shown in Exhibit C of the Sky Ranch WSA. PURECYCLE's
obligations shall be contingent on the timely payment of fees, rates and charges
and on the timely execution of other obligations by DEVELOPER as identified in
this Agreement.
3.03 Regulatory Approval Contingencies. All parties to this Agreement
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acknowledge that the design, construction and operation of the Water Facilities
require permits and approvals from regulatory entities including the State of
Colorado, Arapahoe County, Tri-County Health Department, Bennett Fire Protection
District, and others. The granting of such regulatory permits and approvals is
beyond the direct control of the parties to this Agreement. In the event one of
the parties receives notice from any regulatory agency of a potential delay in
the issuance of a permit or necessary approval, such party shall provide
immediate written notice to the other parties of such potential delay. The
parties shall mutually cooperate to determine a potential solution to lessen the
impact of such delay(s).
Hills at Sky Ranch WSA Page 7 of 29
3.04 Force Majeure. Without limiting the foregoing, should any party be
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unable to perform any obligation required of them under this Agreement because
of any cause beyond its control, including but not limited to war, insurrection,
riot, civil commotion, strikes, lockout, fire, earthquake, windstorm, flood,
acts of governmental authorities, moratoriums, material shortages, or any other
force majeure, each party's performance of the obligation affected shall,
subject to the provisions of Section 8.01 below, be suspended for so long as
such cause prevents it from performing such obligation.
3.05 Unified Operation and Use of Water Facilities. The Water Facilities to
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be constructed to serve the Property are components of a larger water system
planned and to be operated by PURECYCLE. The Water Facilities shall be
available for use by all of PURECYCLE's customers in accordance with
Rangeview's Rules and Regulations and with sound domestic water system
engineering, management and operational practices.
3.06 Deeds of Trust and Security Interests. In order to secure the
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obligations of PURECYCLE under this Agreement, PURECYCLE shall provide, to the
extent held by PURECYCLE, DEVELOPER with a first-priority deed of trust and/or
Uniform Commercial Code security interest ("UCC Security Interest"), as
appropriate, in PURECYCLE's rights to the following collateral: (i) the
Dedicated Groundwater, immediately upon any conveyances by DEVELOPER to
PURECYCLE pursuant to Section 2.01(e)(i); (ii) the Wholesale Facilities located
on the Property, together with any real property associated therewith upon
commencement of construction of such facilities; and (iii) any other real
property or easements together with any existing or future improvements thereon
conveyed or granted by DEVELOPER to PURECYCLE simultaneously with such
conveyance. In order to secure the obligations of RANGEVIEW under this
Agreement, RANGEVIEW shall provide Developer a first-priority deed of trust
and/or UCC Security Interest in the Retail Facilities, together with any real
property conveyed or granted to RANGEVIEW associated with the Retail Facilities.
PURECYCLE previously granted a first-priority deed of trust and/or UCC Security
Interest to the Land Board in the Export Water. PURECYCLE shall grant DEVELOPER
with a second-priority deed of trust and/or UCC Security Interest in the
Dedicated Export Water at the time the Option, pursuant to Article 5, is
exercised by DEVELOPER. Upon the payment of Water Tap Fees by DEVELOPER,
PURECYCLE shall obtain, with respect to the Dedicated Export Water applicable to
such Water Tap Fees, the release of any first-priority deed of trust and/or UCC
Security Interests in the Export Water. PURECYCLE covenants that it shall not
place any additional encumbrances on the Dedicated Export Water without
DEVELOPER's prior written consent. PURECYCLE covenants that it shall not place
any additional encumbrances on the Dedicated Export Water without DEVELOPER's
prior written consent.All of the deeds of trusts and/or UCC Security Interests
referenced in this Section 3.06 shall remain in place until all of the Water
Taps pursuant to Exhibit C of the Sky Ranch WSA, as amended, have been purchased
or expired pursuant to their terms.
3.07 Parties Obligated. RANGEVIEW is liable and responsible only for the
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specific undertakings provided for in Sections 3.01(b) above and shall have no
liability or responsibility whatever for performance of any obligations imposed
upon PURECYCLE under this Agreement. Services to be provided by RANGEVIEW
pursuant to Section 3.01(b) above shall be provided by PURECYCLE, but RANGEVIEW
shall nevertheless be primarily obligated and responsible to the other parties
to this Agreement for the performance of those services. Notwithstanding the
foregoing, RANGEVIEW shall still be obligated to enforce the provisions of any
agreements it has
Hills at Sky Ranch WSA Page 8 of 29
with PURECYCLE that affect the rights and obligations of the DEVELOPER under
this Agreement.
ARTICLE 4
FEES, RATES, CHARGES, CREDITS AND REIMBURSEMENTS
4.01 General. Rangeview's Rules and Regulations establish rates, fees and
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charges for water service, which are incorporated herein by reference and which
are subject to change from time to time. Except as otherwise provided for in
this Agreement, such rates, fees and charges shall apply to all Customers on the
Property obtaining domestic water service from PURECYCLE.
4.02 Water Tap Purchases. DEVELOPER shall purchase Water Taps from
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PURECYCLE for use on the Property. Water Taps purchased for use on the Property
shall be viewed jointly with Water Taps purchased at the Sky Ranch PUD for
purposes of meeting the minimum tap takedown requirements established in amended
Exhibit C of the Sky Ranch WSA, as amended. Except to the extent that the Water
Resource Charge portion of a specific Water Tap is to be met by DEVELOPER's
credit for Dedicated Groundwater pursuant to Section 4.03 below, DEVELOPER shall
pay the Water Resource Charge portion of the Water Tap Fee directly to the
Davis, Graham and Stubbs LLP Trust Account. Deposits to the trust account shall
be used to release outstanding security interests on the Dedicated Export Water.
Upon receipt of the payment of the Water Resource Charge for each Water Tap,
PURECYCLE will provide evidence to the DEVELOPER that the Dedicated Export Water
associated with such tap has been released from any encumbrances other than
those granted to DEVELOPER.
4.03 Groundwater Dedication Credit. Upon final adjudication of the
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groundwater under the Property and DEVELOPER's transfer of acceptable title to
PURECYCLE for the approved Dedicated Groundwater per Section 2.01(e)(i),
DEVELOPER shall be granted a credit. At the DEVELOPER's election and his
providing written direction to PURECYCLE of such, the credit may be applied
either towards the Water Resource Charge portion of the Water Tap Fee or towards
the Special Facilities Surcharge (per Section 4.04 below) for Water Taps
purchased by DEVELOPER subsequent to said transfer of title. The amount of the
Groundwater Dedication Credit will be determined using eighty percent (80%) of
the current Water Resource Charge portion of the Water Tap Fee (i.e.,
$3,400/EQR) and, using the anticipated amount of Dedicated Groundwater to be
adjudicated, is calculated as follows:
94 af/yr anticipated adjudicated groundwater 0.7 acre feet/year per EQR =
134 EQR
134 EQR * $3,400/EQR Water Resource Charge = $455,600 * 80% = $364,480
In the event that title for the Dedicated Groundwater is transferred to
PURECYCLE pursuant to Section 2.01(e)(i), DEVELOPER shall not be required to
separately reimburse PURECYCLE for costs incurred by PURECYCLE to obtain the
decree for the water rights. In the event that a decree for the Dedicated
Groundwater is not obtained and that acceptable title for the Dedicated
Groundwater is not transferred to PURECYCLE within three years of the Effective
Date of this Agreement, DEVELOPER shall reimburse PURECYCLE for the actual costs
incurred by PURECYCLE to obtain the decree and title for the Dedicated
Groundwater whether or not successful, with payment being made within sixty days
of PURECYCLE's claim for payment.
Hills at Sky Ranch WSA Page 9 of 29
4.04 Special Facilities Surcharge. A surcharge of Seven Hundred dollars
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($700) shall apply to each Water Tap purchased by DEVELOPER for the Hills at Sky
Ranch PUD and shall be used by PURECYCLE to fund the construction of those
Special Facilities identified in Section 3.01(d). Should DEVELOPER elect to
apply the Groundwater Dedication Credit towards the Special Facilities
Surcharge, the amount of the surcharge would be reduced to an estimated $271.20
per Water Tap, calculated as follows:
$364,480 estimated Groundwater Dedication Credit 850 EQR = $428.80/EQR
$700/EQR Surcharge - $428.80/EQR Credit = $271.20/EQR balance of surcharge
ARTICLE 5
WATER SERVICE OPTION
5.01 Option. In consideration for the payment of the option fees pursuant
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to the schedule set forth in Section 5.02 (the "Option Fee") by DEVELOPER to
PURECYCLE, PURECYCLE shall grant and convey to DEVELOPER an option (the
"Option") to purchase Water Taps for use on the Property for up to a total of
850 EQRs. Based on the estimated amount of Dedicated Groundwater pursuant to
Section 2.01(e)(i) above, Two hundred and fifty (250) acre-feet per year of the
Export Water (the "Dedicated Export Water") shall be so reserved by PURECYCLE.
The valuation for the Dedicated Export Water shall be as set forth in Section
5.05 below. PURECYCLE's obligations to convey and deliver Dedicated Export Water
to DEVELOPER shall be expressly subject to the terms and conditions of the
Export Water Deed.
5.02 Exercise Terms. Notwithstanding the provisions of Section
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5.04,DEVELOPER shall be authorized to exercise the Option at any time after
Water Taps for 1,000 EQRs have been purchased for use at the Sky Ranch PUD and
expiring on the earliest date described following:
(a) Date on which Water Taps for 1,500 EQR have been purchased
cumulatively for use at the Sky Ranch PUD and at the Hills at Sky Ranch
PUD.
(b) at 5:00 p.m. on the fifth (5th), sixth (6th), or seventh (7th)
anniversary of the Effective Date, unless in each case DEVELOPER extends
the option in accordance with Section 5.04; or
(c) at 5:00 p.m. on the eighth (8th) anniversary of the Effective Date.
DEVELOPER may exercise this Option by delivering to PURECYCLE written notice of
its intent to proceed with development at the Hills at Sky Ranch PUD provided
such notice is delivered during the term of the Option and DEVELOPER is then in
compliance with any other contracts between DEVELOPER and PURECYCLE. Upon
DEVELOPER's exercise of the Option, PURECYCLE shall reserve the Dedicated Export
Water for use on the Property and shall diligently complete construction of the
facilities necessary to deliver the Dedicated Export Water to the Property, and
PURECYCLE will provide domestic water service to the Property in accordance with
this Agreement.
Hills at Sky Ranch WSA Page 10 of 29
5.03 Payment Terms. The Option Fee shall be payable by DEVELOPER to
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PURECYCLE in cash, by wire transfer or by certified check with payments being
made directly to the Davis, Graham & Stubbs LLP Trust Account as follows:
(a) Ten Thousand Four Hundred Dollars ($10,400) payable within thirty
(30) days following the Effective Date;
(b) Ten Thousand Four Hundred Dollars ($10,400) payable on each of the
first, second, third and fourth anniversaries of the Effective Date unless
the Option is exercised prior to such anniversary date, in which case no
further Option Fee shall be due.
5.04 Extension of Option. In the event that DEVELOPER has not exercised the
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Option in accordance with Section 5.03, DEVELOPER may extend the Option for up
to an additional three one-year terms by making payments directly to the Davis,
Graham & Stubbs LLP Trust Account of Twenty One Thousand Dollars ($21,000) (the
Option Extension Fee) for each additional one-year extension term. Payments
shall be due on the fifth anniversary of the Effective Date for a one year
extension, on the fifth and sixth anniversaries for a two year extension, and on
the fifth, sixth and seventh anniversaries for a three year extension.
5.05 Dedicated Export Water Valuation. The value of the Dedicated Export
-----------------------------------
Water shall be calculated based on Rangeview's Rules and Regulations in effect
at the time of exercise. The Rules and Regulations currently establish an
allocation of 0.7 acre-feet per year per EQR. The 250 acre-feet per year of
Dedicated Export Water is allocated to 357 EQR's which, when multiplied by the
current Water Resource Charge of $3,400 per EQR, results in a total valuation of
$1,213,800.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS
6.01 DEVELOPER Representations and Covenants. In addition to the other
------------------------------------------
representations, warranties and covenants made by DEVELOPER herein, DEVELOPER
makes the following representations, warranties and covenants:
(a) DEVELOPER is duly authorized to execute this Agreement and perform
its obligations hereunder, and all action on its part for the execution and
delivery of this Agreement has been or will be duly and effectively taken.
(b) DEVELOPER represents that the water rights for the Denver Basin
Groundwater underlying the Property have not been separated from the
Property, are available for adjudication to the best of DEVELOPER's
knowledge, and that DEVELOPER has or will have the right as land owner to
obtain a decree for the Dedicated Groundwater underlying the Property
pursuant to Section 2.01(e)(i) above. DEVELOPER shall provide to PURECYCLE
an opinion letter from water counsel establishing the availability of the
Dedicated Groundwater for adjudication by DEVELOPER within sixty days of
the mutual execution of this Agreement. The water rights opinion letter
shall also address the availability of the groundwater underlying the Sky
Ranch PUD, which groundwater was defined as the "Dedicated Groundwater" in
the Sky Ranch WSA and is the subject of Case No. 85CW157 of the Water Court
of Colorado, Water Division No. 1.
Hills at Sky Ranch WSA Page 11 of 29
(c) DEVELOPER shall transfer title for the Dedicated Groundwater to
PURECYCLE once a decree for the Dedicated Groundwater is obtain pursuant to
Section 2.01(e)(i) above.
(d) DEVELOPER shall at its sole cost provide or otherwise transfer to
PURECYCLE acceptable easements for pipelines, utilities and access to the
wholesale water facilities described in Section 3.01(a) above.
(e) DEVELOPER shall cause all Retail Facilities to be located on the
Property in accordance with Section 3.01(b) herein, along with easements
pursuant to Rangeview's Rules and Regulations, to be designed, acquired,
constructed and installed.
(f) DEVELOPER shall pay a Special Facilities surcharge pursuant to
Section 4.04 above.
(g) DEVELOPER shall make arrangements for domestic wastewater service
for the Property from the same wastewater service provider that serves the
Sky Ranch PUD and with similar wastewater service provisions as customers
at the Sky Ranch PUD, including the return of all treated wastewater
effluent from the Property to PURECYCLE for use by PURECYCLE.
(h) DEVELOPER shall include provisions, satisfactory to PURECYCLE, in
any agreements which DEVELOPER may enter into with other governmental
agencies providing that all domestic water service for development on the
Property shall be provided exclusively by PURECYCLE in accordance with this
Agreement.
(i) DEVELOPER acknowledges that construction of the Water Facilities
can only proceed concurrently with other development activities on the
Property and at other property within the Sky Ranch PUD. DEVELOPER shall
endeavor to schedule and cause these other development activities to occur
in a manner and on a schedule that allow for the efficient, cost effective,
and timely construction of the Water Facilities.
(j) DEVELOPER anticipates installing a portion of the Customer
Facilities. In any event, PURECYCLE shall not incur or be responsible for
any cost or expense related to any Customer Facilities except as may be
specifically provided for in Rangeview's Rules and Regulations.
(k) DEVELOPER shall abide by all applicable conditions and provisions
of Rangeview's Rules and Regulations with regard solely to water service
for the Property.
(l) DEVELOPER shall keep and perform all of their covenants and
agreements contained herein in a timely manner that will not impede
PURECYCLE from meeting their obligations.
(m) Neither the execution of this Agreement, the consummation of the
transactions contemplated hereunder, nor the fulfillment of or the
compliance with the terms and conditions of this Agreement by DEVELOPER
will conflict with or result in a breach of any terms, conditions or
provisions of, or constitute a default under, or result in the imposition
of any prohibited lien, charge or encumbrance of any nature under any
agreement, instrument,
Hills at Sky Ranch WSA Page 12 of 29
indenture or any judgment, order or decree to which DEVELOPER is a party or
by which DEVELOPER or the Property are bound.
6.02 PURECYCLE Representations and Covenants. In addition to the other
------------------------------------------
representations, warranties and covenants made by PURECYCLE herein, PURECYCLE
makes the following representations, warranties and covenants:
(a) PURECYCLE is duly authorized to execute this Agreement and perform
its obligations hereunder, and all action on its part for the execution and
delivery of this Agreement has been or will be duly and effectively taken.
(b) PURECYCLE shall keep and perform all of its covenants and
agreements contained herein in a timely manner that will not impede
DEVELOPER from meeting their respective obligations.
(c) PURECYCLE shall reserve the Dedicated Export Water pursuant to the
provisions of Article 5 herein.
(d) Neither the execution of this Agreement, the consummation of the
transactions contemplated hereunder, nor the fulfillment of or the
compliance with the terms and conditions of this Agreement by PURECYCLE
will conflict with or result in a breach of any terms, conditions or
provisions of, or constitute a default under, the Export Water Agreement,
the Export Water Deed, or any other agreement, mortgage, indenture, or
instrument to which PURECYCLE is a party, or result in the imposition of
any prohibited lien, charge or encumbrance of any nature under any
agreement, instrument, indenture or any judgment, order or decree of any
court to which PURECYCLE is a party or by which PURECYCLE is bound.
(e) Water Rights. PURECYCLE shall provide to DEVELOPER an opinion
-------------
letter of water counsel within sixty (60) days of the mutual execution of
this Agreement prepared by Petrock and Fendel, P.C., for the benefit of the
DEVELOPER. The opinion letter shall represent that PureCycle has the right
to utilize the Dedicated Export Water to serve the Property, shall
recognize the Export Water dedicated to the Sky Ranch PUD, and shall be
reasonably in the same form as the March 19, 2004 letter granted for the
Sky Ranch PUD.
(f) Estoppels. PURECYCLE shall request from the Land Board assurances
---------
concerning the current status and validity of the Lease. The Land Board's
assurances shall be in the general form of the Estoppel Certificate
provided in Exhibit D. RANGEVIEW shall also provide an estoppel concerning
the current status and validity of the Lease in the general form of the
Estoppel Certificate provided in Exhibit E within 60 days of mutual
execution of this Agreement.
6.03 RANGEVIEW Representations and Covenants. RANGEVIEW makes the following
---------------------------------------
representations, warranties and covenants:
(a) RANGEVIEW is duly authorized to execute this Agreement and perform
its obligations hereunder, and all action on its part for the execution and
delivery of this Agreement has been or will be duly and effectively taken.
Hills at Sky Ranch WSA Page 13 of 29
(b) RANGEVIEW shall keep and perform all of their covenants and
agreements contained herein in a timely manner that will not impede
PURECYCLE and DEVELOPER from meeting their respective obligations.
(c) Neither the execution of this Agreement, the consummation of the
transactions contemplated hereunder, nor the fulfillment of or the
compliance with the terms and conditions of this Agreement by RANGEVIEW
will conflict with or result in a breach of any terms, conditions or
provisions of, or constitute a default under, the Lease, the Export Water
Agreement, the Export Water Deed, or any other agreement, mortgage,
indenture, or instrument to which RANGEVIEW is a party or by which
RANGEVIEW is bound, or result in the imposition of any prohibited lien,
charge or encumbrance of any nature under any agreement, instrument,
indenture or any judgment, order or decree of any court to which RANGEVIEW
is a party or by which RANGEVIEW is bound.
6.04 Instruments of Further Assurance. DEVELOPER, PURECYCLE and RANGEVIEW
----------------------------------
covenant that they will do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, such acts, instruments and transfers
as may reasonably be required for the performance of their obligations
hereunder.
ARTICLE 7
DEFAULT BY DEVELOPER; REMEDIES AND ENFORCEMENT
7.01 Events of Default. A default by the DEVELOPER under this Agreement
-------------------
shall not be considered a default under the Sky Ranch WSA. The occurrence of any
one or more of the following events or the existence of any one or more of the
following conditions shall constitute an Event of Default by DEVELOPER under
this Agreement:
(a) Failure by DEVELOPER to make payment of any Water Tap Fees, Option
Fees, Option Extension Fees, or other rates, fees or charges identified
herein when the same shall become due and payable as provided herein.
(b) Failure by DEVELOPER to cause the Retail Facilities to be designed
and constructed in a timely manner.
(c) Failure by DEVELOPER to provide fee title to or easements for any
property required by PURECYCLE for the Wholesale Water Facilities to be
located on the Property.
(d) Default in the performance or observance of any other of the
covenants, agreements or conditions on the part of DEVELOPER in this
Agreement.
7.02 Remedies on Occurrence of Event of Default. Upon the occurrence of an
-------------------------------------------
Event of Default by DEVELOPER, and after all cure periods have expired,
PURECYCLE shall have the following rights and remedies, any or all of which may
be pursued in the sole discretion of PURECYCLE:
(a) To protect and enforce its rights under this Agreement and any
provision of law by such suit, action or special proceedings as PURECYCLE
may deem appropriate, including without limitation for the enforcement of
any appropriate legal or equitable remedy, or for the recovery of damages
caused by breach of this Agreement, including attorneys' fees and all other
costs and expenses incurred in enforcing this Agreement in the event
PURECYCLE
Hills at Sky Ranch WSA Page 14 of 29
prevails in its exercise of such remedies, and DEVELOPER agrees that
PURECYCLE shall have the right to proceed against DEVELOPER for specific
performance of any covenant or agreement contained herein.
(b) To exercise any and all other remedies provided by Rangeview's
Rules and Regulations and this Agreement, until the default is fully cured.
Any delay in a payment due pursuant to Article 4 shall extend the time of
performance of PURECYCLE's obligations under Section 3.02 above.
(c) To take or cause to be taken such other actions as it deems
necessary to enforce its rights hereunder.
(d) In the event PURECYCLE prevails in its exercise of such remedies,
any expenses incurred by PURECYCLE in connection with the remedies set
forth herein shall become due and payable by DEVELOPER immediately without
notice and shall bear interest at a percentage rate of ten percent (10%)
per annum.
7.03 Cure of Default. In the Event of Default by DEVELOPER, the default may
---------------
be cured as described following:
(a) For default caused due to a failure by DEVELOPER to make payments
as set forth in Section 7.01(a) above, by DEVELOPER, making payment to
PURECYCLE within sixty days of PURECYCLE's notice of the default of all
amounts due through the date of payment plus all costs incurred by
PURECYCLE as a result of the default.
(b) For other defaults, by DEVELOPER's performance, within sixty days
after the Event of Default, or if more than sixty days is reasonably
required to cure such default, by commencing to correct the default within
said sixty-day period and thereafter prosecuting the same to completion
with reasonable diligence.
7.04 Delay or Omission of Waiver. No delay or omission of PURECYCLE to
-------------------------------
exercise any right or power accruing upon any Event of Default shall exhaust or
impair any such right or power or shall be construed to be a waiver of any such
Event of Default or acquiescence therein.
7.05 No Waiver of One Default to Affect Another; All Remedies Cumulative.
----------------------------------------------------------------------
No waiver of any Event of Default hereunder by PURECYCLE shall extend to or
affect any subsequent or any other then existing Event of Default or shall
impair any rights or remedies consequent thereon. All rights and remedies of
PURECYCLE provided herein may be exercised with or without notice, shall be
cumulative, may be exercised separately, concurrently or repeatedly, and the
exercise of any such right or remedy shall not affect or impair the exercise of
any other right or remedy.
Hills at Sky Ranch WSA Page 15 of 29
ARTICLE 8
DEFAULT BY RANGEVIEW OR PURECYCLE; REMEDIES AND ENFORCEMENT
8.01 Termination for Frustration of Essential Purpose.
-----------------------------------------------------
(a) If a failure to obtain necessary regulatory approval, any force
majeure, or any default by RANGEVIEW or PURECYCLE in the performance of
their obligations hereunder causes a delay in the construction of any
essential element of the Water Facilities, and it is impossible for any
reconfiguration of the Water Facilities, or for any assumption of control
pursuant to Section 9.02 of the Sky Ranch WSA, if applicable under the
circumstances, to achieve water service to the Property, DEVELOPER shall
have the right to terminate this Agreement upon written notice to RANGEVIEW
and PURECYCLE. Notwithstanding the foregoing, the parties will mutually
cooperate to the extent possible with respect to delays pursuant to this
Section. However, if DEVELOPER determines that such delays pursuant to this
Section will not be resolved in a timely manner, DEVELOPER shall have the
right to terminate the Agreement upon sixty (60) days written notice to
RANGEVIEW and PURECYCLE.
(b) Upon receipt of a notice issued pursuant to subsection (a) above,
RANGEVIEW and PURECYCLE shall immediately cease all work on the Water
Facilities, except such work as may be required for the protection of
public safety, to secure and protect the site of any construction work, and
to preserve the utility of any non-construction work for possible future
use.
(c) In the event of a termination under this Section 8.01, DEVELOPER
shall pay RANGEVIEW and PURECYCLE for all work performed and materials
purchased through and including the date on which RANGEVIEW and PURECYCLE
receive such notice and for reasonable termination expenses it incurred
unless RANGEVIEW or PURECYCLE has committed a material breach of this
Agreement which is the proximate cause of the impossible circumstance. In
that event, DEVELOPER shall not be required to pay RANGEVIEW or PURECYCLE
for any work performed and materials purchased. In addition, if a material
breach of this Agreement by RANGEVIEW or PURECYCLE is the proximate cause
of the impossible circumstance, this subsection (c) shall not be construed
to bar DEVELOPER from claiming whatever damages it may be entitled to as a
result of such breach.
(d) For the purposes of this Section 8.01, the term "impossible" shall
mean a circumstance in which RANGEVIEW or PURECYCLE is truly prevented from
performing, and not that continued performance is merely impracticable or
unreasonably expensive. Such a circumstance must be beyond the control of
and not created by DEVELOPER.
8.02 Foreclosure. In addition to the foregoing rights and remedies, in the
-----------
event of a material default by RANGEVIEW and PURECYCLE with the performance of
their obligations under this Agreement, DEVELOPER may exercise any rights
provided pursuant to the deeds of trust and security interests granted under
Section 3.06, including the right to foreclose on any deeds of trust or security
interests, and to exercise, enforce, or assert any and all other rights and
remedies that are available in law or in equity.
Hills at Sky Ranch WSA Page 16 of 29
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.01 Effective Date. This Agreement shall be in full force and effect and
---------------
be legally binding on the date it is fully executed and delivered by the parties
hereto and upon the simultaneous execution of the Amendment to the Sky Ranch WSA
(Exhibit B).
9.02 Termination Contingency.
------------------------=
(a) Development Approvals. Development of the Property is contingent
----------------------
upon DEVELOPER obtaining approval from Arapahoe County of a Final
Development Plan ("FDP") for a portion of the Property targeted for initial
development. If said approval of the FDP is not obtained in a timely
manner, but in no event later than twenty four (24) months after the
Effective Date of this Agreement, any party may terminate the Agreement on
or before July 1, 2006 upon thirty days written notice to all parties.
(b) Water Service Marketability. DEVELOPER has raised concerns about
-----------------------------
the marketability of the Property based on the Export Water supply. If the
developers of the Sky Ranch PUD and the Hills at Sky Ranch PUD are jointly
unable to consummate a sale or sales of at least 700 lots cumulative at
both planned unit developments to a nationally recognized homebuilder or
homebuilders within 24 months of the date of approval of the FDP for the
Property, due principally to the homebuilders' or the homebuilder's concern
over the Export Water, which concern must be supported and documented, then
the DEVELOPER shall be entitled to terminate this Agreement by giving
written notice thereof to RANGEVIEW and PURECYCLE. Termination shall be
contingent upon the right of RANGEVIEW and PURECYCLE to address such
documented homebuilder concerns with engineering evaluations and other
documentation as they choose. If PURECYCLE is unable to persuade the
homebuilder or homebuilders to meet with PURECYCLE and RANGEVIEW to address
the documented homebuilder's or homebuilders' concerns, or to consummate
the acquisition of the property as evidenced by a deed for all or a portion
of the property within 60 days of notice of termination, then this
Agreement shall be deemed effectively terminated on said 60th day.
(c) Water Rights. If DEVELOPER is unsatisfied with the opinion of
-------------
water counsel provided pursuant to Section 6.02(e), DEVELOPER shall have
the right to terminate this Agreement by giving written notice to
PURECYCLE. In no event shall DEVELOPER have the right to terminate this
Agreement pursuant to this Section after the Board of County Commissioners
of Arapahoe County has approved the PDP.
(d) In the event of a termination pursuant to this Section 9.02,
PURECYCLE shall retain ownership of any and all Wholesale Facilities
completed, substantially completed, or as may be under construction at the
date of termination, including any property, rights-of-way and easements
required for their access, operation and maintenance. DEVELOPER shall not
be entitled to any refund for Water Taps purchased prior to the date of
termination to the extent that PURECYCLE has utilized or relied upon said
tap fee revenue for meeting their obligations hereunder. DEVELOPER shall
fully reimburse PURECYCLE for any additional amounts, not covered by
revenue from DEVELOPER's purchase of Water Taps, incurred by PURECYCLE in
pursuance of their obligations hereunder prior to the date of
Hills at Sky Ranch WSA Page 17 of 29
termination up to a maximum of $25,000.00 within 60 days of DEVELOPER's
receipt of invoices and canceled checks from PURECYCLE evidencing such
obligations.
(e) The termination or default by Icon Investors I, LLC and/or AMD
under the Water Service Agreement for the Sky Ranch PUD shall not result in
the termination or default by any party to this Agreement and it shall
remain in full force and effect unless otherwise terminated as provided for
herein. Notwithstanding the above, should any default by Icon Investors I,
LLC and/or AMD cause an interruption of wastewater service to PURECYCLE and
RANGEVIEW, PURECYCLE and RANGEVIEW shall not be found in default of any of
their obligations to provide water service under this Agreement should the
proximate cause of default by PURECYCLE and RANGEVIEW be associated with
the interruption of wastewater service. Upon default of Icon Investors I,
LLC and/or AMD, the DEVELOPER shall assume all obligations for providing
continuous and uninterrupted wastewater service to PURECYCLE and RANGEVIEW.
9.03 Insurance, Bonds, and Liens
------------------------------
(a) Insurance. PURECYCLE shall at all times carry workers'
---------
compensation insurance 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 DEVELOPER as an additional insured.
(b) Insurance and Bonds of Contractors. PURECYCLE shall cause its
--------------------------------------
contractors and subcontractors to maintain adequate insurance and to obtain
performance bonds and labor and materials payment bonds in accordance with
all statutory requirements. When the principal site of the work is on the
Property, insurance provided by contractors for construction activities to
PURECYCLE shall name DEVELOPER as an additional insured.
(c) Liens. With respect to any work to be performed by PURECYCLE on
-----
the Property, the party performing the actual work shall protect the
Property from mechanic's liens, and shall indemnify DEVELOPER and any other
property owner from and against and with respect to any such liens which
attach to such Property or easements rights and shall cause any such lien
to be removed as a lien within thirty (30) days of recording thereof.
(d) Indemnification. Any party entering upon any other party's
---------------
property pursuant to the rights granted under this Agreement or otherwise
in connection herewith including, without limitation, for purposes of
constructing any of the Water Facilities, to the extent permitted by law,
hereby indemnifies and saves the other party harmless from and against any
and all loss, liability, damage, claim, fee, penalty, cost or expense
(including court costs and reasonable attorneys' fees) arising out of or
related to any entry by said party, its agents, employees, officers,
contractors, tenants, licensees or invitees (collectively, the
"Indemnifying Parties") onto said other party's property including, without
limitation, any and all construction, installation, utility connection or
other work or activity performed thereon, the exercise of its rights
pursuant to this Agreement, or arising out of the negligent acts or
omissions of said Indemnifying Parties incurred by or asserted against said
other party, its officers, employees, agents, representatives, lessees,
contractors, licensees or invitees.
Hills at Sky Ranch WSA Page 18 of 29
9.04 Time is of the Essence. Time is of the essence hereof; provided,
--------------------------
however, that if the last day permitted or the date otherwise determined for the
performance of any act required or permitted under this Agreement falls on a
Saturday, Sunday or legal holiday, the time for performance shall be extended to
the next succeeding business day, unless otherwise expressly stated.
9.05 Term. This Agreement shall extend in perpetuity unless otherwise
----
terminated as provided for herein.
9.06 Parties Interested Herein. Nothing expressed or implied in this
---------------------------
Agreement is intended or shall be construed to confer upon, or to give to, any
Person other than DEVELOPER, PURECYCLE, or RANGEVIEW, any right, remedy or claim
under or by reason of this Agreement or any covenants, terms, conditions or
provisions thereof. All the covenants, terms, conditions and provisions in this
Agreement by and on behalf of DEVELOPER, RANGEVIEW and PURECYCLE shall be for
the sole and exclusive benefit of the parties hereto.
9.07 Covenants Run With the Land. The covenants, terms, conditions and
-------------------------------
provisions set forth in this Agreement shall inure to and be binding upon the
representatives, successors and assigns of the parties hereto and shall run with
the Property. This Agreement or a Memorandum of Agreement shall be executed by
the parties and recorded against the Property.
9.08 Notices. Except as otherwise provided herein, all notices or payments
-------
required to be given under this Agreement shall be in writing and shall be
hand-delivered or sent by certified mail, return receipt requested, to the
following addresses:
To DEVELOPER: Icon Land II, LLC
5299 DTC Boulevard, Suite 815
Greenwood Village, CO 80111
Tel (303)984-9800
Fax (303)984-9874
To PURECYCLE: Pure Cycle Corporation
8451 Delaware Street
Thornton, Colorado 80260
Tel (303)292-3456
Fax (303)292-3475
To RANGEVIEW: Rangeview Metropolitan District
141 Union Blvd., Suite 150
Lakewood, Colorado 80228-1556
Tel (303)987-0835
Fax (303)987-2032
All notices will be deemed effective one (1) day after hand-delivery or three
(3) days after mailing by registered or certified mail, postage prepaid with
return receipt. Any party by written notice so provided may change the address
to which future notices shall be sent.
9.09 Severability. If any covenant, term, condition or provision under this
------------
Agreement shall, for any reason, be held to be invalid or unenforceable, the
invalidity or unenforceability of such covenant, term, condition or provision
shall not affect any other provision contained herein, the intention being that
such provisions are severable.
Hills at Sky Ranch WSA Page 19 of 29
9.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original, but all of which shall
constitute one and the same document.
9.11 Amendment. This Agreement may be amended from time to time by
---------
agreement between the parties hereto and upon written notice to those parties of
the Sky Ranch WSA as identified on Exhibit B hereto; provided, however, that no
amendment, modification or alteration of the terms or provision hereof shall be
binding upon any party unless the same is in writing and duly executed by all
parties hereto.
9.12 Integration. This Agreement and the Sky Ranch WSA constitutes the
-----------
entire agreement between the parties hereto concerning the subject matter
hereof, and all prior negotiations, representations, contracts, understandings
or agreements pertaining to such matters are merged into and superseded by this
Agreement and the Sky Ranch WSA`.
9.13 Governing Law. This Agreement arises out of the transaction of
--------------
business in the State of Colorado by the parties hereto. This Agreement shall
be governed and construed in accordance with the laws of the State of Colorado.
The performance by the parties hereto of their respective obligations provided
for in this Agreement shall be in strict compliance with all applicable laws and
the rules and regulations of all governmental agencies, municipal, county, state
and federal, having jurisdiction in the premises.
9.14 Assignment and Amendment. This Agreement shall not be assignable by
--------------------------
any party hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. Any attempted assignment
not in accordance with this Section shall be void and of no force or effect.
Developer intends to create with respect to the Property, one or more special
districts ("Districts") to facilitate financing and development of the
infrastructure improvements and public facilities for the Property, including
without limitation, the design, acquisition, construction and financing of water
system improvements necessary to serve the Property. The parties hereby agree
that at the time such Districts are created that certain obligations of the
Developer hereunder may be assigned by the Developer to the Districts. To the
extent DEVELOPER assigns any of its obligations under this Agreement, the
assignee of such obligations shall expressly assume such obligations. The
parties will cooperate in the drafting, negotiation and execution of an
amendment to this Agreement to add the Districts as parties to the agreement and
to provide for the assignment of certain of the Developer's obligations to the
Districts and the assumption of such obligations by the Districts.
9.15 Binding Effect. This Agreement shall be binding upon and, except as
---------------
otherwise provided in this Agreement, shall inure to the benefit of the
successors in interest or the legal representatives of the parties hereto.
[SIGNATURE PAGE AND EXHIBITS FOLLOW]
Hills at Sky Ranch WSA Page 20 of 29
Icon Land II, LLC, a Colorado limited liability
company
By: /s/ Andrew R. Klein
----------------------------------------
Andrew R. Klein, Manager
Pure Cycle Corporation, a Delaware
Corporation
By: /s/ Mark Harding
----------------------------------------
Mark Harding, President
Attest:
By: /s/ Scott Lehman
--------------------------------
Scott Lehman, Secretary
(SEAL)
For purposes of Sections 3.01(b), 6.01(e) and 6.02(f)
Rangeview Metropolitan District
By: /s/ Thomas P. Clark
--------------------------------------------
Thomas P. Clark, Director
Hills at Sky Ranch WSA Page 21 of 29
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
--------
The foregoing instrument was acknowledged before me this 14th day of May
2004, by Andrew R. Klein, as Manager of Icon Land II, a Colorado limited
liability company.
Witness my hand and official seal.
My commission expires: 02/18/2008
---------------------
/s/ Sabine Latza
------------------------
Notary Public
(SEAL)
Hills at Sky Ranch WSA Page 22 of 29
STATE OF COLORADO )
) ss.
COUNTY OF ADAMS )
-----
The foregoing instrument was acknowledged before me this 14th day of May
2004, by Mark Harding, as President, and Scott Lehman, as Secretary, of Pure
Cycle Corporation, a Delaware corporation.
Witness my hand and official seal.
My commission expires: 8/16/06
----------------------
/s/ Tamara P. Nielsen
------------------------
Notary Public
(SEAL)
STATE OF COLORADO )
) ss.
COUNTY OF ADAMS )
-----
The foregoing instrument was acknowledged before me this 14th day of May
2004, by Thomas P. Clark, as Director of Rangeview Metropolitan District.
Witness my hand and official seal.
My commission expires: 8/16/06
/s/ Tamara P. Nielsen
------------------------
Notary Public
(SEAL)
Hills at Sky Ranch WSA Page 23 of 29
EXHIBIT A
WATER RIGHTS SPECIAL WARRANTY DEED
This Water Rights Special Warranty Deed is made and given effective ___________,
200_, by and from __________________________, a _____________________________,
whose address is _________________________________________________________
("Grantor"), to PURECYCLE CORPORATION, a Delaware Corporation, whose address is
8451 Delaware Street, Thornton CO 80260 ("Grantee").
Grantor hereby sells, conveys, and assigns to Grantee all of Grantor's water
rights, title and related rights and interests of every kind in and to the
nontributary groundwater from the Upper Arapahoe, Lower Arapahoe and Laramie-Fox
Hills aquifers underlying the lands described in the Water Service Agreement for
the Hills at Sky Ranch PUD (the "Property") as decreed in Case No. __________ in
the Water Court for Water Division No. 1, State to Colorado.
Grantor hereby expressly reserves all of its rights, title and interests in and
to all non-tributary waters in the Denver aquifer underlying or appurtenant to
the Property and related interests not conveyed herein to Grantee.
Grantor further warrants the title and agrees to defend quiet and peaceable
possession of the subject groundwater against all and every person or persons
claiming title by, through or under Grantor.
Date this _________ day of ______________, 200_.
________________________________
Attest:
By: ________________________________ By: ___________________________
Its: _______________________________ Its: ___________________________
STATE OF COLORADO )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
_____, 2004, by _____________________, as ________________________ and by
_____________________ as _____________________, of _____________________, a
____________________].
Witness my hand and official seal.
My commission expires: ___________________
---------------------------------
Notary Public
(SEAL)
Hills at Sky Ranch WSA Page 24 of 29
EXHIBIT B
AMENDMENT
WATER SERVICE AGREEMENT
FOR THE
SKY RANCH PUD
Dated: May 14, 2004
-------------
RE: Water Service Agreement dated October 31, 2003 by and between Airpark
Metropolitan District ("AMD"); Icon Investors I LLC ("DEVELOPER"); Pure Cycle
Corporation ("PURECYCLE"); and Rangeview Metropolitan District ("RANGEVIEW")
relating to the provision of water service to the Sky Ranch PUD (Arapahoe County
case No. Z01-010).
WHEREAS, for water service purposes, the parties to the aforesaid Water
Service Agreement desire to recognize and accommodate the provision of domestic
water service by PURECYCLE and RANGEVIEW to an approximately 160-acre tract
being generally the Northwest quarter of Section 10 in Township 4 South, Range
65 West of the 6th Principal Meridian, Arapahoe County, Colorado, and being
designated as the Hills at Sky Ranch PUD.
WHEREAS, the Hills at Sky Ranch PUD is proposed to consist of residential
and mixed used development having water system customers of up to 850 EQR, with
said development requiring additional water resources and expanded water service
facilities.
WHEREAS, a "Water Service Agreement for the Hills at Sky Ranch PUD" between
Icon Land II, LLC, a Colorado limited liability corporation, RANGEVIEW and
PURECYCLE ("Hills WSA") is to be executed simultaneously with this Amendment to
establish terms and conditions for domestic water service to the Hills at Sky
Ranch PUD and also to recognize the interconnectedness between water service for
the Hills at Sky Ranch PUD with that for the Sky Ranch PUD.
NOW THEREFORE, this Amendment, dated this 14th day of May 2004, shall amend
the aforesaid Water Service Agreement as follows:
1. To the extent practical, and unless specifically provided for otherwise in
this Amendment, there shall be no distinction with regard to Water Taps
purchased for the Hills at Sky Ranch PUD as compared with Water Taps
purchased for the Sky Ranch PUD.
2. Provisions of Article 5 dealing with domestic wastewater service and
treatment shall apply equally to the Hills at Sky Ranch PUD as for the Sky
Ranch PUD.
3. RANGEVIEW agrees to assume any rights, obligations and duties delegated to
it under the Hills WSA including but not limited toownership and
maintenance responsibilities for the Retail Facilities for the Hills at Sky
Ranch PUD in a like manner as those responsibilities are to be assumed for
the Sky Ranch PUD.
4. AMD's right to assume control of the Water Facilities, pursuant to Section
9.02 and Section 3.05, shall extend to Water Facilities constructed to
serve the Hills at Sky Ranch PUD.
Hills at Sky Ranch WSA Page 25 of 29
5. To the extent practical, water system customers at the Hills at Sky Ranch
PUD shall be treated equally and the same as similar customers at the Sky
Ranch PUD by RANGEVIEW and PURECYCLE, and by AMD in the event that AMD
assumes control of the Water Facilities pursuant to Section 9.02 and
Section 3.05.
6. Paragraph (v) of the "Water Tap Takedown Schedule" in Exhibit C shall be
amended as follows:
"(v) An additional Three Hundred Ten (310) Water Taps to be
purchased on the first Anniversary and each subsequent Anniversary
through the twelfth (12th) Anniversary, or until a total of 4,850
Water Taps are purchased, whichever is earlier. If 4,850 Water Taps
have not been purchased for use at the Sky Ranch PUD and the Hills at
Sky Ranch PUD on the twelfth Anniversary, PURECYCLE shall not be
obligated to sell additional Water Taps for use on the properties or
to reserve Export Water to serve those additional Water Taps."
7. Table C-1, the Water Tap Takedown Schedule, of Exhibit C is hereby amended
as follows:
- -----------------------------------------------------------------------------------------
TABLE C-1 (AMENDED) WATER TAP TAKEDOWN SCHEDULE
- -----------------------------------------------------------------------------------------
Scheduled Tap Takedown Minimum Tap Takedown
- ------------------------------------------- ---------------------- --------------------
EQR Per Cumulative EQR Per Cumulative
Development Milestone or Schedule Takedown EQR Takedown EQR
- ------------------------------------------- ---------- ---------- -------- ----------
60 days after PDP Approval by Arapahoe
County 20 20 20 20
- ------------------------------------------- ---------- ---------- -------- ----------
DEVELOPER's Request for Construction Water 80 100 80 100
- ------------------------------------------- ---------- ---------- -------- ----------
DEVELOPER's Request for Municipal Water
Service 56 156 56 156
- ------------------------------------------- ---------- ---------- -------- ----------
90 days after DEVELOPER's Request for
Municipal Water Service 244 400 244 400
- ------------------------------------------- ---------- ---------- -------- ----------
1st Anniversary of Municipal Water Service 400 800 310 710
- ------------------------------------------- ---------- ---------- -------- ----------
2nd Anniversary of Municipal Water Service 400 1,200 310 1,020
- ------------------------------------------- ---------- ---------- -------- ----------
3rd Anniversary of Municipal Water Service 400 1,600 310 1,330
- ------------------------------------------- ---------- ---------- -------- ----------
4th Anniversary of Municipal Water Service 400 2,000 310 1,640
- ------------------------------------------- ---------- ---------- -------- ----------
5th Anniversary of Municipal Water Service 400 2,400 310 1,950
- ------------------------------------------- ---------- ---------- -------- ----------
6th Anniversary of Municipal Water Service 400 2,800 310 2,260
- ------------------------------------------- ---------- ---------- -------- ----------
7th Anniversary of Municipal Water Service 400 3,200 310 2,570
- ------------------------------------------- ---------- ---------- -------- ----------
8th Anniversary of Municipal Water Service 400 3,600 310 2,880
- ------------------------------------------- ---------- ---------- -------- ----------
9th Anniversary of Municipal Water Service 400 4,000 310 3,190
- ------------------------------------------- ---------- ---------- -------- ----------
10th Anniversary of Municipal Water Service 400 4,400 310 3,500
- ------------------------------------------- ---------- ---------- -------- ----------
11th Anniversary of Municipal Water Service 400 4,800 310 3,810
- ------------------------------------------- ---------- ---------- -------- ----------
12th Anniversary of Municipal Water Service 50 4,850 310 4,120
- -----------------------------------------------------------------------------------------
Hills at Sky Ranch WSA Page 26 of 29
8. Water Taps purchased for use at the Hills at Sky Ranch PUD shall be viewed
jointly with Water Taps purchased for use at the Sky Ranch PUD for purposes
of meeting the minimum tap takedown requirements established in Exhibit C.
AIRPARK METROPOLITAN DISTRICT
By:
--------------------------------------
Andrew R. Klein, President
ICON INVESTORS I, LLC, a Colorado Limited Liability
Company
By: Airway Park Manager, LLC, a Colorado Limited
Liability Company
By:
--------------------------------------
Andrew R. Klein, its Manager
PURE CYCLE CORPORATION, a Delaware Corporation
By:
--------------------------------------
Mark W. Harding, President
RANGEVIEW METROPOLITAN DISTRICT
By:
--------------------------------------
Thomas P. Clark, Director
Hills at Sky Ranch WSA Page 27 of 29
EXHIBIT D
LAND BOARD ESTOPPEL CERTIFICATE
This Estoppels Certificate is given to ICON Land II, LLC, a Colorado limited
liability company ("Developer"), by the State of Colorado, acting through its
State Board of Land Commissioners (the "State"), with the understanding that
Developer will rely on this Certificate in connection with entering into a Water
Service Agreement among Developer, Pure Cycle Corporation, a Delaware
corporation ("PureCycle"), and Rangeview Metropolitan District, a
quasi-governmental corporation and political subdivision of the State of
Colorado ("Rangeview").
The State hereby certifies as follows:
1. The State is the Lessor under that certain Amended and Restated
Lease Agreement between Rangeview and the State (Lease No. S-37280), executed
April 4, 1996, as recorded on July 31, 1996 at Reception No. A6097802 in the
Arapahoe County Clerk and Recorder's Office (the "Lease"). A true, correct and
complete copy of the Lease is attached hereto. The Lease is the entire
agreement between the State and Rangeview pertaining to the use of all the
waters on and under the Lowry Range (as defined under the "Lease"). There are
no amendments, modifications, supplements, arrangements, side letters or
understandings, oral or written of any sort, of the Lease.
2. The Lease has been duly executed and delivered by, and is a binding
obligation of, the State, and the Lease is in full force and effect.
3. All current obligations of the State under the Lease have been
performed, and to the best of the State's knowledge Rangeview is not currently
in default under the Lease.
4. The State is not in default under the Lease. The State has not
assigned, transferred or hypothecated the Lease or any interest therein.
5. The person executing this Estoppels Certificate is authorized by the
State to do so and execution hereof is the binding act of the State enforceable
against the State.
IN WITNESS WHEREOF, the State has executed this Estoppels Certificate this __
day of _____________, 2004.
STATE OF COLORADO
STATE BOARD OF LAND COMMISSIONERS
By:
-------------------------------------
President
Hills at Sky Ranch WSA Page 28 of 29
EXHIBIT E
RANGEVIEW ESTOPPEL CERTIFICATE
This Estoppels Certificate is given to ICON Land II, LLC, a Colorado limited
liability company ("Developer"), by the Rangeview Metropolitan District, a
quasi-governmental corporation and political subdivision of the State of
Colorado ("Rangeview"), with the understanding that Developer will rely on this
Certificate in connection with entering into a Water Service Agreement among
Developer, Pure Cycle Corporation, a Delaware corporation ("PureCycle"), and
Rangeview.
Rangeview hereby certifies as follows:
1. Rangeview is Lessee under that certain Amended and Restated Lease
Agreement between Rangeview and the State Board of Land Commissioners (Lease No.
S-37280), executed April 4, 1996, as recorded on July 31, 1996 at Reception No.
A6097802 in the Arapahoe County Clerk and Recorder's Office (the "Lease"). A
true, correct and complete copy of the Lease, together with any amendments,
modifications and supplements thereto, is attached hereto. The Lease is the
entire agreement between Rangeview and the State pertaining to the use of all
the waters on and under the Lowry Range (as defined under the "Lease"). There
are no amendments, modifications, supplements, arrangements, side letters or
understandings, oral or written of any sort, of the Lease, except as attached.
2. The Lease has been duly executed and delivered by, and is a binding
obligation of, Rangeview, and the Lease is in full force and effect.
3. All current obligations of the Rangeview under the Lease have been
performed, and to the best of Rangeview's knowledge, neither the State or
Rangeview are currently in default under the Lease.
4. Rangeview has not assigned, transferred or hypothecated the Lease or
any interest therein.
5. The person executing this Estoppels Certificate is authorized by
Rangeview to do so and execution hereof is the binding act of Rangeview
enforceable against the Rangeview.
IN WITNESS WHEREOF, Rangeview has executed this Estoppels Certificate this __
day of __________, 2004.
RANGEVIEW METROPOLITAN DISTRICT
By:
-------------------------------------
Hills at Sky Ranch WSA Page 29 of 29