Document:

exh10_1.htm

 

Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (“Agreement”) is entered into effective as of the 11th day of March, 2015 (“Effective Date”), by and among Pure Cycle Corporation, a Colorado corporation (“Pure Cycle”) and PCY Holdings, LLC, a Colorado limited liability company (“PCY”) (Pure Cycle and PCY collectively, jointly and severally, “Seller”), and Arkansas River Farms, LLC, a Colorado limited liability company (“Buyer”), or its assigns. 

 

Section 1.  Purchase and Sale. Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer, certain real property comprising approximately 14,641 acres of real property, located in the counties of Bent, Otero and Prowers (collectively, the “Counties”), Colorado, comprised of the Irrigated Acres, the Additional Pasture Acres and the Additional Owned Acres (as each is identified in Section 2(b), below), which Land is described on the attached Exhibit A (collectively, the “Land”), together with all rights, easements, and benefits appurtenant to the Land, including but not limited to: (a) all improvements located on the Land, including  but not limited to all irrigation equipment, buildings, storage bins, houses and other improvements, and any easements, servitudes, permits, licenses, and leases appurtenant to the real property (collectively, the “Improvements”); (b) all right, title and interest of Seller in all rock, limestone, granite, construction aggregate, crushed stone, sand, gravel, caliche, clay, top soil, or other similar material or substances appurtenant to the Land, together with any and all surface use, access easements, and all other rights in connection therewith (collectively, the “Sand and Gravel”); (c) 25% of all of Seller’s right title and interest in all mineral rights associated with and/or appurtenant to the Land other than the Sand and Gravel, including, but not limited to, all right, title, interest, claim and demand in and to all oil, gas, natural gas and hydrocarbons appurtenant to the Land, together with any and all surface use, access easements, and all other rights in connection therewith (the “Minerals”) (d) all right, title and interest of Seller in personal property located on or attached to the Land (the “Personal Property”); (e) all right, title and interest of Seller in all water and water rights, domestic and irrigation wells, well permits, tributary, non-tributary and not non-tributary water, ditch and ditch rights and easement and conveyance rights appurtenant to the Land (collectively, the “Water Rights”), including but not limited to: (i) the following certificated water interests: (A) 18,448.44 shares of stock in the Fort Lyon Canal Company (“FLCC”), evidenced by the certificates set forth on Exhibit B (the "FLCC Shares") and (B) 45 shares of stock in the Lower Arkansas Water Management Association ("LAWMA" and such shares, evidenced by the certificates set forth on Exhibit B (the "LAWMA Shares"); (ii) all water taps and rights to acquire water taps associated with the Land; and (iii) the wells located on the subject property and described in the well permits listed on Exhibit B; and (f) all wind, solar, air, mitigation, ecological and conservation rights (the (“Ecological Rights”).  The Land, the Improvements, the Sand and Gravel, the 25% interest in the Minerals, the Personal Property, the Ecological Rights and the Water Rights shall collectively be referred to herein as the “Property.”  If Buyer has obtained and approved surveys of the Land, the legal description of the Land as set forth in Exhibit A shall be updated to reflect the legal description set forth in the approved surveys.  FLCC and LAWMA shall each hereinafter be referred to as a “Water Company”, collectively as the “Water Companies”), and those Water Rights derived from shares in the Water Companies shall be referred to as the “Certificated Water Rights.”  All shares of capital stock in the Water Companies shall be transferred by special warranty deed and water stock transfer form.  Additionally, Seller shall convey all of Seller's right, title and interest in and to all other rights associated with the structures for the Water Rights, including but not limited to, easements or rights of way or other rights to use land needed or used to divert, deliver, store, or apply water to the Land (and all other rights necessary and incidental to said easements) associated with the Water Rights and for the installation, reconstruction, maintenance, repair, removal, or other uses associated, necessary or incidental to operation of the Water Rights, together with all the diversion or storage structures, including but not limited to, all headgates, ditches, seep ditches, drainage ditches, laterals, reservoirs, reservoir outlet works, dams, water tanks, wells, well casings, pipelines or other appurtenances used in association with the Water Rights.  Seller agrees to cooperate with Buyer and execute all documents required in order to properly effectuate the transfer of all of the above described rights (both at Closing and following Closing).

 

 

 

 

 

Section 2.  Purchase Price; Deposit.

 

(a)           The purchase price for the Property is approximately $52,958,215.00, to be calculated based upon the Purchase Price Formula (as defined below), subject to the prorations and credits set forth herein and to adjustment as set forth in Section 2(c) (the “Purchase Price”).

 

(b)           The Purchase Price shall be calculated based on the following formula (the “Purchase Price Formula”):

 

	
Land Valuation

	 	 	 
	
Irrigated Acres

	 	 	11,464	 
	
Price per Irrigated Acre

	 	 	 	 
	
(including FLCC Shares per Irrigated Acre

	 
	
calculated at 0.9 shares/acre)

	 	$	3,400.00	 
	
Total Irrigated Price

	 	$	38,977,600.00	 
	  	 	 	 	 
	
Excess Water Valuation

	 	 	 	 
	
Total FLCC Shares

	 	 	18,448.44	 
	
  Shares per Irrigated Acre (0.9 shares/acre)

	 	 	(10,317.60	)
	
Excess Shares

	 	 	8,130.84	 
	  	 	 	 	 
	
Price per Share

	 	$	1,625.00	 
	
Total Excess FLCC Price

	 	$	13,212,615.00	 
	  	 	 	 	 
	
Total LAWMA Shares

	 	 	45	 
	
Price per Share

	 	$	2,500.00	 
	
Total LAWMA Valuation

	 	$	112,500.00	 
	  	 	 	 	 
	
Total Excess Water Valuation

	 	$	13,325,115.00	 
	  	 	 	 	 
	
Additional Pasture Acres

	 	 	1,092.50	 
	
Price per Pasture Acre

	 	$	600.00	 
	
Total Pasture Valuation

	 	$	655,500.00	 
	  	 	 	 	 
	
Additional Owned Acres

	 	 	2,085.00	 
	
  Price per additional acres

	 	$	0	 
	  	 	 	 	 
	
Gross Purchase Price

	 	$	52,958,215.00	 

 

 

2

 

 

“Excess Shares” means the (a) the Dry-Up Shares and (b) any FLCC Shares that are in excess of the 10,317.60 FLCC shares allocated to the Irrigated Acres using a rate of 0.9 shares per acre of the Irrigated Acres.  “Dry-Up Shares” means any FLCC Shares that were not historically used to irrigate the Land.

 

(c)           Buyer shall have the right to review all dry-up covenants related to the Dry-Up Shares (the “Dry-Up Covenants”). To the extent the Dry-Up Covenants do not provide adequate enforceable dry up of the property on which the Dry-Up Shares have been historically used in Buyer’s reasonable discretion, Buyer may elect to not to purchase such portion of the Dry-Up Shares, in which event the Purchase Price shall be reduced in an amount equal to $1,625.00 for each Dry-Up Share that Buyer elects not to purchase. Buyer shall provide written notice to Seller of which Dry-Up Shares it elects not to purchase on or before the day that is ten (10) business days prior to the Closing Date.

 

(d)           Within three (3) business days following the Effective Date, Buyer shall deposit earnest money in the sum of $1,000,000.00 (the “Deposit”) with Fidelity National Title Insurance Company, 4643 South Ulster St. #500, Denver, CO 80237 (the “Escrow Agent”), provided that the title examiner shall be Tom Maroney with Fidelity National Title Company, 19751 East Main Street #R14, Parker, CO 80138.  The Deposit shall be refundable to Buyer until completion of the Due Diligence Period as provided in Section 4 below.  The Escrow Agent shall deposit the Deposit funds in an interest-bearing escrow account.  Any interest earned on the Deposit shall accrue to the benefit of the party entitled to the Deposit in accordance with this Agreement, and, upon Closing, shall be applied to the Purchase Price.  If Buyer terminates this Agreement in accordance with the provisions of this Agreement, the Deposit shall be returned to Buyer.

 

Section 3.  Title Insurance and Surveys.

 

(a)           Within ten (10) days after the Effective Date, Buyer shall order a commitment for an owner's extended policy of title insurance (the “Commitment”), issued through and underwritten by Fidelity National Title Insurance Company (the “Title Company”), committing the Title Company to issue its policy insuring title to the Property (excluding the Water Rights) in Buyer in the amount of the Purchase Price (excluding the Excess Water Valuation).  Buyer shall also request the Title Company deliver current tax certificates for the Property.

 

(b)           Within one (1) business day of the Effective Date, Seller shall provide Buyer with copies of each existing survey covering any portion of the Land.  During the Title Review Period (as defined below), Buyer may, at its sole cost and expense, obtain an update of the existing surveys, or order a new survey for any Land for which an existing survey is not available (collectively, the “Survey”). The parties acknowledge that if Buyer seeks to obtain a new survey for any Land for which there is no existing survey, a time period longer than the Title Review Period may be required. Therefore, Buyer shall have up to 90 days after the Effective Date to obtain any new Survey required by Buyer (the “Extended Survey Period”), and shall have until the end of the Extended Survey Period to deliver a Title Objection Notice (as defined below) with respect to any Land for which a new Survey is required.

 

 

3

 

 

(c)           On or before fifty (50) days after the Effective Date (the “Title Review Period”), Buyer shall deliver to Seller written notice of Buyer's objections to the Commitment and the Survey, if any (the “Title Objection Notice”).  Permissible exceptions to title shall include only:  (i) the lien of general taxes not yet payable; and (ii) title exceptions shown on the Commitment to which Buyer has not objected or is deemed to have accepted pursuant to subparagraph (d) below (collectively, the “Permitted Exceptions”).

 

(d)           Seller shall have five (5) business days following Seller’s receipt of the Title Objection Notice (the “Seller Response Period”) to respond to any objections raised by Buyer.  If Seller notifies Buyer that it will not cure or remove any objections raised by Buyer, or if Seller fails to respond to Buyer's Title Objection Notice during the Seller Response Period, Buyer shall have the right to terminate this Agreement by providing written notice of termination to Seller on or before the day that is five (5) days after the expiration of the Seller Response Period.  If Buyer provides timely written notice of termination to Seller, the Deposit shall be returned to Buyer and the parties shall be released from all further obligations hereunder except those obligations which expressly survive termination.  If Buyer fails to provide a Title Objection Notice, or does not terminate this Agreement in accordance with this paragraph, Buyer shall be deemed to have waived such objections (other than any objections Seller has agreed in writing to cure), and such objections shall be deemed Permitted Exceptions hereunder.

 

(e)           A title insurance policy in accordance with the Commitment shall be issued or committed to be issued by the Title Company as of the date of Closing and shall show no exceptions other than the Permitted Exceptions (the “Title Policy”).  Notwithstanding anything to the contrary in this Agreement, Seller shall pay off or obtain releases of all existing mortgages and other lien indebtedness with respect to the Property at Closing, and such matters shall in no event be deemed Permitted Exceptions.

 

Section 4.  Shareholder Approval

 

(a)           Buyer acknowledges that Pure Cycle is required to (a) file this Agreement with the Securities and Exchange Commission (the “SEC Filing”) and (b) obtain the affirmative vote in favor of this Agreement and the transactions contemplated herein from the holders of a majority of the issued and outstanding shares of its common stock in accordance with the Colorado Business Corporation Act and Pure Cycle’s articles of incorporation and bylaws (“Shareholder Approval”) in order to consummate the transactions contemplated herein.  Within five (5) business days after the Effective Date, (i) Seller shall make the SEC Filing and (ii) Buyer shall enter into voting agreements with those shareholders of Pure Cycle who are directors of Pure Cycle and those shareholders over whose shares the directors have sole voting control, in a form reasonably acceptable to Buyer and such shareholders (each a “Voting Agreement”), pursuant to which each of such shareholder agrees to (x) vote in favor of  adoption of this Agreement and the transactions contemplated herein and (y) vote against (1) any Superior Proposal (as defined below), (2) any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or warranty of Seller under this Agreement and (3) vote against any action, proposal, transaction or agreement that could reasonably be expected to impede, interfere with or adversely affect the timely consummation of the transactions contemplated herein.  The date on which (i) Seller has provided written notice to Buyer that Seller has made the SEC Filing, together with reasonable supporting documentation evidencing satisfaction of such requirement, or (ii) Buyer has notified Seller that it has obtained executed Voting Agreements from holders of at least 27% of Pure Cycle’s issued and outstanding shares of common stock, whichever is later, shall be the “Due Diligence Kick-Off Date.”

 

 

4

 

 

(b)           Seller shall take all action necessary to duly call, give notice of, convene and hold a special meeting of Pure Cycle’s shareholders to consider this Agreement and the transactions contemplated herein (the “Shareholder Meeting”) as soon as reasonably practicable after the date of this Agreement, but in no event later than 75 days after the Effective Date.  Seller shall use commercially reasonable efforts to (i) solicit proxies from Pure Cycle’s shareholders in favor of the adoption of this Agreement and the transactions contemplated herein (the “Proxy Statements”) and (ii) take all other actions necessary or advisable to secure the Shareholder Approval.  Seller shall provide regular updates to Buyer regarding the proxy solicitation results.  Once the Shareholder Meeting has been called and noticed, Seller shall not postpone or adjourn the meeting without the consent of Buyer (other than to obtain a quorum or as reasonably determined by Seller to comply with applicable law).

 

(c)           The obligations of the parties to consummate the transactions contemplated herein are subject to the condition that Pure Cycle shall have obtained the Shareholder Approval. If Pure Cycle has not obtained Shareholder Approval on or before the Closing Date, then Seller may terminate this Agreement by written notice to Buyer on or before the Closing Date, whereupon the Deposit shall be returned to Buyer and the parties shall be released from all further obligations hereunder, other than those which specifically survive termination of this Agreement; provided, that if Seller terminates this Agreement pursuant to this subsection following the due Diligence Kick-Off Date, Seller shall pay Buyer a break-up fee of $1,000,000.00 (which obligation shall survive termination of this Agreement).

 

Section 5.  Due Diligence Period.

 

(a)           As a condition to Buyer's obligation to close the transaction, Buyer shall have through the date that is sixty (60) days following the Due Diligence Kick-Off Date (the “Due Diligence Period”) to conduct due diligence of the Property as Buyer deems appropriate, including but not limited to water, consumptive use, environmental, legal, financial and other due diligence of the Property. Following the expiration of the Due Diligence Period, if Buyer has not terminated this Agreement, Buyer shall have an additional period of thirty (30) days to complete due diligence investigations (the “Additional Diligence Period”).  If Buyer is not satisfied with the Property for any reason or no reason, in Buyer's sole discretion, then Buyer may terminate this Agreement by written notice to Seller on or before the end of the Additional Diligence Period, provided, however, that if Buyer elects to terminate during the Additional Diligence Period, Buyer shall not receive the return of the Deposit, the Deposit shall be delivered to Seller, and the parties shall be released from all further obligations hereunder.

 

(b)           Except as required by law, order, rule or regulation, until the Due Diligence Kick-Off Date, neither Buyer nor Seller shall disclose to any person publicly or privately the existence of this Agreement or the transactions contemplated hereby except for disclosures to the parties' respective agents, contractors, engineers, surveyors, attorneys, and employees (each an “Authorized Person.” Following the Due Diligence Kick-Off Date, the parties may disclose the existence of and the parties to this Agreement, but shall continue keep the specific terms of this Agreement and all information obtained from the other party concerning this transaction confidential, except as required by law, order, rule or regulation and except for disclosures to Authorized Persons.  The obligations of the parties under this subsection shall survive the Closing, expiration, or termination of this Agreement; provided, however, if the Closing occurs, this provision shall no longer apply to Buyer.

 

 

5

 

 

(c)           On or before ten (10) days following the Effective Date, Seller shall provide Buyer with copies of the following documents, to the extent such documents are in Seller’s possession or control: (i) all water stock certificates, water diversion records, well permits and a well pumping history, (ii) historical farming and yield information, (iii) spraying and fertilization records for the prior three (3) years, (iv) all existing engineering reports and crop records, (v) energy bills for the past three (3) years, (vi) all prior environmental audits and appraisals, (vii) all written leases, licenses or occupancy agreements affecting the Property (or, if there are any oral leases or occupancy agreements affecting the Property, a written summary of the relevant terms of such oral agreements, including the term and the rental amount), (viii) all permits affecting the Property, (ix) all contracts affecting the Property, (x) a list of irrigation equipment, (xi) copies of all Dry-Up Covenants related to the Dry-Up Shares, and (xi) all other reports pertaining to the Property or the Water Rights.  In addition, within fourteen (14) days following the Effective Date, Seller shall provide a historical use affidavit with respect to the Water Rights in a form reasonably acceptable to Seller.  In addition to the foregoing documents, Seller shall afford Buyer access to such documents and information regarding the Property in Seller’s possession as Buyer may reasonably request.  Seller shall also cooperate with and assist Buyer to obtain records that Buyer reasonably deems necessary for Buyer to evaluate the quantity, quality and consumptive use of the Water Rights and farming history on the Property, and shall sign a release on a form prepared by Buyer and reasonably acceptable to Seller to have such records released to Buyer.

 

(d)           If Buyer is not satisfied with the Property for any reason or no reason, in Buyer's sole discretion, then Buyer may terminate this Agreement by written notice to Seller on or before the end of the Due Diligence Period, whereupon the Deposit shall be returned to Buyer and the parties shall be released from all further obligations hereunder, other than those which specifically survive termination of this Agreement.  Upon the expiration of the Due Diligence Period, if Buyer has not terminated this Agreement in accordance with this paragraph, the Deposit shall be non-refundable to Buyer except in the event of a Seller default or as otherwise expressly provided herein.

 

(e)           Following the Effective Date and through the Closing or until earlier termination of the Agreement, Buyer and Buyer's authorized representatives may enter upon the Property for any lawful purpose, including but not limited to surveying, water rights and consumptive use evaluation, soil testing, engineering studies, and other inspections of the Property; provided, however, Buyer shall not damage any growing crops on the Property or unreasonably interfere with Seller’s use and operation of the Property.

 

(f)           Buyer shall not permit claims or liens of any kind against the Property for inspections, tests, studies or work performed on the Property at Buyer’s request and Buyer agrees to indemnify, protect and hold Seller harmless from and against any liability, damage, cost or expense incurred by Seller and caused by any such inspection, test, study work, claim, or lien. This indemnity includes Seller’s right to recover all costs and expenses incurred by Seller to defend against any such liability, damage, cost or expense, or to enforce this Section 4(g), including Seller’s reasonable attorney fees, legal fees and expenses. Buyer shall further indemnify, defend and hold Seller harmless against any claims of any person for personal injuries or property damage caused by the presence of Buyer, or Buyer’s contractor or agents, on the Property or any work or service performed by Buyer or by any person acting by, through or under Buyer; provided however, Buyer shall not be liable for any damages incurred by Seller resulting from Seller’s negligence or from the mere discovery by Buyer of a pre-existing condition at or with regard to the Property.  In the event Buyer does not purchase the Property, Buyer shall promptly correct any adverse condition or damage to the Property caused by any inspection, test, work or service performed by Buyer or any person acting by, through or under Buyer.  The provisions of this Section 4(g) shall survive the termination of this Agreement.

 

 

6

 

 

(g)           During the Due Diligence Period, Buyer and Seller will agree upon a form of partial relinquishment of surface rights with respect to Seller’s reserved Minerals (the “Relinquishment”) providing that, following Closing, Seller will not (i) impair any structures, improvements or appurtenances located or to be located on the Property, (ii) impair the lateral or sub-adjacent support of the Property, or (iii) unreasonably interfere with Grantor's operations or use of the surface of the Property.  The Relinquishment shall be recorded in the real property records in each of the Counties at Closing.

 

(h)           During the Due Diligence Period and the Additional Due Diligence Period, Buyer and Seller shall cooperate and use commercially reasonable efforts to obtain an estoppel or other documentation from each of the Water Companies in forms acceptable to Buyer certifying that: (i) all assessments due with respect to the Certificated Water Rights are paid in full; (ii) the Certificated Water Rights are validly issued and outstanding in the name of Seller; and (iii) the Water Companies will permit the transfer of the Certificated Water Rights to Buyer.

 

Section 6. Closing; Deliveries.

 

(a)           Closing shall occur 15 days after the expiration of the Additional Diligence Period, or at such other time as mutually agreed upon between Buyer and Seller (the “Closing Date”).

 

(b)           It shall be a condition of Buyer’s obligation to close that upon written request from Buyer following the expiration of the Additional Due Diligence Period, Seller shall have terminated, effective as of the Closing, any Leases (as defined in Section 10(e) below) that are terminable by Seller without penalty as landlord under such Lease.

 

(c)           At Closing:

 

(i)           Seller shall deliver or cause to be delivered into escrow with the Escrow Agent: (A) a fully executed special warranty deed conveying the Property to Buyer (excluding the Water Rights), a special warranty deed with respect to the Certificated Water Rights and a quitclaim deed with respect to all Water Rights other than the Certificated Water Rights, each in a form reasonably acceptable to Buyer and Seller (collectively, the “Deeds”); (B) a bill of sale, in a form reasonably acceptable to Buyer and Seller, conveying the Personal Property; (C) original certificates representing the Certificated Water rights, to the extent that the Water Companies provide such certificates and do not already have such certificates in their possession; (D) any forms or documents reasonably required to transfer all Water Rights to Buyer including assignments acceptable to the subject Water Companies; (E) assignments of any well permits; (F) an original executed and notarized counterpart of the Relinquishment; (G)  possession of the Property subject to the Leases (as defined below); (H) an assignment transferring all Leases to Buyer, in a form reasonably acceptable to Buyer and Seller and (I) such affidavits, instruments, agreements or other documents as may reasonably be required to complete the transactions contemplated under this Agreement and/or satisfy the requirements of the Title Company for issuance of the Title Policy and such additional documents as are customary in such transactions or as may be reasonably requested by Buyer.

 

 

7

 

 

(ii)           Buyer shall deliver or cause to be delivered into escrow with the Escrow Agent: (A) the balance of the Purchase Price, calculated and adjusted as set forth in Section 2, credited for the Deposit, and credited and debited with applicable prorations and closing costs; (B) an original executed and notarized counterpart of the Relinquishment; (B) such affidavits, instruments, agreements or other documents as may reasonably be required to complete the transactions contemplated under this Agreement and/or satisfy the requirements of the Title Company for issuance of the Title Policy and such additional documents as are customary in such transactions or as may be reasonably requested by Seller.

 

Section 7.  Closing Costs.  At Closing, Seller shall pay the following costs:  (a) the base premium cost for the Title Policy, (b) recording fees for any release of liens encumbering the Property pursuant to Section 3(e), (c) its own attorneys' fees, (d) one-half of the transfer fees charged by the Water Companies, if any, (e) one-half of the escrow fee and closing fee charged by the Escrow Agent, if any, and (f) any documentary stamps or transfer tax.  At Closing, Buyer shall pay the following costs: (v) the title insurance premiums for any endorsements to the Title Policy and for any lender's policy, (w) its own attorneys' fees, (x) recording fees for the Deeds, (y) one-half of the transfer fees charged by the Water Companies, if any, (z) one-half of the escrow fee and closing fee charged by the Escrow Agent, if any.

 

Section 8.  Taxes; Assessments; Rents.  Real and personal property taxes, rents, water rates and utility charges shall be prorated and adjusted as of the Closing Date.  If the Closing shall occur before the tax rate is fixed for the then-current year, the apportionment of taxes shall be upon the basis of the tax rate for the preceding year applied to the latest assessed valuation which accounting shall be deemed final.  All assessments levied by the Water Companies, if any, for the year of Closing shall be prorated and adjusted as of the Closing Date. Seller shall be responsible for all assessments levied by the Water Companies for the all years prior to the year of Closing and Buyer shall be responsible for all assessments levied by the Water Companies, if any, for the year following Closing and all years thereafter.  The obligations set forth in this Section 8 shall survive Closing.

 

Section 9.  Default; Remedies; Liability.

 

(a)           If Buyer fails to perform any of its material obligations under this Agreement for any reason other than default by Seller or the termination of this Agreement as provided herein, and Buyer fails to cure the default by the date that is five (5) business days after Seller’s delivery of written notice of such default to Buyer, Seller may terminate this Agreement and receive the Deposit from the Title Company as liquidated damages, as its sole and exclusive remedy, hereby waiving all other remedies. BUYER AND SELLER AGREE THAT BASED UPON THE CIRCUMSTANCES NOW EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO ESTABLISH SELLER'S DAMAGE BY REASON OF BUYER'S DEFAULT.  ACCORDINGLY, BUYER AND SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO AWARD SELLER “LIQUIDATED DAMAGES” EQUAL TO THE AMOUNT OF THE DEPOSIT.

 

 

8

 

 

(b)           If Seller fails to perform any of its material obligations under this Agreement for any reason other than default by Buyer or the termination of this Agreement as provided for herein, and Seller fails to cure the default by the date that is five (5) business days after Buyer’s delivery of written notice of such default to Seller, then Buyer may; (a) enforce specific performance of this Agreement against Seller; or (b) terminate this Agreement and receive the Deposit from Title Company, and Seller shall reimburse Buyer for its third-party out of pocket costs and expenses incurred in connection with this Agreement, including reasonable attorney’s fees.

 

(c)           In addition to the foregoing remedies, in the event of any action or litigation related to this Agreement, the prevailing party in such action or litigation shall be awarded from the non-prevailing party its costs and reasonable attorneys' fees.

 

(d)           If more than one entity or individual constitutes the Seller, such parties constituting the Seller shall be jointly and severally liability for any breach of Seller's obligations under this Agreement, including the Warranties (as defined below) made hereunder.

 

Section 10.  Seller's Warranties; “AS IS”.  Seller hereby makes the following representations and warranties as of the Effective Date and again as of the Closing Date (herein collectively the “Warranties,” and each individually a “Warranty”).  The following representations and warranties shall survive the Closing until the date which is one (1) year following the Closing Date.

 

(a)           Seller is duly organized and validly existing under the laws of the state of its organization.  The execution and performance of this Agreement has been duly authorized by Seller and will not require the consent of any third party, other than Shareholder Approval. Neither this Agreement nor the performance of Seller hereunder shall constitute a violation of any governing document, contractual commitment or law applicable to Seller.

 

(b)           Seller has not received written notice of, and has no knowledge of, any pending or threatened condemnation proceedings or administrative actions relating to the Property.

 

(c)           Seller has not received written notice of, and has no knowledge of, any pending or threatened litigation with respect to any matter affecting the Property.

 

(d)           Between the Effective Date and the Closing Date, Seller shall, or, if applicable, cause its tenant farmers to, maintain the Property in good condition and repair, and farm and ranch the Property and care for and cultivate any crops thereon in the ordinary course of business in accordance with the agricultural practices in the area in which the Property is located, at Seller’s sole cost.

 

(e)           A complete list of all leases, subleases, licenses or other occupancy agreements affecting the Property are listed on Exhibit C (the “Leases”).   Except as disclosed to Buyer in writing, the Leases (i) are in full force and effect, and there are no modifications or other agreements regarding the Leases; and (ii) to Seller’s knowledge, there are no defaults by any party under the Leases.

 

 

9

 

 

(f)           Except for the Leases and as shown in the Commitment, (i) there are no leases, subleases, licenses, contracts, or other agreements, written or oral, regarding the Property, (ii) there are no farming leases reliant on any diversions of any of the Water Rights, and (iii) there are no parties in possession of or entitled to possession of the Property. From the Effective Date through the Closing Date, Seller shall not execute or commit to enter into any lease or contract with respect to the Property without Buyer’s prior written approval in its sole discretion.

 

(g)           Seller has received no written notice of noncompliance of the Property with any  applicable federal, state and local laws, statutes, ordinances, rules and/or regulations, including, but not limited to, environmental statutes, ordinances, rules and/or regulations (collectively, “Applicable Laws”), and Seller has no knowledge of any such noncompliance.

 

(h)           To Seller’s knowledge, and except as may be disclosed in any environmental report provided by Seller to Buyer, no petroleum products, hazardous materials, hazardous substances or waste, asbestos, PCB’s and/or other regulated substances as defined in any Applicable Laws, have been generated, manufactured, used, disposed of, or stored on or in connection with the Property, except for gasoline and oil contained in vehicles or above ground storage tanks or containers and except for typical use of such materials and chemicals ordinarily used in the operation of a ranch or farm that produces and includes such products, crops and animals as the Property.  No underground storage tanks are currently located on or under the Property.

 

(i)           Seller is not a “foreign person,” as defined by applicable Internal Revenue Service rules and regulations.

 

(j)           Seller is not bankrupt or insolvent, and has not filed for and is not involved in any voluntary or involuntary proceeding in bankruptcy under Applicable Laws.

 

(k)           None of the information included or incorporated by reference in the Proxy Statement or the SEC Filing will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.  The Proxy Statements will comply as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder

 

(l)           To Seller’s knowledge, except for the Dry-Up Shares, the Water Rights are appurtenant to the Land, and have been used solely on the Land.  The Water Rights (other than the Dry-Up Shares) have historically been used to irrigate the Land and have not been abandoned.

 

(m)           The Certificated Water Rights are authorized to be used upon the Land.

 

(n)           The real property described on Exhibit D constitutes all of the real property historically irrigated with the Dry-Up Shares.

 

 

10

 

 

All references in this Section 9 to “Seller’s knowledge,” or similar phrases shall mean the actual knowledge of Mark Harding, President of Seller, without having made, or being under any duty to make, any further inquiry with respect to such knowledge. Seller agrees to indemnify, defend and hold harmless Buyer from any damage, costs (including reasonable attorneys' fees), loss or liability resulting from Seller's breach of any of the foregoing Warranties; which indemnity shall survive Closing for a period of one (1) year.

 

Except for the Warranties set forth herein or in the documents delivered by Seller to Buyer at Closing, Seller disclaims the making of any representations or warranties, express or implied, regarding the Property or matters affecting the Property, including but not limited to its physical condition, title to or the boundaries of the Property, soil condition, hazardous waste, toxic substance or other environmental matters, compliance with building, health, safety, land use, environmental and zoning laws, regulations and orders, the ability to develop the Property for any purpose, and all other information pertaining to the Property.  Buyer, moreover, acknowledges that, except for the Warranties set forth herein or in the documents delivered by Seller to Buyer at Closing:  (i) Buyer has entered into this Agreement with the intention of relying upon its own investigation of the physical, environmental, economic, and legal condition of the Property; (ii) Buyer is not relying upon any statements, representations, or warranties made by Seller or anyone acting or claiming to act on Seller's behalf concerning the Property.  Except for the Warranties set forth herein or in the documents delivered by Seller to Buyer at Closing, Buyer shall purchase the Property in its “AS-IS, WHERE-IS” condition as of Closing, and Buyer expressly acknowledges that, in consideration of the agreements of Seller herein, and except as otherwise expressly specified herein or in the documents delivered in connection with Closing, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING BUT NOT LIMITED TO ANY WARRANTY AS TO TITLE, CONDITION, ZONING, AVAILABILITY OF ACCESS, AVAILABILITY OF UTILITIES AND GOVERNMENTAL APPROVALS, THE LIKELY SUCCESS OF AN APPLICATION TO CHANGE THE USE OF THE WATER DERIVED FROM THE WATER RIGHTS HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY.

 

Section 11.  Condemnation.  In the event any portion of the Property is condemned or access thereto shall be taken or proceedings or negotiation therefor are commenced prior to Closing, if Buyer, in Buyer’s sole discretion, determines that such taking renders the remainder of the Property unsuitable for Buyer's purposes, and Buyer notifies Seller in writing of such conclusion prior to Closing, then this Agreement shall terminate and the Deposit shall be refunded to Buyer.  If this Agreement is not so terminated, the Purchase Price shall not be affected, and (i) if a condemnation award is paid prior to Closing, then at Closing, Seller shall assign such award to Buyer, and (ii) at Closing, Seller shall assign all claims to Buyer, and Buyer shall have the right to contest the condemnation of the Property and/or the award resulting therefrom.

 

Section 12.  Notice.  Any notice required by this Agreement shall be hand-delivered, or sent in writing, postage prepaid by U.S. mail, by nationally recognized overnight courier, by facsimile (receipt confirmed) or by electronic mail (transmission confirmed by recipient), addressed to Buyer or Seller, to the address set forth below.  Such notice shall be deemed given upon hand delivery, three (3) days after mailing by U.S. Mail, upon transmission by facsimile (receipt confirmed), one (1) day after sending by overnight courier, or upon receipt if given by electronic mail (transmission confirmed by recipient).  For purposes of calculating any time periods including notice deadlines under this Agreement, if the last day therefore falls upon a Saturday, Sunday or legal holiday, the last day shall be deemed to be the next day which is not a Saturday, Sunday or legal holiday.  All notices shall be given to the respective parties at 

the following addresses:

 

 

11

 

 

	 	
Buyer:

	
Arkansas River Farms, LLC

	 	  	
c/o C&A Holding Company, Inc.

	 	  	
7991 Shaffer Parkway, Suite 200

	 	  	
Littleton, CO 80127

	 	  	
Attention: Karl Nyquist

	 	  	
Fax no. 303-369-5110

	 	  	
karl@cacompanies.com

	 	  	  
	 	
 with a copy to:

	
Brownstein Hyatt Farber Schreck, LLP

	 	  	
410 17th Street, Suite 2200

	 	  	
Denver, CO 80202

	 	  	
Attention: Noelle Riccardella, Esq.

	 	  	
Fax no.  303-223-8004

	 	  	
nriccardella@bhfs.com

	 	  	  
	 	
Seller:

	
Pure Cycle Corporation

	 	  	
34501 E Quincy Avenue

	 	  	
Building 34, Box 10

	 	  	
Watkins, Colorado

	 	  	
Attention:  Mark W. Harding

	 	  	
Fax no.  303-292-3475

	 	  	
mharding@purecyclewater.com

	 	  	  
	 	  	
PCY Holdings, LLC

	 	  	
34501 E Quincy Avenue

	 	  	
Building 34, Box 10

	 	  	
Watkins, Colorado

	 	  	
Attention:  Mark W. Harding

	 	  	
Fax no.  303-292-3475

	 	  	
mharding@purecyclewater.com

	 	  	  
	 	
with a copy to:

	
Davis Graham & Stubbs LLP

	 	  	
1550 17th Street, Suite 500

	 	  	
Denver, CO 80202

	 	  	
Attention: Wanda Abel

	 	  	
Fax No. 303-893-1379

	 	  	
Wanda.abel@dgslaw.com

 

 

12

 

Section 13.  Broker's Fees.  Buyer and Seller each represent and warrant that they did not engage the services of any real estate broker or person that may claim a commission or finder’s fee with respect to this transaction, and each agrees to indemnify and hold harmless the other against any and all claims based in whole or in part on any act of such indemnifying party for commissions, fees, or other compensation made by any real estate broker, agent, or salesman as the result of the sale of the Property contemplated hereby.

 

Section 14.  1031 Tax-Deferred Exchange.  The parties understand and agree that the transaction contemplated under this Agreement may be part of a tax-deferred exchange by one or both parties.  The parties shall cooperate in taking all actions reasonably necessary in order to qualify this transaction for such treatment provided it does not result in any delay or additional expense, damage or risk to any of the parties and provided that Buyer shall not be required to take title to any property other than the Property.  Any party desiring to effect a tax-deferred exchange shall have the right to assign its rights and obligations hereunder to an entity acting as Qualified Intermediary, as that term is used in Regulations under Section 1031 of the Internal Revenue Code, for purposes of completing the contemplated exchange, but no such assignment shall have the effect of releasing the assignor from continuing liability for performance of any of its obligations under this Agreement.

 

Section 15.  No Solicitation.

 

(a)           To induce Buyer to enter into this Agreement and to expend funds conducting its due diligence review of the Property, neither Seller nor any of its representatives will directly or indirectly execute or negotiate agreements with or solicit inquiries or proposals from any party other than Buyer with respect to the sale of the Property (a “Proposed Acquisition”).  Seller will promptly notify Buyer if Seller or any of its representatives receives such offers, inquiries or proposals.  Notwithstanding the foregoing, the Seller may, at any time prior to receipt of Shareholder Approval, furnish information to or enter into discussions or negotiations with any person or group that has made an unsolicited bona fide written proposal for a Proposed Acquisition received after the date hereof to the extent that the board of directors of Pure Cycle determines in good faith, after consultation with its outside legal counsel, that the failure to take such action would constitute a breach of its fiduciary duties to the shareholders of Pure Cycle under applicable law.

 

(b)           This Agreement may be terminated by the Seller at any time prior to the receipt of Shareholder Approval if, (i) the board of directors of Pure Cycle has determined that a bona fide, unsolicited, written proposal for a Proposed Acquisition constitutes a Superior Proposal (as defined in subsection (c) below), (ii) Seller has provided Buyer with a notice of the Superior Proposal including the terms and conditions of the Proposed Acquisition (a “Notice of Superior Proposal”), and (iii) Pure Cycle’s board of directors, after taking into account any modifications to the terms of this Agreement offered by Buyer within five (5) business days following receipt of a Notice of Superior Proposal, continues to believe that such Proposed Acquisition constitutes a Superior Proposal.  Upon termination pursuant to this Section 14(b), the Deposit shall immediately be returned to Buyer and Seller shall pay Buyer a break-up fee of $2,500,000.00 (which obligation shall survive termination of this Agreement).

 

(c)           For purposes of this Agreement, “Superior Proposal” means any unsolicited, bona fide Proposed Acquisition that the board of directors of the Pure Cycle has determined in good faith, after consultation with its outside legal counsel, and after taking into account the legal, financial, financing and other aspects of such Proposed Acquisition, would result in a transaction that is (i) more favorable, from a financial point of view, to the shareholders of Pure Cycle (after taking into account any modifications to the terms of this Agreement offered by Buyer) and (ii) reasonably likely to be consummated without unreasonable delay.

 

 

13

 

 

Section 16.  Miscellaneous.

 

(a)           This Agreement shall be governed by Colorado law and the parties agree that venue for any dispute involving this Agreement shall be in the District Court of the City and County of Denver.

 

(b)           Seller shall be responsible for all risks of damage, loss or injury to the Property and for all property-owner liability prior to Closing.  In the event any material damage (defined as in excess of 2% of the Purchase Price) occurs to the Property between the Effective Date and Closing Date, Buyer may terminate this Agreement and receive a refund of the Deposit.

 

(c)           This Agreement including its exhibits shall constitute the entire agreement between Seller and Buyer and supersedes any other written or oral agreements between Seller and Buyer.  This Agreement may be modified only by the written agreement of both parties.

 

(d)           This Agreement shall be binding upon, and shall inure to the benefit of, Seller and Buyer and their respective successors and assigns.  Neither party may assign its interests under this Agreement without the prior written consent of the other party; provided, however, that Buyer may assign this Agreement to any entity owned or controlled by, or under common control with, Buyer or Resource Land Holdings, LLC, without Seller's prior consent.

 

(e)           This Agreement may be executed in multiple counterparts, including a pdf or facsimile copies, each of which shall be considered to be an original thereof.

 

(f)           Time is of the essence of this Agreement.

 

(g)           No representations or warranties pertaining to this Agreement or any property affected by this Agreement have been made by, or shall be binding on, any of the parties, except as expressly stated in this Agreement.

 

(h)           From and after the Closing Date, each party shall take all appropriate action and execute, or cause to be executed, all documents, instruments or conveyances of any kind that may be reasonably necessary or advisable to carry out any of the provisions of this Agreement.

 

 

[signatures on following pages]

 

  

14

  

 

 

IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the Effective Date.

BUYER:

ARKANSAS RIVER FARMS, LLC

By: /s/ Aaron M. Patsch                                                       

Name: Aaron M. Patsch

Title:  Authorized Representative

  

15

  

 

SELLER:

PURE CYCLE CORPORATION,

a Colorado corporation

By: /s/ Mark W. Harding                                                       

    Mark W. Harding, President

PCY HOLDINGS, LLC,

a Colorado limited liability company

By: Pure Cycle Corporation, its sole member

By: /s/ Mark W. Harding                                                       

    Mark W. Harding, President

  

16

  

 

Exhibit A

Legal Description of the Land

(See attached)

This exhibit consists of legal descriptions of the Registrant’s Arkansas River Valley properties consisting of approximately 14,641 acres, more or less, in the counties of Bent, Otero and Prowers, Colorado.

 

  

A-1

  

 

Exhibit B

List of Certificated Shares

FLCC Shares:

A.           FLCC Shares Historically Used on the Land:  See Exhibit B-1 attached.

B.           Dry-Up Shares:  See Exhibit B-2 attached.

LAWMA Shares:

An assignment was submitted to LAWMA on March 5, 2015 to transfer Certificate 339 into the name of Pure Cycle Corporation.  The new certificate number is not yet available.

Well Permits:  See Exhibit B-3 attached.

  

B-1

  

 

Exhibit B-1

Fort Lyon Canal Company Shares

This exhibit consists of a list of FLCC certificate numbers and the number of shares represented by each certificate.

 

  

  

  

Exhibit B-2

Dry-Up Shares

This exhibit consists of a list of FLCC certificate numbers and the number of shares represented by each certificate.

 

  

  

  

 

Exhibit B-3

Well Permits

This exhibit consists of a list of well permit numbers issued with respect to the Registrant’s Property by the Office of the State Engineer of Colorado.

 

  

 

  

Exhibit C

List of Leases

(see attached)

This exhibit consists of a list of Registrant’s Leases by property describing the acreage and FLCC Shares subject to each Lease.

 

  

C-1

  

Exhibit D

Legal Description of Real Property Historically

Irrigated with the Dry-Up Share

Legal descriptions for the following properties are attached:

	
Farm

Number

	
Farm

	
15

	
Farm

	
61

	
Farm

	
  62*

	
Farm

	
63

	
Farm

	
85

	
Farm

	
110

	
Farm

	
117

	
Farm

	
132

____________________

 

* Only the portion of Farm 62 not owned by Seller is subject to dry-up covenants.

 

The remainder of this exhibit consists of legal descriptions of properties historically irrigated with certain of the Registrant’s FLCC shares.

 

D-1EX-10.1

 Exhibit 10.1 

AMENDED AND RESTATED SEVERANCE AGREEMENT 

THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”) is entered into effective as of March 16, 2015
between MYERS INDUSTRIES, INC., an Ohio corporation (the “Company”), and JOHN C. ORR (the “Executive”). 

RECITALS: 
  

	 	A.	The Company and the Executive are parties to a Severance Agreement dated March 1, 2011 (the “Severance Agreement”). 

 

	 	B.	The Company and Executive desire to amend and restate the terms of the Severance Agreement as provided herein. 

NOW, THEREFORE, the Company and the Executive agree as follows: 

1. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this
Agreement with initial capital letters: 
 (a) “Annual Bonus” means the bonus paid to executives or other employees of the Company
pursuant to a formal or informal bonus plan or individual bonus arrangement. 
 (b) “Base Salary” means the Executive’s
annual base salary rate as in effect from time to time. 
 (c) “Board” means the Board of Directors of the Company. 

(d) “Cause” means: 

(i) commission by the Executive (evidenced by a conviction or written, voluntary and freely given confession) of a criminal act
constituting a felony involving fraud or moral turpitude; 
 (ii) commission by the Executive of a material breach or
material default of any of the Executive’s agreements or obligations under any provision of this Agreement, which is not substantially cured in all material respects within thirty (30) days after the Board gives written notice thereof to
the Executive; or 
 (iii) commission by the Executive, when carrying out the Executive’s Duties under this Agreement,
of acts or the omission of any act, which both (A) constitutes gross negligence or willful misconduct and (B) results in material economic harm to the Company or has a materially adverse effect on the Company’s operations, properties
or business relationships. 

 (e) “Change in Control” means a change in control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act as in effect on the date of this Agreement, whether or not the Company is then subject to such reporting requirement;
provided that, without limitation, a Change in Control shall be deemed to have occurred if: 
 (i) any “person” (as
defined in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more
of the combined voting power of the Company’s then outstanding securities; provided that a Change in Control shall not be deemed to occur under this clause (i) by reason of the acquisition of securities by the Company or an employee
benefit plan (or any trust funding such a plan) maintained by the Company; 
 (ii) during any period of one (1) year
there shall cease to be a majority of the Board comprised of “Continuing Directors” as hereinafter defined; or 

(iii) there occurs (A) a merger or consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) the approval by the stockholders of the Company of a plan
of complete liquidation of the Company, or (C) the sale or disposition by the Company of more than fifty percent (50%) of the Company’s assets. For purposes of this Subsection 1(e)(iii), a sale of more than fifty percent (50%) of
the Company’s assets includes a sale of more than fifty percent (50%) of the aggregate value of the assets of the Company and its subsidiaries or the sale of stock of one or more of the Company’s subsidiaries with an aggregate value
in excess of fifty percent (50%) of the aggregate value of the Company and its subsidiaries or any combination of methods by which more than fifty percent (50%) of the aggregate value of the Company and its subsidiaries is sold. 

(iv) For purposes of this Agreement, a “Change in Control” will be deemed to occur: 

(A) on the day on which a thirty percent (30%) or greater ownership interest described in Subsection 1(e)(i) is acquired,
provided that a subsequent increase in such ownership interest after it first equals or exceeds thirty percent (30%) shall not be deemed a separate Change in Control; 

(B) on the day on which “Continuing Directors”, as hereinafter defined, cease to be a majority of the Board as
described in Subsection 1(e)(ii); 
 (C) on the day of a merger, consolidation or sale of assets as described in Subsection
1(e)(iii); or 
 (D) on the day of the approval of a plan of complete liquidation as described in Subsection 1(e)(iii). 

  
 2 

 (v) For purposes of this Subsection 1(e), the words “Continuing
Directors” mean individuals who at the beginning of any period (not including any period prior to the date of this Agreement) of one (1) year constitute the Board and any new Director(s) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least a majority of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was previously so
approved. 
 (f) “Code” means the Internal Revenue Code of 1986, as amended. 

(g) “Compensation Committee” means the Compensation Committee of the Board or its successor. 

(h) “Director” means a member of the Board. 

(i) “Disability” means a physical or mental incapacity that prevents the Executive from performing his duties for a period of one
hundred eighty (180) consecutive days in any period of two (2) consecutive fiscal years of the Company. 
 (j) “Duties”
means the duties and responsibility customarily required of the highest ranking executive officer of a major corporation or such additional duties as may be assigned from time to time to the Executive by the Board which are consistent with the
position of President and Chief Executive Officer. 
 (k) “Effective Date” means March 13, 2015. 

(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

(m) “Good Reason” means the occurrence of one or more of the following conditions arising without the consent of the Executive: 

(i) a material diminution in the Executive’s annual Base Salary or a material diminution in the Executive’s overall
compensation package in the aggregate (but disregarding as a part of the overall compensation package the Executive’s benefit under the Company’s Supplemental Executive Retirement Plan), in either case below the level in effect on the
Effective Date; provided, however, that for purposes of this Section 1(m)(i) a material diminution will not be deemed to have occurred if the diminution results either from changes to the Executive’s participation level under the Long Term
Incentive Plan or from the failure to achieve applicable performance targets under a performance based plan or program; 

(ii) a reduction or series of reductions in the aggregate value of the life insurance, accidental death, long term disability,
short term disability, medical, dental and vision benefits and expense reimbursement policy available to the Executive as of the Effective Date which, in the aggregate is material; 

(iii) a material diminution in the Executive’s Duties; 

  
 3 

 (iv) a requirement that the Executive report to anyone other than the Board; 

(v) a material change in the geographic location at which the Executive must perform his Duties; 

(vi) any other action or inaction that constitutes a material breach by the Company of this Agreement or any other agreements
under which the Executive provides services to the Company (specifically including a failure of the purchaser in a Change in Control transaction, to assume this Agreement in accordance with Section 12 hereof). 

In order for a condition to constitute a Good Reason, the Executive must provide written notification to the Company of the existence of the condition within
forty-five (45) days of the initial existence of the condition (or within forty-five (45) days following the Executive actually becoming aware of such condition, if later), upon the notice of which the Company shall have a period of thirty
(30) days during which it may remedy the condition. Furthermore, to constitute a Good Reason, the Executive must voluntarily terminate employment with the Company within one hundred eighty (180) days following the initial existence of the
condition (or within one hundred eighty (180) days following the Executive actually becoming aware of such condition, if later), but in no event later than February 13 of the year following the date of the initial existence of the
condition or, if later, the date the Executive becomes aware of the condition. The parties agree that “Good Reason” will not be deemed to have occurred merely because the Company becomes a subsidiary or division of another entity following
a “Change in Control”, as defined herein, provided the Executive continues to serve as the Chief Executive Officer of such subsidiary or division and such subsidiary or division is comparable in size to the organization consisting of the
Company and its subsidiaries prior to the Change in Control. 
 (n) “Term” means the period commencing on the Effective Date and
ending on the earlier of: (i) the Termination Date; or (ii) the Executive’s death or Disability. 
 (o) “Termination
Date” means the date on which the Executive’s employment is terminated (the effective date of which will be the date of termination). 
  

	 	2.	SEVERANCE COMPENSATION. 

 (a) If the Executive’s employment is terminated by the Company
other than for Cause or is terminated by the Executive for Good Reason, including following a Change in Control, then the following severance provisions shall apply: 

(i) provide the following benefits: 

  
 4 

 (A) for the applicable period under Code Section 4980B (the “COBRA
Period”) following the Termination Date, coverage under the Company’s group medical and dental plans (the “Health Care Plans”) all at the levels being provided to the Executive immediately prior to the Termination
Date, or if any of such benefits have decreased during the one year period ending on the Termination Date, at the highest level in effect during such one year period; 

(B) for the one year period commencing on the Termination Date, pay for executive outplacement services for the Executive from
a nationally recognized executive outplacement firm at the level provided for the most senior executives; 
 (C) pay to the
Executive within thirty (30) days following the Termination Date a single sum payment in an amount equal to two (2) times his annual Base Salary in effect on the Termination Date (or if such annual Base Salary has decreased during the one
year period ending on the Termination Date, at the highest rate in effect during such period); 
 (D) pay to the Executive
within thirty (30) days following the Termination Date a single sum payment in an amount equal to two (2) times his Annual Bonus at the Target level in effect during the prior two (2) year period plus the pro rata portion of the
Target Bonus for the period commencing on the first day of the fiscal year in which the employment of the Executive is terminated and ending on the Termination Date; 

(E) for a period of two (2) years, beginning with the month following the Termination Date, provide an automobile
allowance not to exceed one hundred ten percent (110%) of the automobile allowance paid to the Executive in the calendar year preceding the year of his termination of employment for the purpose of paying expenses related to the cost of
acquisition, maintenance, fuel and liability insurance associated with the Executive’s automobile (the “Automobile Allowance”); 

(F) for a period of two (2) years, beginning with the month following the Termination Date, provide long term disability
coverage, including long term disability protection under policies that are the same or substantially similar to those in effect as of the date hereof (the “Disability Coverage”); 

(G) for a period of two (2) years, beginning with the month following the Termination Date, provide life insurance
protection under policies that are the same or substantially similar to those in effect as of the date hereof (the “Life Insurance Coverage”); and 

  
 5 

 (H) For a period of six (6) months commencing from the last day of the
COBRA Period, provide coverage under the Health Care Plans (the “Health Care Coverage”). 
 (ii) With
respect to Subsection 2(a)(i)(E), the Automobile Allowance provided to the Executive during any calendar year during the Term will not affect the Automobile Allowance payable to him in any other calendar year. The Executive’s right to receive
the Automobile Allowance is not subject to liquidation or exchange for any other benefit, whether under this Agreement or otherwise. With respect to Subsection 2(a)(i)(F), the Disability Coverage provided to the Executive during any calendar year
during the Term will not affect the Disability Coverage provided to him in any other calendar year. The Executive’s right to receive the Disability Coverage is not subject to liquidation or exchange for any other benefit, whether under this
Agreement or otherwise. With respect to Subsection 2(a)(i)(G), the Life Insurance Coverage provided to the Executive during any calendar year during the Term will not affect the Life Insurance Coverage provided to him in any other calendar year. The
Executive’s right to receive the Life Insurance Coverage is not subject to liquidation or exchange for any other benefit, whether under this Agreement or otherwise. With respect to Subsection 2(a)(i)(H), the Health Care Coverage provided to the
Executive during any calendar year during the Term will not affect the Health Care Coverage provided to him in any other calendar year. The Executive’s right to receive the Health Care Coverage is not subject to liquidation or exchange for any
other benefit, whether under this Agreement or otherwise. 
 (b) If the Executive’s employment with the Company is terminated by reason
of the Executive’s death or Disability during the Term, the Executive or his surviving spouse shall be entitled to receive (i) the Base Salary and Annual Bonus accrued and unpaid to the date of death or Disability, (ii) any amounts
payable under any employee benefit plan of the Company in accordance with the terms of such plan, and (iii) if the Executive and/or his surviving spouse and dependents properly elect continued medical coverage in accordance with Code
Section 4980B (“COBRA”), the Company shall pay the entire cost of the premiums for such continued medical coverage (the “Medical Coverage”) for the longer of (A) the maximum required period of coverage
under Code Section 4980B(f) or (B) twenty-four (24) months, provided, however, that such Medical Coverage provided to the Executive in any calendar year during such period will not affect the Medical Coverage provided to him in any
other calendar year and the Executive’s right to receive the Medical Coverage is not subject to liquidation or exchange for any other benefit, whether under this Agreement or otherwise. 

(c) If the Executive’s employment hereunder is terminated: 

(i) by reason of the Executive’s death or Disability; or 

(ii) by the Company other than for Cause or by the Executive for Good Reason; 

The Executive will become fully vested in all outstanding stock options, restricted stock, restricted stock units or similar awards and any such award shall
be then and thereafter fully exercisable until the termination of such options pursuant to their terms. 

  
 6 

 (d) If the Executive’s employment hereunder is terminated by the Company for Cause or
terminated by the Executive other than for Good Reason, then no further compensation or benefits will be provided to the Executive by the Company under this Agreement following the Termination Date other than payment of compensation earned prior to
the Termination Date but not yet paid. 
 (e) Notwithstanding anything contained in this Agreement to the contrary, if the Executive
breaches any of the Executive’s obligations under Sections 6 or 7 hereof, and such breach is not substantially cured in all material respects within thirty (30) days after the Board gives written notice thereof to the Executive, no
further severance payments or other benefits will be payable to the Executive under this Section 2. 
 3. TERMINATION FOLLOWING A
CHANGE IN CONTROL. At any time within the one hundred eighty (180) days following a Change in Control, but in no event later than February 13 of the year following the date of the Change in Control, if the Executive is terminated by the
Company without Cause, the Executive’s employment is terminated by him for Good Reason, or this Agreement is not assumed by an assignee or transferee that is the successor to all or substantially all of the assets of the Company pursuant to
Section 12 hereof then in addition to the payments and benefits outlined in Section 2 hereof the Executive will also be entitled to the following benefits: 

(a) The Executive will become fully vested in all outstanding stock options, restricted stock, restricted stock units or similar awards, but
only to the extent not previously forfeited or terminated. 
 (b) The Executive will have available the expenses of enforcement provided in
Section 4 hereof. For the avoidance of doubt, this specific reference to the availability of expenses of enforcement in the event of a Change in Control shall not be interpreted to limit the availability of expenses of enforcement in other
circumstances. 
 4. EXPENSES OF ENFORCEMENT. The Executive shall not be required to incur the expenses associated with the enforcement of
the Executive’s rights under this Agreement by litigation or other legal action. Therefore, the Company shall pay, or cause to be paid, on a current basis, reasonable attorney fees and expenses incurred by the Executive to enforce the
provisions of this Agreement. The Executive shall be required to repay any such amounts to the Company to the extent that a court of competent jurisdiction issues a final and non-appealable order setting forth the determination that the claims of
the Executive were frivolous. 
 5. WITHHOLDING OF TAXES. The Company may withhold from any amounts payable under this Agreement all
federal, state, city, or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling. 
 6.
CONFIDENTIAL INFORMATION. The Executive agrees that the Executive will not, during the Term or at any time thereafter, either directly or indirectly, disclose or make known to any other person, firm, or corporation any confidential information,
trade secret or proprietary information of the Company in violation of that certain Non Competition and Non Disclosure Agreement between the Company and the Executive dated July 18, 2000 (the “Non Competition and Non Disclosure
Agreement”). 

  
 7 

 7. NON-COMPETITION. Pursuant to the Non Competition and Non Disclosure Agreement, the Executive
hereby acknowledges and reaffirms that, during the Term, and for three (3) years thereafter, the Executive shall not compete with the Company as more fully set forth in the Non Competition and Non Disclosure Agreement. 

8. ARBITRATION. The following arbitration rules shall apply to this Agreement: 

(a) In the event that the Executive’s employment shall be terminated by the Company during the Term or the Company shall withhold
payments or provision of benefits because the Executive is alleged to be engaged in activities prohibited by Section 6 or 7 hereof or for any other reason, the Executive shall have the right, in addition to all other rights and remedies
provided by law, at his election either to seek arbitration in the metropolitan area of Akron, Ohio, under the Commercial Arbitration Rules of the American Arbitration Association by serving a notice to arbitrate upon the Company or to institute a
judicial proceeding, in either case within one hundred and twenty (120) days after having received notice of termination of his employment. 

(b) Without limiting the generality of Subsection 8(a), this Subsection 8(b) shall apply to termination asserted to be for “Cause”
or for “Good Reason”. In the event that (i) the Company terminates the Executive’s employment for Cause, or (ii) the Executive resigns his employment for Good Reason, the Company and the Executive each shall have thirty
(30) days to demand of the American Arbitration Association in writing (with a copy to the other party hereto) that arbitration be commenced to determine whether Cause or Good Reason, as the case may be, existed with respect to such termination
or resignation. The parties hereto shall have thirty (30) days from the date of such written request to select such third party arbitrator. Upon the expiration of such thirty (30) day period, the parties hereto shall have an additional
thirty (30) days in which to present to such third party arbitrator such arguments, evidence or other material (oral or written) as may be permitted and in accordance with such procedures as may be established by such third party arbitrator.
The third party arbitrator shall furnish a written summary of his findings to the parties hereto not later than thirty (30) days following the last day on which the parties were entitled to present arguments, evidence or other material to the
third party arbitrator. 
 During the period of resolution of a dispute under this Subsection 8(b), the Executive shall receive no compensation by the
Company (other than payment by the Company of premiums due before or during such period on any insurance coverage applicable to the Executive hereunder) and the Executive shall have no duties for the Company. If the arbitrator determines that the
Company did not have Cause to terminate the Executive’s employment or that the Executive had Good Reason to resign his employment, as the case may be, the Company shall promptly pay the Executive in a lump sum any compensation to which the
Executive would have been entitled, for the period commencing with the date of the Executive’s termination or resignation and ending on the date of such determination, had his employment not been terminated or had he not resigned. 

  
 8 

 9. EMPLOYMENT AT WILL. The parties hereto acknowledge and confirm that the Executive’s
employment by the Company is employment-at-will, and is subject to termination by the Executive or by the Company at any time with Cause or without Cause. With this Agreement, the parties hereto do not intend to create, and have not created, a
contract of employment, express or implied, between the Executive and the Company. The Executive acknowledges that such employment-at-will status cannot be modified except in a specific writing that has been authorized or ratified by the Board. 

10. EMPLOYMENT ACTIONS. This Agreement is not intended to create, and will not be construed as creating, an express or implied contract of
employment. Nothing contained herein will prevent the Company at any time from terminating the Executive’s right and obligation to perform services to the Company or prevent the Company from removing the Executive from any position which the
Executive holds with the Company, provided, however, that no such action shall affect the obligation of the Company to make payments and provide benefits if and to the extent required under this Agreement. The payments and benefits provided in this
Agreement will be full and complete liquidated damages for any such employment action taken by the Company. 
 11. NOTICES. For purposes of
this Agreement, all communications provided for herein shall be in writing and shall be deemed to have been duly given when hand delivered or mailed by United States Express mail, postage prepaid, addressed as follows: 

 

	 	(a)	If the notice is to the Company: 

 Myers Industries, Inc. 

1293 South Main Street 
 Akron, OH
44301 
 Attn: Chairman of the Compensation Committee 

With a Copy to: 
 Benesch,
Friedlander, Coplan & Aronoff, LLP 
 200 Public Square, Suite #2300 

Cleveland, OH 44114-2378 
 Attn:
Megan L. Mehalko, Esq. 
  

	 	(b)	If the notice is to the Executive: 

 Mr. John C. Orr 

1630 Shade Road 
 Akron, OH 44333

 With a Copy to: 
 Ulmer
& Berne LLP 
 1660 West 2nd Street, Suite 1100 

Cleveland, OH 44113 
 Attn: Ronald
C. Stansbury, Esq. 

  
 9 

 or to such other address as either party hereto may have furnished to the other in writing and in accordance
herewith; except that notices of change of address shall be effective only upon receipt. 
 12. ASSIGNMENT; BINDING EFFECT. This Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors, heirs (in the case of the Executive) and permitted assigns. No rights or obligations of the Company under this Agreement may be assigned
or transferred by the Company except that such rights or obligations may be assigned or transferred in connection with the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such assignee or transferee expressly assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law.
The Company further agrees that, in the event of a sale or transfer of assets as described in the preceding sentence, it shall be a condition precedent to the consummation of any such transaction that the assignee or transferee expressly assumes the
liabilities, obligations and duties of the Company hereunder. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than the Executive’s rights to compensation and benefits, which
may be transferred only by will or operation of law, except as provided in this Section 12. 
 The Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefits payable hereunder following the Executive’s death by giving the Company written notice thereof. In the
absence of such a selection, any compensation or benefit payable under this Agreement following the death of the Executive shall be payable to the Executive’s spouse, or if such spouse shall not survive the Executive, to the Executive’s
estate. In the event of the Executive’s death or a judicial determination of the Executive’s incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to the Executive’s beneficiary,
estate or other legal representative. 
 13. INVALID PROVISIONS. Any provision of this Agreement that is prohibited or unenforceable shall
be ineffective to the extent, but only to the extent, of such prohibition or unenforceability without invalidating the remaining portions hereof and such remaining portions of this Agreement shall continue to be in full force and effect. In the
event that any provision of this Agreement shall be determined to be invalid or unenforceable, the parties hereto will negotiate in good faith to replace such provision with another provision that will be valid or enforceable and that is as close as
practicable to the provisions held invalid or unenforceable. 
 14. ALTERNATIVE SATISFACTION OF COMPANY’S OBLIGATIONS. In the event
this Agreement provides for payments or benefits to or on behalf of the Executive which cannot be provided under the Company’s benefit plans, policies or arrangements either because such plans, policies or arrangements no longer exist or no
longer provide such benefits or because provision of such benefits to the Executive would adversely affect the tax qualified or tax advantaged status of such plans, policies or arrangements for the Executive or other participants therein, the
Company may provide the Executive with an “Alternative Benefit”, as defined in this Section 14, in lieu thereof. The Alternative Benefit is a benefit or payment which places the Executive and the Executive’s dependents or
beneficiaries, as the case may be, in at 

  
 10 

 
least as good of an economic position as if the benefit promised by this Agreement (a) were provided exactly as called for by this Agreement, and (b) had the favorable economic, tax and
legal characteristics customary for plans, policies or arrangements of that type. Furthermore, if such adverse consequence would affect the Executive or the Executive’s dependents, the Executive shall have the right to require that the Company
provide such an Alternative Benefit. Notwithstanding the foregoing, if provision of an alternative benefit would constitute a violation of Internal Revenue Code Section 409A, the Parties will be left to their legal remedies. 

15. ENTIRE AGREEMENT, MODIFICATION. Subject to the provisions of Section 16 hereof, this Agreement contains the entire agreement between
the parties hereto with respect to the employment of the Executive by the Company and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties hereto, whether oral or written. No modification,
amendment, or waiver of any of the provisions of this Agreement shall be effective unless in writing, specifically referring hereto, and signed by both parties hereto. 

16. NON-EXCLUSIVITY OF RIGHTS. Notwithstanding the foregoing provisions of Section 15, nothing in this Agreement shall prevent or limit
the Executive’s continuing or future participation in any benefit, bonus, incentive or other plan, program, policy or practice provided by the Company for its executive officers, nor shall anything herein limit or otherwise affect such rights
as the Executive has or may have under any stock option, restricted stock or other agreements with the Company or any of its subsidiaries. Amounts which the Executive or the Executive’s dependents or beneficiaries, as the case may be, are
otherwise entitled to receive under any such plan, policy, practice or program shall not be reduced by this Agreement unless specifically provided. 

17. WAIVER OF BREACH. The failure at any time to enforce any of the provisions of this Agreement or to require performance by the other party
hereto of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part of this Agreement or the right of either party hereto thereafter to
enforce each and every provision of this Agreement in accordance with the terms of this Agreement. 
 18. GOVERNING LAW. This Agreement has
been made in, and shall be governed and construed in accordance with the laws of, the State of Ohio. The parties hereto agree that this Agreement is not an “employee benefit plan” or part of an “employee benefit plan” which is
subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. 
 19. REPRESENTATION. The Company represents
and warrants that it is fully authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization. 

20. SUBSIDIARIES AND AFFILIATES. Notwithstanding any contrary provision of this Agreement, to the extent it does not adversely affect the
Executive, the Company may provide the compensation and benefits to which the Executive is entitled hereunder through one or more subsidiaries or affiliates. 

  
 11 

 21. NO MITIGATION OR OFFSET. In the event of any termination of employment, the Executive shall
be under no obligation to seek other employment. Amounts due the Executive under this Agreement shall not be offset by any remuneration attributable to any subsequent employment he may obtain. 

22. COMPLIANCE WITH SECTION 409A OF THE CODE. Certain payments contemplated by this Agreement may be “deferred compensation” for
purposes of Section 409A of the Code. Accordingly, the following provisions shall be in effect for purposes of avoiding or mitigating any adverse tax consequences to the Executive under Section 409A: 

(a) A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment
of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A, for purposes of any such provision of this Agreement,
references herein to “termination”, “termination of employment” or similar terms will mean “separation from service”. 

(b) The intent of the parties hereto is that payments and benefits under this Agreement comply with or be exempt from Code Section 409A
and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement will be interpreted to be in compliance therewith or exempt therefrom. In no event whatsoever will the Company be liable for
any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A. 

(c) To the extent any provisions of this Agreement would otherwise contravene one or more requirements or limitations of Code
Section 409A, then the Company and the Executive may, within any applicable time period provided under the Treasury Regulations issued under Code Section 409A, effect through mutual agreement the appropriate amendments to those provisions
which are necessary in order to bring the provisions of this Agreement into compliance with Code Section 409A, provided such amendments shall not reduce the dollar amount of any such item of deferred compensation or adversely affect the vesting
provisions applicable to such item or otherwise reduce the present value of that item. If any legislation is enacted during the term of this Agreement which imposes a dollar limit on deferred compensation, then the Executive will cooperate with the
Company in restructuring any items of compensation under this Agreement that are deemed to be deferred compensation subject to such limitation, provided such restructuring shall not reduce the dollar amount of any such item or adversely affect the
vesting provisions applicable to such item or otherwise reduce the present value of that item. 
 (d) Notwithstanding any provision to the
contrary in this Agreement, if (i) the Company, in its good faith discretion, determines that any payments or benefits described in this Agreement would constitute non-exempt deferred compensation for purposes of Section 409A of the Code,
and (ii) the Executive is a “specified employee” (within the meaning of Section 409A of the Code and the Treasury Regulations thereunder) at the time of his termination of employment, then such payments or benefits shall not be
made or paid to the Executive prior to the earlier of (A) the expiration of the six (6) month period measured from the date of such “separation from service” or (B) the date of his death (the “Delay
Period”). Upon the expiration of the Delay Period, all payments deferred pursuant to this Subsection 22(d) shall be paid in a lump sum to the Executive, and any remaining payments due under this Agreement shall be paid in accordance with
the normal payment dates specified for them herein. 

  
 12 

 (e) For purposes of Code Section 409A, the Executive’s right to receive any installment
payment pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments. 
 (f) Whenever a
payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment will be made within thirty (30) days following the Termination Date”), the actual date of payment within the specified period
will be determined solely by the Company. 
 (g) Notwithstanding any other provision herein to the contrary, in no event will any payment
that constitutes non-exempt deferred compensation subject to Code Section 409A, as determined in good faith by the Company, be subject to offset, counterclaim, or recoupment by any other amount payable to the Executive unless otherwise
permitted by Code Section 409A. 
 (h) To the extent that reimbursements or other in-kind benefits under this Agreement constitute
non-exempt deferred compensation for purposes of Code Section 409A, (i) all expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were
incurred by the Executive, (ii) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind
benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. 

[Remainder of the page intentionally left blank, signature page follows] 

  
 13 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the date first above written. 
  

			
	MYERS INDUSTRIES, INC.
	(the “Company”)
	
	 /s/ Vincent C. Byrd

	By:		Vincent C. Byrd
	Its:		Chairman of the Compensation Committee
	
	 /s/ John C. Orr

	 JOHN C. ORR
 (the
“Executive”)

 [Signature page to Severance Agreement] 

  
 14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00242-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00242-of-00352.parquet"}]]