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EXHIBIT 10.17
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made and entered into as of the 20th
day of September, 1995, among PACKAGED ICE, INC., a Texas corporation (the
"Company"), and the Investors named in Schedule A attached hereto and
incorporated herein by reference (collectively "Investors" and individually
"Investor").
W I T N E S S E T H:
WHEREAS, to obtain additional equity financing, the Company desires to
issue and sell shares of its $.01 par value Common Stock ("Common Stock") and
its $.01 par value Series A Convertible Preferred Stock (the "Series A
Preferred Stock") to the Investors, and each Investor desires to purchase such
Common Stock and Series A Preferred Stock, at the prices, on the terms, and
subject to the conditions as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Authorization of Securities. The Company will authorize the
issuance and sale of (i) 450,000 shares of its Series A Preferred Stock, which
shall have the powers, designations, preferences, rights, qualifications,
limitations and restrictions as set forth in the form of Certificate of
Designation of Resolutions Establishing Shares of Series A Preferred Stock
("Certificate of Designation") attached hereto as Exhibit 1.1 and incorporated
herein, and (ii) 420,000 shares of Common Stock. The Series A Preferred Stock
and the Common Stock are sometimes collectively hereinafter referred to as the
"Securities."
1.2 Issuance and Sale of Securities. At the Closing, subject to the
terms and conditions of this Agreement and on the basis of the representations
and warranties set forth herein, the Company agrees to issue and sell to each
Investor, and each Investor severally agrees to purchase from the Company, the
number of shares of Series A Preferred Stock and Common Stock, at the
respective purchase prices, as set forth below the name of each Investor on
Schedule A hereto.
1.3 Delivery and Payment. At the Closing, the Company will execute
and deliver to each Investor certificates evidencing the number of shares of
Series A Preferred Stock and Common Stock purchased hereunder, as set forth
opposite the name of each Investor on Schedule A hereto, against payment, in
immediately available funds, by each Investor to the Company of the purchase
price for the shares of Series A Preferred Stock and Common Stock as set forth
below the name of each Investor on Schedule A hereto.
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1.4 Closing. The consummation of the issuance, sale and purchase of
the Common Stock to be purchased pursuant to this Agreement shall be effected
(the "Closing") at the offices of Xxxxxx & Xxxxxx, 2300 First City Tower, 0000
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000-0000 commencing at 10:00 a.m., on
September 20, 1995 (the "Closing Date") or at such other time or place as the
Company and the Investors shall mutually agree.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as follows:
2.1 Organization and Standing of the Company. The Company and each
of its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to issue the Securities and to own its
properties and assets and to carry on its business as now conducted and as
proposed to be conducted. The Company and each of its subsidiaries is duly
qualified to transact business and is in good standing in all jurisdictions in
which such qualification is required. The copies of the Articles of
Incorporation and Bylaws of the Company and each of its subsidiaries delivered
to the Investors prior to the execution of this Agreement are true and complete
copies of the duly and legally adopted Articles of Incorporation and Bylaws of
the Company and its subsidiaries in effect as of the date of this Agreement.
2.2 Capitalization of the Company. The authorized capital stock of
the Company consists of 50,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock"), of which 2,626,371 shares are issued and
outstanding and 5,000,000 shares of preferred stock, par value $.01 per share,
none of which are outstanding. The Company's Board of Directors has authorized
the designation of 450,000 shares of the preferred stock as the Series A
Convertible Preferred Stock (the "Series A Preferred Stock"), and has
authorized the issuance of said 450,000 shares of Series A Preferred Stock.
Except as set forth on Section 2.2 of the Disclosure Schedule, attached hereto
as Schedule B and incorporated herein by reference (the "Disclosure Schedule"),
at the Closing there will be no other warrants, options, subscriptions or other
rights or preferences (including conversion or preemptive rights) outstanding
to acquire capital stock of the Company or its subsidiary, or notes, securities
or other instruments convertible into or exchangeable for capital stock of the
Company, nor any commitments, agreements or understandings by or with the
Company with respect to the issuance thereof, nor any obligation to repurchase
or redeem any capital stock of the Company except as stated in this Agreement
in Section 5.11. Except as set forth on Section 2.2 of the Disclosure
Schedule, no shareholders of the Company have any right to require the regis-
tration of any securities of the Company or to participate in any such
registration. All outstanding securities of the Company have been issued in
full compliance with an exemption or exemptions from the registration and
prospectus delivery requirements of the Securities Act and from the
registration and qualification requirements of all applicable state securities
laws.
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2.3 Duly Issued. All of the issued and outstanding shares of Common
Stock have been duly authorized, are validly issued, fully paid and non-
assessable. Upon issuance and delivery to each of the Investors of the number
of shares of the Series A Preferred Stock and Common Stock set forth opposite
each Investor's name on Schedule A against payment of the purchase price
therefor pursuant to this Agreement, such shares will be validly issued, fully
paid and non-assessable. The shares of Series A Preferred Stock, upon issuance
pursuant to this Agreement, will have the rights and preferences set forth in
the Certificate of Designation. The shares of Common Stock issuable upon
conversion of the Series A Preferred Stock have been reserved for issuance
based upon the initial Conversion Price (as defined in the Certificate of
Designation), and when issued upon conversion, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable.
2.4 Authorization. This Agreement has, and each other agreement
required to be entered into by the Company pursuant to the terms and conditions
hereof, when executed and delivered by the Company, will have been duly
authorized, executed and delivered by and on behalf of the Company, and will
constitute the valid and binding agreements of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally. The Company has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations hereunder.
2.5 Subsidiaries. Except as set forth on Section 2.5 of the
Disclosure Schedule, the Company has no subsidiaries and does not, directly or
indirectly, own any interest in any corporation, partnership, firm or other
business entity. The Company is not a participant in any joint venture,
partnership, or similar agreement. Section 2.5 of the Disclosure Schedule
accurately sets forth the name of each corporation, partnership, firm or other
business entity in which the Company has an interest, the state of
organization, and the percentage ownership by the Company.
2.6 Financial Position.
(a) Attached hereto as Section 2.6 of the Disclosure Schedule
is the Company's unaudited, consolidated balance sheet as of December 31, 1994
(the "1994 Balance Sheet"), and the related unaudited, consolidated statements
of income and cash flow for the fiscal year then ended, together with the draft
report thereon of Deloitte & Touche, certified public accountants, and the
unaudited, consolidated balance sheet of the Company as at July 31, 1995 (the
"July 31 Balance Sheet"), and the related, unaudited consolidated statements of
income and cash flow for the seven month period ended on July 31, 1995 (such
balance sheets and related statements are collectively referred to herein as
the "Financial Statements"). Except as set forth in Section 2.6 of the
Disclosure Schedule, the Financial Statements present fairly the financial
position of the Company and its subsidiaries as of such dates, respectively,
all in conformity with generally accepted accounting principles, consistently
applied, following in the case of the interim financial statements the
Company's normal internal accounting practices and year end adjustments.
(b) Except as set forth on Section 2.6 of the Disclo-
sure Schedule, since the date of the July 31 Balance Sheet, no event or
condition has occurred, and no event or condition is to
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the knowledge of the Company's officers threatened, which has had a materially
adverse effect, or could reasonably be expected to have a materially adverse
effect, on the Company's or any subsidiary's properties, assets, or financial
position. Except as set forth in Section 2.6 of the Disclosure Schedule, the
Company has no material liabilities or financial obligations not disclosed in
the July 31 Balance Sheet. Except as disclosed in the Financial Statements,
the Company is not an indemnitor or guarantor of any indebtedness of any other
person, firm or corporation. The Company maintains and will continue to
maintain its books and records in accordance with generally accepted accounting
principles consistently applied. Since the July 31 Balance Sheet, neither the
Company nor its subsidiaries has (i) incurred any debts, obligations or
liabilities, absolute, accrued or contingent and whether due or to become due,
except current liabilities incurred in the ordinary course of business, which
(individually or in the aggregate) will not materially and adversely affect the
business, properties or prospects of the Company or its subsidiaries; (ii) paid
any obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing current liabilities, in each case in the
ordinary course of business; (iii) declared or made any payment or distribution
to its shareholders as such or purchased or redeemed any of its shares of
capital stock or other securities, or obligated itself to do so; (iv) sold,
transferred or leased any of its assets except in the ordinary course of
business; (v) issued or sold any shares of capital stock or other securities or
granted any options, warrants or other purchase rights with respect thereto
other than as contemplated by this Agreement. There has been no material
adverse change in the condition, financial or otherwise, or operations, results
of operations or business of the Company or its subsidiaries since the July 31
Balance Sheet.
(c) The thirteen-month projected cash flow information from
October 1995 to October 1996 was prepared by the Company. To the Company's
best knowledge the projection is a reasonable estimate of future cash flow of
the Company for a thirteen-month period. THIS PROJECTION, WHICH THE COMPANY
BELIEVES TO BE REASONABLE, MERELY REPRESENTS A PREDICTION OF FUTURE EVENTS
BASED UPON ASSUMPTIONS WHICH MAY OR MAY NOT OCCUR. AMONG OTHER THINGS, ITS
ACCURACY DEPENDS UPON THE OCCURRENCE OF A COMPLEX SERIES OF FUTURE EVENTS OR
TRANSACTIONS, SOME OF WHICH ARE NOT WITHIN THE CONTROL OF THE COMPANY'S
MANAGEMENT. IN ADDITION, ACTUAL OPERATING RESULTS WILL LIKELY VARY FROM THOSE
WHICH HAVE BEEN PROJECTED. THE PROJECTION SHOULD NOT BE RELIED ON TO INDICATE
ACTUAL RESULTS WHICH MAY BE OBTAINED.
2.7 Tax Returns. Each of the Company and its subsidiaries has timely
filed all Tax Returns required by law and has paid all Taxes required to be
paid, together with any penalties and interest. These Tax Returns are true and
correct in all material respects. There is no pending dispute with any taxing
authority relating to any of the Company's or subsidiaries' returns. There is
no tax audit of any return of the Company or any subsidiaries pending or
currently in process. The Company and its subsidiaries have paid all Taxes and
assessments determined to be owing as a result of any prior audit. The Company
has not elected pursuant to the Internal Revenue Code of 1986, as amended (the
"Code"), to be treated as an S corporation or a collapsible corporation
pursuant to Section 1362(a) or Section 341(f) of the Code, nor has it made
other elections that would have a material adverse effect on the business,
properties,
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prospects or financial condition of the Company or its subsidiaries. The
Company and its subsidiaries have withheld or collected from each payment made
to each employee, the amount of all Taxes, including, but not limited to,
federal income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes required to be withheld or collected therefrom, and
has paid the same to the proper tax receiving offices or authorized
depositories. For purposes of this Agreement, (i) the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, occupation, use,
service, service use, license, payroll, franchise, transfer and recording
taxes, fees and charges imposed by the United States or any state, local or
foreign government or subdivision or agency thereof, whether computed on a
separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, liabilities, additional amounts, penalties and
additions to tax; and (ii) the term "Tax Return" shall mean any report, return,
information return or other document (including related or supporting
information) filed or required to be filed by the Company or its subsidiaries
with any governmental or regulatory authority or other authority in connection
with the determination, assessment or collection of any Taxes (whether or not
such Taxes are imposed on the Company or its subsidiaries) or the
administration of any law, regulation or administrative requirements relating
to any Taxes.
2.8 Title to Properties. Except as set forth on Section 2.8 of the
Disclosure Schedule, each of the Company and its subsidiaries has good and
marketable title to, and the exclusive use of, all of its tangible properties
and assets, free and clear of all mortgages, liens, claims and encumbrances.
2.9 ERISA
(a) The Company, each subsidiary and each ERISA Affiliate have
complied in all material respects with the Employee Retirement Income Security
Act of 1974, as amended from time to time ("ERISA") and, where applicable, the
Internal Revenue Code as amended ("Code") regarding each Plan. "ERISA
Affiliate" shall mean each trade or business (whether or not incorporated)
which together with the Company or any subsidiary would be deemed to be a
"single employer" within the meaning of Section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code. "Plan" shall mean any
employee pension benefit plan, as defined in Section 3(2) of ERISA, which (i)
is currently or hereafter sponsored, maintained or contributed to by the
Company, any subsidiary or an ERISA Affiliate or (ii) was at any time during
the preceding six calendar years, sponsored, maintained or contributed to, by
the Company, any subsidiary or an ERISA Affiliate.
(c) No act, omission or transaction has occurred which could
result in imposition on the Company, any subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed
pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.
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(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2, 1974.
No liability to the Pension Benefit Guaranty Corporation ("PBGC") (other than
for the payment of current premiums which are not past due) by the Company, any
subsidiary or any ERISA Affiliate has been or is expected by the Company, any
subsidiary or any ERISA Affiliate to be incurred with respect to any Plan. No
ERISA Event with respect to any Plan has occurred. "ERISA Event" shall mean
(i) a "Reportable Event" described in Section 4043 of ERISA and the regulations
issued thereunder, (ii) the withdrawal of the Company, any Subsidiary or any
ERISA Affiliate from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (iii) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of proceedings to
terminate a Plan by the PBGC or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
(e) Full payment when due has been made of all amounts which
the Company, any subsidiary or any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan, and
no accumulated funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with respect to any
Plan.
(f) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does not, as of the end
of the Company's most recently ended fiscal year, exceed the current value of
the assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) None of the Company, any subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time without any material liability.
(h) None of the Company, any subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding six
calendar years sponsored, maintained or contributed to, any Multiemployer Plan.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
(i) None of the Company, any subsidiary or any ERISA Affiliate
is required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the Plan.
2.10 No Breach. Except as set forth on Section 2.10 of the Disclosure
Schedule, neither the Company nor its subsidiaries is in breach or default of
any term or provision of their respective Articles of Incorporation or bylaws,
or any material term or provision of any mortgage,
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indenture, instrument, lease, contract, commitment or other agreement to which
the Company or any of its subsidiaries is a party or by which it is bound, or
of any provision of any governmental statute, rule or regulation applicable to
or binding upon the Company or any of its subsidiaries. Neither the execution
and delivery of this Agreement and the other agreements required to be executed
and delivered pursuant to the terms and conditions of this Agreement nor the
consummation of the transactions contemplated thereby will (a) conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute
a default under, (i) the Articles of Incorporation or bylaws of the Company or
any of its subsidiaries, (ii) any agreement or instrument to which the Company
or any of its subsidiaries is now a party or by which any of them is bound, or
(iii) any provision of any judgment, decree, order, statute, rule or regulation
applicable to or binding on the Company or any of its subsidiaries, or (b)
result in the creation of any mortgage, pledge, lien, encumbrance, or charge
upon any of the properties or assets of the Company or any of its subsidiaries.
2.11 Litigation. Except as set forth on Section 2.11 of the
Disclosure Schedule, there is no litigation or other legal, administrative or
governmental proceeding pending or, to the knowledge of the officers of the
Company, threatened against or relating to the Company, its subsidiaries, or
their respective properties or business.
2.12 Court Orders, Decrees, Etc. There is no outstanding order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal
against or adversely affecting the Company, its subsidiaries, or their
respective properties or business.
2.13 Franchises, Permits, and Consents. Each of the Company and its
subsidiaries possesses all governmental franchises, licenses, permits,
consents, authorizations, exemptions and orders, required by the Company and
its subsidiaries to carry on their businesses as now being conducted. All
registrations, designations and filings with all governmental authorities
required in the conduct of the businesses of the Company or its subsidiaries or
in connection with the consummation of the transactions contemplated by this
Agreement have been made or obtained.
2.14 Insurance. The Company and its subsidiaries have in force, and
have paid all premiums due on, liability, casualty and other insurance policies
in the amounts and of the types set forth on Section 2.14 of the Disclosure
Schedule. The Company believes, after advice from its insurance broker, that
such insurance is in amounts acceptable for the nature and extent of the
Company's and its subsidiaries' business and resources.
2.15 Securities Law Compliance. The offer, issuance and sale of the
Securities to be issued hereunder has been made in compliance with all
applicable federal and state securities laws. Neither the Company nor anyone
acting on its behalf has offered any of the Securities (or similar securities)
for sale to, or solicited offers to buy any of the Securities (or similar
securities) from, any prospective purchaser, so as to make the issuance and
sale of the Securities hereunder subject to the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or applicable
state securities laws.
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2.16 Finders' Fees. Except as set forth on Section 2.16 of the
Disclosure Schedule, the Company has incurred no liability for commissions or
other fees to any finder or broker in connection with the transactions
contemplated by this Agreement.
2.17 Intellectual Property. Except as set forth on Section 2.17 of
the Disclosure Schedule, to the actual knowledge of the Company's officers:
(a) The Company and its subsidiaries own or have the right to
use pursuant to license, sublicense, public domain, agreement, or permission
(i) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, together with
all reissuances, revisions, extensions, and reexaminations thereof, (ii) all
trademarks, service marks, trade dress, logos, trade names, and corporate
names, including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (iv) all mask works and all applications, registrations
and renewals in connection therewith, (v) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(vi) all other proprietary rights, and (vii) all copies and tangible
embodiments thereof (in whatever form or medium) (collectively, "Intellectual
Property"), currently being used or reasonably anticipated to be used in the
operation of the Company's business.
(b) None of the Company and its subsidiaries has knowingly
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and none of
the Company's officers has ever received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation, including any claim that any of the Company and its subsidiary must
license or refrain from using any Intellectual Property rights of any third
party. To the knowledge of any of the officers of the Company and its
subsidiaries, no third party has interfered with, infringed upon, or
misappropriated in any material respect any Intellectual Property rights of any
of the Company or its subsidiaries.
(c) The Disclosure Schedule identifies each patent or
registration which has been issued to any of the Company and its subsidiaries
with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which any of the Company and
its subsidiaries has made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which any of the
Company and its subsidiaries has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). Section 2.17 of
the Disclosure Schedule also identifies each trade name or unregistered
trademark used by any of the Company and its subsidiaries. With respect to
each such item of Intellectual Property required to be identified in the
Disclosure Schedule:
i. the Company and its subsidiaries possess all right,
title, and interest in and to the item, free and clear of any security
interest, license, or other restriction;
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ii. except as set forth on the Disclosure Schedule the
item is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
iii. except as set forth on the Disclosure Schedule no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the knowledge of any of the officers of the Company
and its subsidiaries, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(d) Section 2.17 of the Disclosure Statement identifies each
material item of Intellectual Property that any third party owns and that any
of the Company and its subsidiaries uses pursuant to license, sublicense,
agreement, or permission. The Company has delivered or made available at its
offices to the Investors correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each such item of Intellectual Property required to be identified in the
Disclosure Schedule:
i. the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full force and
effect;
ii. the license, sublicense, agreement or permission
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby;
iii. no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
iv. no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
v. except as set forth on the Disclosure Schedule none
of the Company and its subsidiaries has granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
2.18 Environment, Health, and Safety. To the actual knowledge of the
Company's officers, each of the Company and its subsidiaries has complied in
all material respects with all laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) which have jurisdiction over the Company and its subsidiaries
concerning pollution or protection of the environment, public health and
safety, or employee health and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against
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any of them alleging any failure so to comply. Without limiting the generality
of the preceding sentence, each of the Company and its subsidiaries has
obtained and been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied, in all material respects, with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in such laws.
2.19 Product Liability. To the actual knowledge of the Company's
officers, none of the Company and its subsidiaries has any liability (and to
such officers' actual knowledge there is no factual basis for any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Company and its
subsidiaries.
2.20 Conflicts of Interest. Except as disclosed in Section 2.20 of
the Disclosure Schedule, no officer, director or shareholder of the Company or
its subsidiaries or any affiliate of any such person has any direct or indirect
interest (a) in any entity which does business with the Company or its
subsidiaries, or (b) in any property, asset or right which is used by the
Company or any subsidiary in the conduct of business, or (c) in any contractual
relationship with the Company or any of its subsidiaries other than as an
employee.
2.21 Company Equipment. The Company's ice bagging equipment
manufactured by Lancer Corporation (the "Equipment") has received approval by
the National Sanitation Foundation. To the knowledge of the Company, the ice
making equipment manufactured by Hoshizaki America, Inc. has received approval
of the National Sanitation Foundation. The lists of equipment currently
installed, and of removals made from November, 1993 through the date hereof,
set forth in Section 2.21 of the Disclosure Schedule are true and correct as of
the date hereof. The Equipment functions in accordance with its intended
purpose, and has no design or manufacturing defects not covered by warranty,
and no material number of the Equipment currently has any manufacturing
defects.
2.22 Material Contracts. Set forth in Section 2.22 of the Disclosure
Schedule are the following:
(a) A list of all written and oral contracts, agreements,
subcontracts, purchase orders, commitments and arrangements involving payments
remaining to or from the Company or any of its subsidiaries in excess of
$10,000, and other agreements material to the Company's or its subsidiaries'
business to which the Company or any of its subsidiaries is a party or by which
it is bound under which full performance (including payment) has not been
rendered by any party thereto;
(b) A listing of all employment agreements, consulting
agreements, noncompetition agreements, all nondisclosure agreements which
restrict the Company from disclosing information obtained from third parties,
entered into or adopted by the Company or any of its subsidiaries;
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(c) A listing of all deeds of trusts, mortgages, security
agreements, pledge agreements and other agreements or arrangements whereby any
of the assets or properties of the Company or any of its subsidiaries are
subject to any lien, encumbrance, security interest or charge.
Prior to the Closing Date, the Company shall provide legal counsel for
the Investors with a true and complete copy of each document referred to above.
The Company and its subsidiaries have in all material respects substantially
performed all obligations required to be performed by them to date and are not
in default in any material respect under any of the contracts, agreements,
leases, documents, commitments or other arrangements to which any of them is a
party or by which any of them is otherwise bound. All instruments referred to
above are in effect and enforceable according to their respective terms, and
there is not under any of such instruments any existing material default or
event of default or event which, with notice or lapse of time or both, would
constitute an event of default thereunder. All parties having material
contractual arrangements with the Company or any of its subsidiaries are in
substantial compliance therewith and none are in material default in any
respect thereunder.
2.23 Small Business Concern. The Company is a small business concern
within the meaning of such term as used in the Small Business Investment Act of
1958, as amended and the rules and regulations thereunder as now in effect.
The Company has heretofore furnished to each of the Investors which is a
licensed small business investment company or will furnish to such Investor on
or prior to the Closing Date a completed Size Status Declaration on SBA Form
480 and represents and warrants that it has been accurately completed and that
all objective facts are correctly stated.
2.24 Disclosure. The Company has not knowingly withheld from the
Investors any material facts relating to the assets, business, operations,
financial condition or prospects of the Company or its subsidiaries. The
representations and warranties contained in this Agreement and all other
agreements being entered into in connection with this Agreement do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained herein not
misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INVESTORS
Each of the Investors severally, and not jointly, represents and
warrants to the Company, the following:
3.1 Authorization. This Agreement has been duly executed and
delivered by such Investor and constitutes the valid and binding agreement of
the Investor enforceable in accordance with its terms, and each other agreement
required to be entered into by the Investor pursuant to the terms and
conditions hereof, when executed and delivered by the Investor will constitute
the valid and binding agreement of the Investor enforceable in accordance with
its terms, except as
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enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally. If the Investor is not a natural
person, it has all requisite power and authority to enter into this Agreement
and to perform its obligations hereunder.
3.2 Securities Not Registered. The Investor is acquiring the
Securities for investment purposes only, for his own account and not with a
view to, or for resale in connection with, any distribution thereof in
violation of applicable securities laws. The Investor has been advised that
the Securities being purchased and issued hereunder have not been registered
under the Securities Act or applicable state securities laws and that such
shares must be held indefinitely unless the offer and sale thereof are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Investor acknowledges and agrees that the
certificates evidencing the Securities will bear a restrictive legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND THEY
MAY NOT BE OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT THEREUNDER OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
and that such instruments will bear such restrictive or other legends as are
required by applicable state laws.
3.3 Access to Information. The Company has made available to the
Investor the opportunity to ask questions of and to receive answers from the
Company's officers, directors and other authorized representatives concerning
the Company and its business and prospects and each Investor been permitted to
have access to all information which he has requested in order to evaluate the
merits and risks of the purchase of the Securities hereunder.
3.4 Investor Due Diligence. In making the investment in the Company
and its Securities, the Investor is not acting on the basis of, or relying
upon, any promotional materials, business plans, financial projections,
representations or warranties other than those express representations and
warranties contained in this Agreement, and the Investor has performed its own
due diligence and has independently made such studies and investigations of the
Company's business, the market for the Company's products and services, the
Company and its management, as the Investor deems necessary to formulate its
decision to purchase Securities pursuant to the terms of this Agreement.
3.5 Investment Experience. The Investor (i) has such knowledge,
skill and experience in financial, business and investment matters relating to
an investment of this type, that it is capable of evaluating the merits and
risks of the purchase of the Securities, (ii) is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act, and (iii) has the ability to bear the risk of losing his entire
investment in the Securities.
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3.6 Finders' Fees. The Investor has incurred no liability for
commissions or other fees to any finder or broker in connection with the
transactions contemplated by this Agreement.
ARTICLE 4
COVENANTS OF THE COMPANY
The Company covenants and agrees that, unless a written waiver from the
Investors in accordance with the provisions of Section 9.2 of this Agreement is
first obtained, from and after the Closing Date the Company will fully comply
with each of the following covenants of this Article 4.
4.1 Books of Account. The Company will, and will cause each of its
subsidiaries to, keep books of record and account in which full, true and
correct entries are made of all of its and their respective dealings, business
and affairs, in accordance with generally accepted accounting principles. The
Company will employ certified public accountants selected by the Board of
Directors of the Company who are "independent" within the meaning of the
accounting regulations of the Securities and Exchange Commission and who are
one of the so-called "Big Six" accounting firms, and have annual audits made by
such independent public accountants in the course of which such accountants
shall make such examinations, in accordance with generally accepted auditing
standards, as will enable them to give such reports or opinions with respect to
the financial statements of the Company and its subsidiaries as will satisfy
the requirements of the Securities and Exchange Commission in effect at such
time with respect to certificates and opinions of accountants.
4.2 Furnishing of Financial Statements and Information. The Company
will deliver to each Investor:
(a) as soon as practicable, but in any event within 30 days
after the close of each month, unaudited consolidated balance sheets of the
Company and its subsidiaries as of the end of such month, together with the
related consolidated statements of operations and cash flow for such month,
setting forth the budgeted figures for such month prepared and submitted in
connection with the Company's annual plan as required under Section 4.3 hereof,
all in reasonable detail in a form consistent with prior periods and certified
by an authorized accounting officer of the Company, subject to year-end
adjustments;
(b) as soon as practicable, but in any event within 165 days
after the end of each fiscal year, a consolidated balance sheet of the Company
and its subsidiaries, as of the end of such fiscal year, together with the
related consolidated statements of operations, shareholders' equity and cash
flow for such fiscal year, setting forth in comparative form figures for the
previous fiscal year, all in reasonable detail and duly certified by the
Company's independent public accountants, which accountants shall have given
the Company an opinion, unqualified as to the scope of the audit, regarding
such statements;
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(c) within 90 days after the end of each fiscal year, written
notice of the current Conversion Price for the Series A Preferred Stock,
including a brief statement indicating any adjustments reasonably anticipated;
(d) promptly after the submission thereof to the Company,
copies of all reports and recommendations submitted by independent public
accountants in connection with any annual or interim audit of the accounts of
the Company or any of its subsidiaries made by such accountants;
(e) promptly after transmission thereof, copies of all
reports, proxy statements, registration statements and notifications filed by
it with the Securities and Exchange Commission pursuant to any act administered
by the Securities and Exchange Commission or furnished to shareholders of the
Company or to any national securities exchange;
(f) with reasonable promptness, such other financial data
relating to the business, affairs and financial condition of the Company and
any subsidiaries as is available to the Company and as from time to time the
Investors may reasonably request;
(g) promptly following the issuance of any additional shares
of Common Stock or of any securities convertible into Common Stock, or any
options, warrants or other rights to purchase additional shares of Common Stock
or convertible securities, written notice of the amount of securities so issued
and the total consideration received therefor; and
(h) within 10 days after the Company learns in writing of the
commencement or threatened commencement of any material suit, legal or
equitable, or of any material administrative, arbitration or other proceeding
against the Company, any of its subsidiaries or their respective businesses,
assets or properties, written notice of the nature and extent of such suit or
proceeding.
4.3 Preparation and Approval of Budgets. At least one month prior to
the beginning of each fiscal year of the Company, the Company shall prepare and
submit to its Board of Directors, for its review and approval, an annual plan
for such year, which shall include monthly capital and operating expense
budgets, cash flow statements and profit and loss projections itemized in such
detail as the Board of Directors may reasonably request. Each annual plan
shall be modified as often as is necessary in the judgment of the Board of
Directors to reflect changes required as a result of operating results and the
other events that occur, or may be reasonably expected to occur, during the
year covered by the annual plan, and copies of each such modification shall be
submitted to the Board of Directors. The Company will, simultaneously with the
submission thereof to the Board of Directors, deliver a copy of each such
annual plan and modification thereof to each Investor.
4.4 Inspection. The Company will permit the Investors, or any
designee thereof, to visit and inspect the properties of the Company or any of
its subsidiaries, including the financial books and records thereof, and the
right to take extracts therefrom, and discuss the affairs,
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finances and accounts thereof with the appropriate officers, all at reasonable
times upon reasonable notice, and as often as reasonably may be requested.
4.5 Directors' and Shareholders' Meetings. The Investors shall have
the right to elect two directors of the Company as set forth in the Voting
Agreement (as defined in Section 5.17), one to be selected by The Food Fund II
Limited Partnership and the other by Norwest Equity Partners V, a Minnesota
Limited Partnership.
The Company shall reimburse the Investors for the reasonable out-of-
pocket expenses incurred by them or the directors elected by them in connection
with the attending of meetings by their director designees or carrying out any
other duties by such director designees that may be specified by the Board of
Directors; shall pay such director designees the same director's fees paid to
the other non-employee directors of the Company; shall maintain as part of its
Articles of Incorporation or Bylaws a provision for the indemnification of its
directors to the full extent permitted by law; and enter into indemnity
agreements reasonably satisfactory to Investors.
In addition, the Company shall notify the Investors of all regular
meetings and special meetings of the Board of Directors of the Company at least
two business days in advance of such meetings.
The Company agrees, as a general practice, to hold a meeting of its
Board of Directors at least once every two months, and during each year to hold
its annual meeting of shareholders within 30 days of delivery of the audit.
4.6 Use of Proceeds. The Company will use the proceeds of the
investments made by the Investors to pay expenses incurred in connection with
this Agreement, repurchase Common Stock held by P-I Partners, L.P., lease or
purchase the components of systems which make, bag and merchandise packaged ice
and/or dispense purified water (collectively, "Systems"), install Systems in
retail and industrial locations, purchase inventories (including, without
limitation, replacement parts and plastic bags), market the Systems, maintain
the Systems, make acquisitions of other related businesses, pay the liabilities
on Schedule 4.6, and for general working capital purposes related to the
Company's business. The liabilities on Schedule 4.6 shall be paid within 30
days of closing.
4.7 Other Restrictions. Without the prior approval of the Board of
Directors of the Company by an affirmative vote of at least two-thirds of its
members, neither the Company nor its subsidiaries will do any of the following:
(a) declare or pay any dividend or make any other distribution
on any shares of its capital stock other than those payable solely in shares of
Common Stock, or purchase, redeem or otherwise acquire for any consideration,
or set aside a sinking fund or other fund for the redemption or repurchase of
any shares of capital stock or any warrants, rights or options to purchase
shares of capital stock (except that any subsidiary may pay dividends to the
Company).
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(b) grant to the holders of any securities issued or to be
issued by the Company a "demand" right to register such securities under the
Securities Act.
(c) guarantee, endorse or otherwise be or become contingently
liable, or permit any subsidiary to guarantee, endorse or otherwise become
contingently liable, in connection with obligations in excess of one million
dollars ($1,000,000) in the aggregate, securities or dividends of any person,
firm, association or corporation (other than the Company and any 100% owned
subsidiary), except that the Company and any subsidiary may endorse negotiable
instruments for collection in the ordinary course of business;
(d) make or permit any subsidiary to make loans or advances to
any person (including without limitation to any officer, director or
shareholder of the Company or any officer or director of any subsidiary), firm,
association or corporation (other than the Company and any 100% owned
subsidiary), except advances to suppliers, customers and employees made in the
ordinary course of business; or
(e) make any material change in the nature of its business as
carried on at the date of this Agreement;
(f) organize any subsidiary, joint venture, partnership, or
acquire a business (by asset purchase, stock purchase, merger or otherwise), or
acquire any assets or make any investment (all of the foregoing being
hereinafter referred to as an "Investment"), except that:
(i) in the case of an Investment which is in the same line
of business as the Company (i.e., the distribution of packaged ice systems and
the sale of bags for use in such systems) or to be used in or in connection
with the Company's business as currently conducted, the Company and its
subsidiaries may make such Investment to the extent that the total expenditure
for such Investment does not exceed $500,000; and
(ii) in the case of any other Investment, the Company
and its subsidiaries may make such Investment only to the extent permitted by
Section 9.02 of the Company's loan agreement with Texas Commerce Bank dated
September 20, 1995, as such agreement is in effect on the date hereof.
(g) issue any securities (including without limitation
options, warrants, other rights to purchase capital stock or convertible
securities of the Company) at a price which would result in an adjustment of
the Conversion Price for the Series A Preferred Stock pursuant to the
Certificate of Designation; or
(h) mortgage, pledge, or create a security interest in all or
substantially all of the Company's assets as collateral.
(i) except that the Company may pledge substantially all of
its assets as security for its loan from Texas Commerce Bank
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ARTICLE 5
CONDITIONS TO INVESTORS' OBLIGATIONS
The obligation of each Investor to purchase and pay for the Securities
to be delivered to it hereunder at the Closing Date is subject to the
fulfillment, on or before the Closing Date, of each of the following
conditions:
5.1 Compliance with Representations and Warranties. The
representations and warranties contained in Article 2 hereof shall be true on
and as of the Closing Date with the same effect as though made on and as of
that date, and the Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by the Company prior to or at the Closing.
5.2 Compliance Certificate. The Company shall have delivered to the
Investors a certificate, dated as of the Closing Date and signed by the
Company's President, certifying that the conditions in this Article 5 required
to be fulfilled prior to the Closing Date have been fulfilled.
5.3 Amended and Restated Shareholders Agreement. Each of the
Investors shall have entered into a counterpart of the Amended and Restated
Shareholders Agreement in the form attached hereto as Exhibit 5.3 ("Amended and
Restated Shareholders Agreement"), and the holders of at least eighty percent
(80%) of the outstanding Common Stock shall have executed a counterpart of the
Amended and Restated Shareholders Agreement.
5.4 Parallel Exit Agreement. Xxxxx X. Xxxxxx, Xxxx Xxxxx, the
Company and each Investor shall have entered into the Parallel Exit Agreement
in the form of Exhibit 5.4 attached hereto ("Parallel Exit Agreement").
5.5 Bank Facility Commitment. The Company shall have obtained a bank
credit facility in an amount not less than $4.5 million on terms deemed
reasonable to the Investors.
5.6 Stock Certificates. The Company shall have delivered to each of
the Investors stock certificates evidencing the number of shares of Common
Stock and Series A Preferred Stock purchased hereunder.
5.7 Registration Rights Agreement. The Company and the Investors
shall have duly authorized and executed a Registration Rights Agreement in the
form set forth as Exhibit 5.7 hereof.
5.8 [Intentionally omitted.]
5.9 Opinion of Counsel. The Company shall have delivered to the
Investors the opinion of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. dated the
Closing Date, substantially in the form of Exhibit 5.9.
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5.10 P-I Partners. The Company shall have purchased the 420,000
shares owned by P-I Partners, L.P. for no more than $2,500,000 and settled all
disputes with P-I Partners, L.P.
5.11 Insider Stock. Certain founders of the Company shall have sold
to the Company 80,000 shares of the Company's Common Stock for the par value
thereof, and the Company shall have resold such shares for at least $400,000.
5.12 Investment by Other Investors. On the Closing Date, concurrently
with the purchase by such Investor, each other Investor shall have purchased
and paid for the Securities being purchased by it hereunder.
5.13 Xxxxxxxxx'x Rights and Options. All stock options and other
rights to purchase securities of the Company held by Xxxxxx X. Xxxxxxxxx or
persons making up the Xxxxxxxxx Group (as defined in the Shareholders
Agreement), other than as set forth in Section 5.14 of this Agreement, shall
have been terminated; provided, however, that certain Stock Option Agreement
dated June 9, 1992 among the Company and Xxxxxx X. Xxxxxxxxx for 80,358 shares
of Common Stock shall remain in full force and effect.
5.14 Xxxxxxxxx Stock Purchase. Xxxxxx X. Xxxxxxxxx, and Xxxxxxx
Xxxxxxxxx shall have purchased at least 190,000 shares of Common Stock at a
price of no less than $5.00 per share.
5.15 Breco Release. The Investors shall have received written
evidence that American Breco Corporation Texas, Inc. and/or Xxxxxxx Xxxxxx have
released or waived all of their rights to pursue investment in the Company.
5.16 Execution of SBA Forms. Each of the Investors that is a small
business investment company shall have received from the Company the Size
Status Declaration on SBA Form 480 and the Company's duly executed
certification, dated the Closing Date, on SBA Form 652-D that the Company will
not illegally discriminate in its operations, employment practices or
facilities.
5.17 Amended and Restated Voting Agreement. The holders of at least
80% of the outstanding Common Stock shall have entered into the Amended and
Restated Voting Agreement in the form of Exhibit 5.17 attached hereto (the
"Voting Agreement").
ARTICLE 6
CONDITIONS TO COMPANY'S OBLIGATIONS
The obligation of the Company to issue and sell the Securities to the
Investors hereunder is subject to the fulfillment by each Investor, at or
before the Closing, of the following conditions:
6.1 Compliance with Representations and Warranties. The
representations and warranties of each of the Investors contained in Article 3
hereof shall be true on and as of the Closing Date with the same effect as
though made on that date (except to the extent that any
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representations and warranties of the Company specifically apply to conditions
existing at a particular date).
6.2 Other Agreements. Each of the Investors shall have entered into
the Amended and Restated Shareholders Agreement, the Amended and Restated
Voting Agreement, the Parallel Exit Agreement, and the Registration Rights
Agreement.
ARTICLE 7
INDEMNIFICATION
The Company shall indemnify and hold harmless the Investors, and the
Investors, severally and not jointly and severally, shall indemnify and hold
harmless the Company, against all claims, liability, damage, loss, cost and
expense (including reasonable attorneys' and accountants' fees) incurred by the
indemnified party or parties as a result of or in connection with the breach by
the indemnifying party or parties of any representation, warranty or covenant
contained in this Agreement or in any other agreement entered into pursuant to
the terms and conditions of this Agreement and any and all actions, suits,
proceedings, claims, demands and judgments incident to or alleged to be
incident to any of the foregoing.
ARTICLE 8
RIGHT TO PURCHASE ADDITIONAL SECURITIES
8.1 First Refusal Rights. Subject to the terms and conditions of
this Article 8, the Company hereby grants to each Investor (referred to
hereinafter in this Article 8 as the "Offeree") a right of first refusal to
purchase all or any part of any issue of New Securities (as defined
hereinbelow) that the Company (or any subsidiary whose capital stock will not
be wholly owned, directly or indirectly, by the Company upon completion of any
such issuance) may from time to time after the Closing Date propose to issue.
8.2 Definition of New Securities. "New Securities" shall mean any
capital stock, any rights, options, or warrants to purchase or subscribe for
capital stock, and any securities or other instruments of any type whatsoever
that are, or may become, convertible into or exchangeable for capital stock;
provided, however, that "New Securities" shall not include (i) securities
offered and sold by the Company pursuant to a Public Offering (as hereinafter
defined); (ii) shares of the Company's Common Stock (or related options or
rights) issued to the Company's employees and directors pursuant to a plan
adopted by the Board of Directors; (iii) Common Stock issued by the Company
upon the conversion of the Series A Preferred Stock; and (iv) shares of the
Company's capital stock issued in connection with any option or right listed on
the Disclosure Schedule, stock split or stock dividend by the Company.
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8.3 Notice and Allocation Periods. If the Company or, when
applicable, its subsidiary, proposes to undertake a bona fide issuance of New
Securities, then it shall give each Offeree written notice of its intention,
describing the type of New Securities, the price, the number of shares to be
offered, and the general terms upon which such securities are proposed to be
offered. Each Offeree shall be given at least twenty (20) days' prior written
notice within which to agree to purchase all or any part of its Pro Rata Share
(as hereinafter defined) of such issuance of New Securities for the price and
upon the general terms specified in said notice by giving written notice to the
issuer within such period and stating therein the quantity of New Securities to
be purchased by it. "Pro Rata Share" shall mean, with respect to each Offeree,
that portion of the number of shares of New Securities proposed to be issued
which equals the proportion that (a) the number of shares of Common Stock held
by the Offeree immediately prior to the proposed issuance, plus the number of
shares of Common Stock which would then be issuable to the Offeree assuming
that all securities of the Company convertible into or exchangeable for Common
Stock had been converted or exchanged, bears to (b) the total number of shares
of Common Stock issued and outstanding immediately prior to the proposed
issuance, assuming that all securities of the Company convertible into or
exchangeable for Common Stock had been converted or exchanged.
8.4 Right of Company to Sell New Securities. If the Offeree fails to
exercise in full its right of first refusal within the applicable period set
forth above, then the Company or, when applicable, its subsidiary shall have
one hundred twenty (120) days thereafter to sell the New Securities respecting
which the rights set forth herein were not exercised at a price and upon
general terms no more favorable to the purchaser thereof than specified in the
notice to the Offerees. If such New Securities have not been sold within such
120-day period, then the Company or, when applicable, its subsidiary shall not
thereafter issue or sell any New Securities without first offering them to the
Offeree in the manner provided above.
8.5 Public Offering. Reference to the term "Public Offering" in this
Agreement shall mean a bona-fide firm commitment underwritten public offering
of shares of the Company's Common Stock made through a nationally recognized
underwriting firm pursuant to an effective registration statement under the
Securities Act, which results in gross proceeds to the Company of not less than
$7.5 million.
8.6 Termination. This Article 8 shall continue in effect from the
date of this Agreement until the Company has completed a Public Offering.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests, demands and other communications
hereunder, and each other agreement required to be entered into pursuant to the
terms and conditions of this Agreement, shall be in writing and shall be
delivered by hand, overnight courier, facsimile transmission, or by United
States Mail, and shall be deemed to have been duly given when actually re-
ceived, or when mailed, first class postage prepaid, certified mail, return
receipt requested, to
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an Investor at the address set forth below his name on Schedule A hereto, to
the Company at the address set forth below, or to such other address as may be
designated hereafter by prior written notice from the recipient to the sender:
If by mail, to: Packaged Ice, Inc.
X.X. Xxx 00000
Xxxxxxx, Xxxxx 00000-0000
If by hand delivery or
overnight mail, to: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
If by FAX, to: Packaged Ice, Inc.
Fax: (000) 000-0000
9.2 Modification and Waiver.
(a) No amendment or modification to this Agreement shall be
made without the approval of the Company and the affirmative vote of two-thirds
of the shares of Common Stock and the Series A Preferred Stock held by the
Investors with the Series A Preferred Stock voting on an as-converted basis.
(b) Approval, waiver and consent by the Investors hereunder
shall require the affirmative vote of the holders of two-thirds of the shares
of Common Stock and the Series A Preferred Stock held by the Investors with the
Series A Preferred Stock voting on an as-converted basis.
(c) Notwithstanding anything to the contrary herein contained,
the fulfillment by the Company of a condition precedent to an Investor's
obligation to purchase Securities hereunder may be waived from time to time by
any such Investor by written consent to, or waiver of, any such condition.
9.3 Termination. This Agreement shall continue in effect from the
date of execution until the Company has completed an initial Public Offering.
9.4 Conflicts. If there shall be any conflict between any provision
of this Agreement and any provision of the other agreements required to be
entered into pursuant to the terms and conditions of this Agreement, the
conflicting provision of such other agreements shall control.
9.5 Gender. Wherever herein, and in each other agreement required to
be entered into pursuant to the terms and conditions of this Agreement, the
singular number is used, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and vice versa, as the
context may require.
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9.6 Headings. The headings contained in this Agreement, and in each
other agreement required to be entered into pursuant to the terms and
conditions of this Agreement, are for reference purposes only and shall not in
any way affect their meaning or interpretation.
9.7 Counterparts. This Agreement, and each other agreement required
to be entered into pursuant to the terms and conditions of this Agreement, may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
9.8 Parties in Interest. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, shall, except as may otherwise be specifically provided to the
contrary therein, inure to the benefit of and be binding upon each of the
parties hereto and thereto, as the case may be, and their respective heirs,
executors, legal representatives, successors and assigns.
9.9 Survival. All covenants, agreements, representations and
warranties made herein, and in each other agreement required to be entered into
pursuant to the terms and conditions of this Agreement, or otherwise in writing
in connection therewith, shall survive the execution and delivery thereof and
the consummation of the transactions contemplated thereby.
9.10 Entire Agreement. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, embody the entire agreement and understanding between the parties
thereto, and supersede all prior agreements and understandings, written and
oral, relating to the subject matter thereof, including, without limitation,
all letters of intent and summary term sheets heretofore executed or examined
by the parties.
9.11 Governing Law. THIS AGREEMENT, AND EACH OTHER AGREEMENT REQUIRED
TO BE ENTERED INTO PURSUANT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT,
SHALL, EXCEPT AS MAY OTHERWISE BE SPECIFICALLY PROVIDED TO THE CONTRARY
THEREIN, BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
9.12 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, including, without limitation any
claim for violation of securities laws, shall be settled by binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, in Houston, Texas, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof, and shall
not be appealable.
9.13 Expenses and Attorneys' Fees. The Company shall pay all
reasonable costs and expenses that are incurred with respect to the
negotiation, execution, closing, delivery and performance of this Agreement,
and each other agreement required to be entered into pursuant to the terms and
conditions of this Agreement including without limitation those reasonable
legal, accounting and travel costs and expenses incurred by the Investors. The
Company's obligation to pay the Investors expenses shall not be incurred by the
Company until the Closing.
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9.14 Language. The language used in this Agreement, and the other
agreements required to be entered into pursuant to the terms and conditions of
this Agreement, shall be deemed to be language chosen by the parties thereto to
express their mutual intent, and no rule of strict construction against any
party shall apply to any term or condition thereof.
9.15 Severability. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions hereof and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
9.16 Waiver. No waiver by any party of the performance of any
provision, condition or requirement herein shall be deemed to be a waiver of,
or in any manner release the other party from, performance of any other
provision, condition or requirement herein; nor deemed to be a waiver of, or in
any manner release the other party from future performance of the same
provision, condition or requirement; nor shall any delay or omission by any
party to exercise any right hereunder in any manner impair the exercise of any
such right accruing to it thereafter.
9.17 No Third-Party Beneficiaries. Nothing contained in this
Agreement shall be construed to give any person other than the Company and
Investors, their successors and assigns, any legal or equitable right, remedy
or claim under or with respect to this Agreement.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
THE COMPANY: PACKAGED ICE, INC.
-------- By:
--------------------------------
Xxxxx X. Xxxxxx, President
THE INVESTORS: NORWEST EQUITY PARTNERS V,
A MINNESOTA LIMITED PARTNERSHIP
By: Itasca Partners V, L.L.P., its
General Partner
-------- By:
--------------------------------
-------- Name:
------------------------------
-------- Title:
-----------------------------
THE FOOD FUND II LIMITED PARTNERSHIP
-------- By:
--------------------------------
-------- Name:
------------------------------
-------- Title:
-----------------------------
Attachments:
Schedule A - Investors
Schedule B - Disclosure Schedule
Exhibit 1.1 - Certificate of Designation of Resolutions Establishing Shares of
Series A Preferred Stock
Exhibit 5.3 - Amended and Restated Shareholders Agreement
Exhibit 5.4 - Parallel Exit Agreement
Exhibit 5.7 - Registration Rights Agreement
Exhibit 5.8 - Amendment to By-Laws
Exhibit 5.9 - Opinion of Counsel
Exhibit 5.17 - Amended and Restated Voting Agreement
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SCHEDULE A
Food Fund II Limited Partnership
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Shares Price Total
------ ----- -----
Common Stock 42,000 shares $5.00 $210,000
Series A Preferred Stock 45,000 shares $5.56 $250,200
Norwest Equity Partners V,
a Minnesota Limited Partnership
2800 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Shares Price Total
------ ----- -----
Common Stock 378,000 shares $5.00 $1,890,000
Series A Preferred Stock 405,000 shares $5.56 $2,251,800
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