Exhibit 10.3
ESCROW AGREEMENT
(Escrow No. 210028477)
THIS ESCROW AGREEMENT (this “Escrow Agreement”) is made and entered into as of
this 30th day of July, 2010, by and among BANK OF AMERICA, N.A., national
association (“Bank”), PURE CYCLE CORPORATION, a Colorado corporation (“Buyer”),
and CHICAGO TITLE AND TRUST COMPANY (the “Escrow Agent”).
RECITALS
A. The Bank and Buyer have entered into a Loan Sale and Assignment Agreement
dated as of July 30, 2010 (the “Loan Sale Agreement”) relating to the proposed
sale and purchase of the loan of Sky Ranch, LLC, a Colorado limited liability
company, which indebtedness is currently owed to the Bank (the “Loan Sale”),
subject to the terms and conditions set forth therein.
B. The parties desire to enter into this Escrow Agreement to provide for the
holding and disposition of the Earnest Money under the Loan Sale Agreement.
C. Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Escrow Funds. Pursuant to the Loan Sale Agreement, Purchaser has delivered to
Escrow Agent by wire transfer funds in the amount of Seven Hundred Thousand
Dollars ($700,000.00) (the “Earnest Money”).
2. Refund Process; Objection to Refund. Buyer may deliver to Escrow Agent a
notice requesting a return of the Earnest Money (a “Refund Notice”) if Buyer
terminates the Loan Sale Agreement prior to 5:00 p.m. (Eastern time) on or
before September 30, 2010 in accordance with the terms and conditions of the
Loan Sale Agreement which allows Buyer to do so. In the event that Buyer shall
deliver to Escrow Agent a Refund Notice, Escrow Agent shall, within one
(1) Business Day after receipt of such Refund Notice, give written notice to the
Bank together with a copy of the Refund Notice, in accordance with the notice
provisions set forth in Section 15 hereof. If within a period of five
(5) business days following Escrow Agent’s delivery of a copy of the Refund
Notice to the Bank (the “Notice Period”), Escrow Agent does not receive a notice
from the Bank objecting to the refund of the Earnest Money to Buyer (an
“Objection Notice”), then, on the first business day following the Notice
Period, Escrow Agent shall deliver to Buyer the Earnest Money, less the Escrow
Agent’s customary escrow fee, and this Escrow Agreement shall terminate. If the
Bank delivers an Objection Notice to Escrow Agent, the Bank shall simultaneously
deliver to Buyer a copy of such Objection Notice, which shall set forth in
reasonable detail the grounds for the objection. If Escrow Agent receives a
timely Objection Notice from the Bank, Escrow Agent shall not deliver the
Earnest Money to Buyer, but shall continue to hold the Earnest Money pursuant to
the terms of this Escrow Agreement until such time as Escrow Agent receives
either joint written instructions from Buyer and the Bank or a court order
issued by a court of competent jurisdiction directing the disposition

 

 

--------------------------------------------------------------------------------

 

of the Earnest Money. Following the delivery of an Objection Notice to Escrow
Agent, Escrow Agent is hereby authorized and directed to ignore any unilateral
demands, notices or requests for disposition of the Earnest Money. Failure of
the Bank to respond to a Refund Notice on or before the end of the Notice Period
shall be deemed to mean that the Bank does not object to the delivery to Buyer
of the Earnest Money and all interest earned thereon.
3. Payment to Bank. The Bank may deliver to Escrow Agent a notice demanding that
the Earnest Money or applicable portion thereof be paid to the Bank if (A) Buyer
fails to close under the terms of the Loan Sale Agreement, or (B) the Bank is
entitled under the terms of the Loan Sale Agreement to withhold the refund to
Buyer of all or any portion of the Earnest Money, in such event, the notice and
objection periods provided in Section 2 shall apply.
4. Other Demand for Payment. Except as expressly provided in Paragraphs 2 or 3
above, in the event that either party makes a written demand upon the Title
Company for payment of the Earnest Money, Escrow Agent shall, within one
(1) Business Day after receipt of such demand, give written notice to the other
party together with a copy of such demand, pursuant to the notice provisions set
forth in Section 15 hereof. If Escrow Agent does not receive a written objection
within five (5) business days after the giving of such notice, Escrow Agent is
hereby authorized to make such payment. If Escrow Agent does receive such
written objection within such five (5) business day period, Escrow Agent shall
continue to hold the Earnest Money until otherwise directed by joint written
instructions from the Bank and Buyer or a court order from a court of competent
jurisdiction directing the disposition of the Earnest Money.
5. Limitation Of Duties Of Escrow Agent. Escrow Agent shall have no duties or
responsibilities other than those expressly set forth herein. Escrow Agent shall
have no duty to enforce any obligation of any person to make any delivery or to
enforce any obligation of any person to perform any other act. Escrow Agent
shall be under no liability to the other parties hereto or to anyone else by
reason of any failure on the part of any party hereto or any maker, guarantor,
endorser or other signatory of any document or any other person to perform such
person’s obligations under any such document. Except for amendments to these
Instructions hereinafter referred to and except for joint instructions given to
Escrow Agent by the parties hereto, Escrow Agent shall not be obligated to
recognize any agreement between any or all of the persons referred to herein. It
is understood and agreed that the duties of Escrow Agent are purely ministerial
in nature. Escrow Agent shall not be liable to the other parties hereto or to
anyone else for any action taken or omitted by it, or any action suffered by it
to be taken or omitted, in good faith and in the exercise of reasonable
judgment, except for acts of willful misconduct or gross negligence. Escrow
Agent may rely conclusively and shall be protected in acting upon any order,
notice, demand, certificate, opinion or advice of counsel (including counsel
chosen by Escrow Agent), statement, instrument, report or other paper or
document (not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth and acceptability of any information
therein contained) which is reasonably believed by Escrow Agent to be genuine
and to be signed or presented by the proper person or persons. Except as
specifically set forth herein, Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this Escrow
Agreement or any of the terms hereof, unless evidenced by a final judgment or
decree of a court of competent jurisdiction in the State of Illinois or a
Federal court in such State, or a writing delivered to Escrow Agent signed by
the proper party or parties and, if the duties or rights of Escrow Agent are
affected, unless it shall give its prior written consent thereto.

 

2

--------------------------------------------------------------------------------

 

6. Disclaimer Re: Validity of Documentation. In its capacity as Escrow Agent,
Escrow Agent shall not be responsible for the genuineness or validity of any
security, instrument, document or item deposited with it and shall have no
responsibility other than to faithfully follow the instructions contained
herein, and shall not be responsible for the validity or enforceability of any
security interest of any party and it is fully protected in acting in accordance
with any written instrument given to it hereunder by any of the parties hereto
and reasonably believed by Escrow Agent to have been signed by the proper
person. Escrow Agent may assume that any person purporting to give any notice
hereunder has been duly authorized to do so.
7. Resignation of Escrow Agent. Escrow Agent may resign as Escrow Agent
hereunder upon giving thirty (30) days’ prior written notice to that effect to
each of the parties to these Instructions. In such event, the successor Escrow
Agent shall be selected and approved by the parties hereto, which approval will
not be unreasonably withheld or unduly delayed. Such party that will no longer
be serving as Escrow Agent shall deliver, against receipt, to such successor
Escrow Agent, the Earnest Money, if any, held by such party, to be held by such
successor Escrow Agent pursuant to the terms and provisions of this Escrow
Agreement. If no such successor has been designated on or before the effective
date of such party’s resignation, the current Escrow Agent shall continue until
such successor is appointed; provided, however, its sole obligation thereafter
shall be to safely keep all documents and instruments then held by it and to
deliver the same to the person, firm or corporation designated as its successor
or until directed by a final order or judgment of a court of competent
jurisdiction in the State of Illinois or a Federal court in such State,
whereupon Escrow Agent shall make disposition thereof in accordance with such
order or judgment. If no successor Escrow Agent is designated and qualified
within thirty (30) days after Escrow Agent’s resignation is effective, such
party that will no longer be serving as Escrow Agent may apply to any court of
competent jurisdiction for the appointment of a successor Escrow Agent.
8. Investment. Deposits made pursuant to this Escrow Agreement may be invested
on behalf of any party or parties hereto in a federally insured account:
provided, that any direction to Escrow Agent for such investment shall be
expressed in writing and contain the consent of all other parties to this
escrow, and also provided that Escrow Agent is in receipt of the taxpayer’s
identification number and investment forms as required. Escrow Agent will, upon
request, furnish information concerning its procedures and fee schedules for
investment. In the event the Escrow Agent is requested to invest deposits
hereunder, Chicago Title and Trust Company shall not to be held responsible for
any loss of principal or interest which may be incurred as a result of making
the investment or redeeming said investment for the purposes of this Escrow
Agreement.
9. Direction Not to Invest/Right to Commingle. Except as to deposits of funds
for which Escrow Agent has received express written direction concerning
investment or other handling, the parties hereto direct the Escrow Agent not to
invest any funds deposited by the parties under the terms of this escrow and
waive any rights which they may have under Section 2-8 of the Corporate
Fiduciary Act (205 ILCS 620/2-8) to receive interest on funds deposited

 

3

--------------------------------------------------------------------------------

 

hereunder. In the absence of an authorized direction to invest funds, the
parties hereto agree that Escrow Agent shall be under no duty to invest or
reinvest any such funds at any time held by it hereunder; and further, that
Escrow Agent may commingle such deposits with other deposits or with its own
funds in the manner provided for the administration of funds under Section 2-8
of the Corporate Fiduciary Act (205 ILCS 620/2-8) and may use any part or all
such funds for its own benefit without obligation to any party for interest or
earnings derived thereby, if any. Provided, however, nothing herein shall
diminish Escrow Agent’s obligation to apply the full amount of the deposits in
accordance with the terms of this Escrow Agreement.
10. Business Day. Whenever under the terms and provisions of this Escrow
Agreement the time for performance of a condition falls upon a Saturday, Sunday,
or holiday, such time for performance shall be extended to the next business
day.
11. Agreements. The parties have heretofore entered into the Loan Sale Agreement
(as defined above) pertaining to the Loan Sale transaction. This Escrow
Agreement shall not supersede the terms and provisions contained in the Loan
Sale Agreement and in the event of a conflict, the terms and provisions
contained in the Loan Sale Agreement shall govern and prevail. It is agreed by
the parties hereto that Escrow Agent is not to be considered a party to said
Loan Sale Agreement; the Loan Sale Agreement is not to be construed as a part of
these Instructions. It is agreed, however, by the parties hereto that the Escrow
Agent shall be governed solely by the terms and provisions contained in these
Instructions.
12. Governing Law. This Escrow Agreement are governed by and are to be construed
under the laws of the State of Illinois.
13. Reimbursement of Expenses. The Escrow Agent shall be reimbursed by Buyer for
any reasonable expenses incurred by it hereunder, including the reasonable fees
of any attorneys that it may wish to consult in connection with the performance
of its duties hereunder. Such compensation and expenses shall be paid and
reimbursed to the Escrow Agent solely by the Buyer. The Bank shall not be
obligated to pay, reimburse or contribute to any portion of the Escrow Agent’s
fees, compensation or expenses.
14. Disputes. In the event of a dispute between any of the parties hereto as to
their respective rights and interests hereunder, the Escrow Agent shall be
entitled to hold any and all cash then in its possession or under its control
hereunder until such dispute shall have been resolved by the parties in dispute
and the Escrow Agent shall have been notified by instrument jointly signed by
all of the parties in dispute, or until such dispute shall have been finally
adjudicated by a court of competent jurisdiction.
15. Notices. Any notice, demand, request or other communication or delivery
which either party hereto may be required or may desire to give under this
Escrow Agreement shall be in writing and shall be deemed to have been properly
given only if (a) hand delivered (effective upon delivery), (b) sent by a
nationally recognized overnight delivery service (effective one (1) business day
after delivery to such courier for overnight service), (c) sent by facsimile
between 9:00 a.m. and 5:00 p.m. Eastern time on a business day (effective upon
confirmation of transmission provided the same is followed up by an overnight
courier delivery), in each case, prepaid and addressed as follows, or to such
other or additional addresses as either party might designate by written notice
to the other party in accordance with the notice provisions hereof:

 

4

--------------------------------------------------------------------------------

 

     
If to Escrow Agent:
  Chicago Title Insurance Company
 
  171 North Clark Street
 
  Chicago, Illinois 60601
 
  Attn: Donna Adelmann
 
  Telephone: (312) 223-2731
 
   
If to the Bank:
  Traci Craig
 
  Bank of America NA
 
  101 E. Kennedy Blvd. 10th Floor
 
  Tampa, Florida 33602
 
  MC: FL1-400-10-07
 
  Telephone: 813-225-8478
 
  Fascimile:   813-225-8327
 
   
 
  With a copy to:
 
   
 
  Duane Morris LLP
 
  190 South LaSalle Street
 
  Suite 3700
 
  Chicago, Illinois 60603
 
  Attn: David B. Yelin, Esq.
 
   
If to Buyer:
  Pure Cycle Corporation
 
  Attention: Mark Harding,
 
  President and Chief Executive Officer
 
  500 East 8th Avenue, Suite No. 201
 
  Denver, Colorado 80203
 
  Phone: (303) 292-3456
 
  Fax:     (303) 292-3475
 
   
 
  With a copy to:
 
   
 
  Senn Visciano Rosenstein P.C.
 
  1801 California Street, Suite 4300
 
  Denver, Colorado 80202-2604
 
  Attention Mark A. Senn, Esq.
 
  Phone: (303) 298-1122
 
  Fax:     (303) 296-9101

16. Escrow Agent Acceptance. The Escrow Agent hereby consents and agrees to all
of the provisions hereof, and agrees to accept, as Escrow Agent hereunder, all
cash and documents deposited hereunder, and agrees to hold and dispose of said
cash and documents deposited hereunder in accordance with the terms and
provisions hereof.

 

5

--------------------------------------------------------------------------------

 

17. Successors and Assigns. This Escrow Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, successors and assigns.
18. Counterpart Execution. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
19. Facsimile or Photocopy Signatures. A facsimile or photocopy signature on
this Escrow Agreement, any amendment hereto or any notice delivered hereunder
shall have the same legal effect as an original signature.
[Signatures on Following Page.]

 

6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
duly executed the day and year first above written.

            BANK:

BANK OF AMERICA, N.A.,
a national banking association
      By:   /s/ Traci Craig         Traci Craig, Vice President               
BUYER:

PURE CYCLE CORPORATION,
a Colorado corporation
      By:   /s/ Mark Harding         Mark Harding        President and Chief
Executive Officer
500 East 8th Avenue
Suite 201
Denver, Colorado 80203
Phone: (303) 292-3456
Fax:     (303) 292-3475     

          ESCROW AGENT:

CHICAGO TITLE AND TRUST COMPANY
      By:           Its: Authorized Agent               

 

7