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EXHIBIT 10.44
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of September 4, 1997 ("Effective Date"), by and between Southwestern Ice,
Inc., a Texas corporation (the "Buyer"), a wholly-owned subsidiary of Packaged
Ice, Inc., a Texas corporation, or Buyer's nominee, and CJC, Inc., a Nevada
corporation (the "Seller"), with respect to the following facts:
RECITALS
A. Seller owns written data and information concerning businesses
and persons located in San Diego County, California which purchase commercial
quantities of ice, including customer identification requirements and credit
histories (the "Customer List").
B. Seller desires to sell the Customer List to Buyer upon the
conditions set forth in this Agreement.
C. Buyer desires to purchase the Customer List from Seller, upon the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter contained, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Purchase and Sell Customer List. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, Seller
will sell, transfer, convey, assign and deliver to the Buyer, and the Buyer
will purchase or acquire from the Seller, all right, title and interest of the
Seller in and to the Customer List in every form in which such information is
recorded including physical documents and in machine readable form.
1.2 Excluded Assets. Customer List is the only asset of Seller being
purchased by Buyer.
1.3 Liabilities. Buyer shall not assume (and shall not be deemed to
assume) and shall not be responsible for, any liabilities, debts or obligations
of Seller, of any kind or nature whatsoever. Seller shall be responsible for
and shall pay, discharge and satisfy all of the liabilities, debts and
obligations of Seller. Seller shall indemnify, defend and hold Buyer
completely free and harmless from the same including but not limited to
attorneys' fees and litigation costs incurred in resisting and defending
against the assertion of any of the same against Buyer.
1.4 Purchase Price and Method of Payment. The total purchase price
to be paid by Buyer for the Customer List (the "Purchase Price") shall consist
of a cash payment at the Closing to Seller of One Million Thirty Thousand
Dollars ($1,030,000). The cash payment to Seller at the Closing shall be paid
by wire transfer or cashier's check.
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1.5 Covenant Not to Compete. At the Closing, the Seller shall enter
into a Covenant Not to Compete with Buyer (the "Non-Compete Agreement") in
substantially the form set forth in Exhibit A.
1.6 Escrow Deposit. At the Closing, (i) the Seller shall enter into
a pledge and escrow agreement substantially in the form attached as Exhibit B
(the "Escrow Agreement") with Buyer, as escrow agent (the "Escrow Agent"); (ii)
Seller shall deposit with Buyer $260,000; and (iii) Buyer, as Escrow Agent
shall hold said $260,000 pursuant to the terms of the Escrow Agreement (the
"Escrow Fund").
1.7 Closing. The date of Closing (herein referred to as the "Closing
Date") shall be on or before September 3, 1997 with the actual day of Closing
on or before such date as mutually agreed to by the parties in writing;
provided, Buyer may elect to postpone the Closing to not later than September
15, 1997. Unless otherwise agreed, the Closing shall take place at the offices
of Xxxx, Forward, Xxxxxxxx & Scripps LLP, 000 Xxxx Xxxxxxxx, Xxxxx 0000, Xxx
Xxxxx, Xxxxxxxxxx, at the hour of 4:00 p.m.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as specifically disclosed by Seller to Buyer in this Agreement or
in Seller's Disclosure Memorandum (which disclosures shall be deemed to modify
and qualify each of the following representations and warranties of Seller),
Seller represents and warrants to Buyer as follows:
2.1 Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. Seller only conducts its business in San Diego County and is not
required to be qualified to do business in any other jurisdiction. Seller has
all necessary corporate powers to carry on the Business as it is now being
conducted. Seller has full right, power and authority to execute and deliver
this Agreement and consummate the transactions contemplated hereby.
2.2 Corporate Actions. All actions and proceedings necessary to be
taken by or on the part of the Seller in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement, including, to the extent required by its
Articles of Incorporation, Bylaws and by law, the obtaining of votes, and
consents and approvals by the shareholders and board of directors of Seller,
have been duly and validly taken and obtained, and this Agreement has been duly
and validly authorized, executed and delivered by Seller and constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with and subject to its terms.
2.3 Capitalization; No Subsidiaries. The authorized number of shares
of Seller is 85,000, all of one class, of which 1000 are issued and
outstanding, of which 480 shares are owned by Xxxxxx Xxxxxxx and 420 shares are
owned by Xxxx Xxxxx. Seller has no subsidiaries.
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2.4 No Defaults. Neither the execution, delivery or performance by
Seller of this Agreement nor the consummation by Seller of the transactions
contemplated hereby, itself or with the giving of notice or the passage of time
or both, will:
(a) Violate or conflict with the provisions of the Articles of
Incorporation or the Bylaws of Seller;
(b) Violate or conflict with or result in any breach or in any
default under, result in any termination or modification of, or cause any
acceleration of any obligation of its business under any contract, mortgage,
indenture, agreement, lease or other instrument to which Seller is a party or
by which it, its business or any of its assets is bound, or result in the
creation of any encumbrance upon any of its assets such as would have a
material adverse effect on its business or is assets taken as a whole; or
(c) Violate any judgment, decree, order, statute, law, rule or
regulation applicable to Seller.
2.5 Breach. Seller is not in violation or breach of any of the
terms, conditions or provisions of its Articles of Incorporation, as amended,
or Bylaws, or any indenture, mortgage or deed of trust or other contracts,
lease, instrument, court order, judgment, arbitration award, or decree
affecting its business or its assets, to which Seller is a party or by which it
is bound, and has received no notices of same, where the effect thereof would
have a material adverse effect on its business or its assets, taken as a whole.
2.6 Approvals and Consents. No approvals or consents of persons or
entities not a party to this Agreement are legally or contractually required to
be obtained by Seller in connection with the consummation of the transactions
contemplated by this Agreement. No permit, license, consent, approval or
authorization of, or filing with, any governmental regulatory authority or
agency is required in connection with the execution, delivery and performance
of this Agreement, or the consummation of the transactions contemplated hereby.
2.7 Title to and Condition of Assets; Leases.
(a) Seller has good, valid and marketable title to all the
Customer List, free and clear of all liens, encumbrances and security interests
of every kind or character.
(b) Seller has the full right, power and authority to transfer
to Buyer the Customer List. Such transfer to Buyer shall not violate or
conflict with the right of any other person.
2.8 Liabilities. Except for those liabilities disclosed in this
Agreement or Seller's Disclosure Memorandum, there are no liabilities or
obligations of Seller relating to its business, known or unknown, due or not
yet due, liquidated or unliquidated, fixed, contingent or otherwise.
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2.9 Taxes. Seller has filed all applicable federal, state, local and
foreign tax returns required to be filed to date, in accordance with provisions
of law pertaining thereto, and has paid all taxes, interest, penalties and
assessments lawfully due (including without limitation income, withholding,
excise, unemployment, social security, occupation, transfer, franchise,
property, sales and use taxes, import, duties or charges, and all penalties and
interest in respect thereof) except where the failure to file such returns or
pay such taxes has no material adverse effect on the Business and the Assets
taken as a whole.
2.10 Compliance With Law and Regulations. Seller is in compliance
with all requirements of law, federal, state and local, and all requirements of
all governmental bodies or agencies having jurisdiction over it, the operation
of its business and the use of its assets, except where the failure to be in
such compliance would not have a material adverse effect on its business or its
assets taken as a whole. Seller is in full compliance with applicable
environmental laws. Seller has properly filed all reports and other documents
required to be filed with federal, state, local, or foreign governments or
subdivisions or agencies thereof. Seller has not received any notice, not
heretofore complied with, from any federal, state or municipal authority or any
insurance or inspection body that any of its properties, facilities, equipment
or business procedures or practices fails to comply with any applicable law,
ordinance, regulation, or requirement of any public authority or body.
2.11 Litigation. There are no lawsuits, legal proceedings or
investigations of any nature pending or, to Seller's knowledge, threatened
against or affecting it which would materially impair Seller's ability to carry
out the transactions contemplated by this Agreement or which asserts a claim
adverse to Seller with respect to the ownership of the Customer List.
2.12 No Broker or Finder. Seller has not employed or used the
services of any broker or finder in connection with this transaction and shall
hold Buyer completely free and harmless from the claims of any person claiming
to have so acted on behalf of Seller.
2.13 Operation in Ordinary Course.
(a) Seller has operated its business in the ordinary course of
business, consistent with past practice, except as related to the transactions
contemplated hereby; and
(b) Seller has maintained its books, accounts and records in
the usual, customary and ordinary manner.
2.14 Disclosure. Neither this Agreement nor Seller's Disclosure
Memorandum contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as specifically disclosed by Buyer to Seller in this Agreement or
in Buyer's Disclosure Memorandum (which disclosures shall be deemed to modify
and qualify each of the following representations and warranties of Buyer),
Buyer represents and warrants to Seller as follows:
3.1 Corporate Status. Buyer is a corporation which is duly
organized, validly existing, and in good standing under the laws of the State
of Texas. Buyer is duly qualified to do business in each jurisdiction in which
the character of and location of its assets or operations makes qualification
to do business as a foreign corporation necessary. Buyer has full corporate
power to carry on its business as it is now being conducted and as proposed to
be conducted and to own and operate its assets. Buyer has full corporate power
and authority to execute and deliver this Agreement and perform the
transactions contemplated hereby.
3.2 Corporate Actions. All corporate or other actions and
proceedings necessary to be taken by or on the part of Buyer in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly and validly taken,
and this Agreement has been duly and validly authorized, executed and delivered
by Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with and subject to its terms.
3.3 No Defaults. Neither the execution, delivery or performance by
Buyer of this Agreement nor the consummation by Buyer of the transactions
contemplated hereby is an event that, of itself or with the giving of notice or
the passage of time or both, will:
(a) Violate or conflict with the provisions of the Articles of
Incorporation or Bylaws of Buyer;
(b) Violate or conflict with or result in any breach of or any
default under, result in any termination or modification of, or cause any
acceleration of any obligation under, any contract, mortgage, indenture,
agreement, lease or other instrument to which Buyer is a party or by which it
is bound, or by which it may be affected, or result in the creation of any lien
or encumbrance upon any of Buyer's assets, except for agreements, indentures
and instruments related to the financing of the transactions contemplated by
this Agreement; or
(c) Violate any judgment, decree, order, statute, rule or
regulation applicable to Buyer.
3.4 Breach. Buyer is not in violation or breach of any of the terms,
conditions or provisions of its Articles of Incorporation, as amended, its
Bylaws, or any indenture, mortgage or deed of trust or other contracts, lease,
instrument, court order, judgment, arbitration award, or decree materially
affecting the business of the Buyer, to which Buyer is a party or by which it
is otherwise bound, where the effect thereof would have a material adverse
effect on the Buyer.
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3.5 Approvals and Consents. No approvals or consents of persons or
entities not a party to this Agreement are legally or contractually required to
be obtained by Buyer in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
3.6 Litigation. There are no lawsuits, judgments, arbitrations,
administrative charges or other legal proceedings, claims or governmental
investigations pending against, or to Buyer's knowledge, threatened against the
Buyer relating to or affecting the execution, delivery or performance of this
Agreement or the ability of Buyer to perform its obligations under this
Agreement.
3.7 No Broker or Finder. There is no broker or finder or other
person who would have any valid claim against any of the parties for a
commission or brokerage fee or payment in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement of or action
taken by Buyer. Buyer shall hold Seller completely free and harmless from the
claims of any person claiming to have so acted on behalf of Buyer.
3.8 Disclosure. Neither this Agreement nor Buyer's Disclosure
Memorandum contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
ARTICLE IV
DISCLOSURE MEMORANDUM
Seller's Disclosure Memorandum (the "Seller's Disclosure Memorandum"),
is attached to this Agreement as Attachment I, shall be executed on behalf of
Seller, and shall contain accurate, true and correct information and data and,
to the extent expressly set forth herein, shall be accompanied by a copy of
each document referred to therein or otherwise identified as to its location to
the reasonable satisfaction of Buyer. Buyer's Disclosure Memorandum (the
"Buyer's Disclosure Memorandum") shall be executed on behalf of Buyer, and
shall contain accurate, true and correct information and data in all material
respects. Terms used and defined in this Agreement shall have the same
definition when used in the Seller's Disclosure Memorandum or Buyer's
Disclosure Memorandum, as the case may be, and any schedules or exhibits
attached thereto.
ARTICLE V
COVENANTS OF SELLER
5.1 Representations and Warranties. Seller shall give detailed
written notice to Buyer promptly upon learning of any fact which (i) would
render untrue in any material respect any of Seller's or Buyer's
representations or warranties contained in this Agreement or the information
contained in Seller's Disclosure Memorandum or Buyer's Disclosure Memorandum,
or (ii) would cause Seller or Buyer to fail to comply with its obligations
hereunder in any material respect between the Effective Date and the Closing
Date.
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5.2 Notice of Proceeding. Seller will promptly notify Buyer in
writing upon:
(a) Becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereby; or
(b) Receiving any notice from any governmental department,
court, agency or commission of its intention (i) to institute an investigation
into, or institute a suit or proceeding to restrain or enjoin, the consummation
of this Agreement or such transactions, or (ii) to nullify or render
ineffective this Agreement or such transactions if consummated.
5.3 Consummation of Agreement. Seller shall use its best efforts to
fulfill and perform all conditions and obligations on its part to be fulfilled
and performed under this Agreement, and cause the transactions contemplated by
this Agreement to be fully consummated.
5.4 Confidentiality. Seller agrees to keep confidential any
information obtained from Buyer concerning Buyer or the business of Buyer,
unless readily ascertainable from public or published information, or trade
sources.
5.5 Operations. Seller agrees, through the Closing Date, at Seller's
sole cost and expense to (i) keep all existing insurance policies affecting the
Assets in full force and effect; (ii) continue to provide all services and
maintain all of the fixed Assets in good working order in a responsible manner
consistent with past practice; and (iii) upon Closing, terminate all employees
and settle all employment contracts.
5.6 Operations Pending Closing. Subsequent to the date of this
Agreement and prior to the Closing Date, Seller shall cause its business to be
operated in the ordinary course, consistent with past practice. Until and
including the Closing Date, Seller shall use its best efforts to cause its
business to maintain its insurance coverage and its books, accounts and records
in the usual manner in a basis consistent with current practice and to comply
in all material respects with all laws, ordinances and regulations of
governmental authorities applicable to its business.
5.7 Restrictions. Except as disclosed in this Agreement or in
Seller's Disclosure Memorandum, prior to the Closing Date, and without the
prior written consent of Buyer, Seller shall not:
(a) Encumber or grant any security interest in any asset or
its business; or
(b) In the ordinary course of business, enter into any
contract which obligates the Seller of its business to expend more than Ten
Thousand Dollars ($10,000.00) following the Closing Date.
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5.8 Access to Properties and Information. Following the Effective
Date, Buyer and its representatives shall be afforded full access to all of the
assets, properties, books, records, agreements, other documents and employees
of Seller relating to its business, in all cases during normal business hours
and upon reasonable prior notice. Buyer and its representatives shall have the
right to make abstracts from or copies of any such books, records, agreements,
and commitments, and Seller shall furnish Buyer's representatives with such
information concerning such affairs and copies of such documents, contacts,
agreements and records as Buyer may reasonably request. All such information
provided to Buyer in written form by Seller to the knowledge of Seller shall be
true, complete and correct and shall be deemed represented as such by Seller to
Buyer. Any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the business of Seller. Buyer
shall not contact any of Seller's employees or visit any portion of Seller's
properties without Seller's prior knowledge. Buyer shall be responsible for
ensuring that its employees or representatives maintain the confidentiality of
any information learned during the investigation subject to the terms of
Section 6.4 hereto.
5.9 Employees. Buyer will not employee any employees (the
"Employees") of Seller. If Seller elects to terminate any Employees, the
Seller shall be solely responsible for and shall pay any severance, termination
payments, COBRA benefit, accrued vacation pay and similar accrued benefit, or
liabilities relating to any of the employees or to which any employee is
entitled, including claims related in any way to the employment of an Employee
by Seller based upon events occurring prior to the Closing Date, regardless of
when any such claim or demand therefor may be made.
ARTICLE VI
COVENANTS OF BUYER
Buyer covenants and agrees that from the date hereof until the
completion of the Closing:
6.1 Representations and Warranties. Buyer shall give detailed
written notice to Seller promptly upon learning of any fact which (i) would
render untrue in any material respect any of Buyer's or Seller's
representations or warranties contained in this Agreement or the information
contained in Buyer's Disclosure Memorandum or Seller's Disclosure Memorandum or
(ii) would cause Buyer or Seller to fail to comply with its obligations
hereunder in any material respect between the Effective Date and the Closing
Date.
6.2 Notice of Proceeding. Buyer will promptly notify Seller in
writing upon:
(a) Becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereunder; or
(b) Receiving any notice from any governmental department,
court, agency or commission of its intention (i) to institute an investigation
into, or institute a suit or proceeding to restrain or enjoin, the consummation
of this Agreement or such transactions, or (ii) to nullify or render
ineffective this Agreement or such transactions if consummated.
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6.3 Consummation of Agreement. Buyer shall fulfill and perform all
conditions and obligations on its part to be fulfilled and performed under this
Agreement, and cause the transactions contemplated by this Agreement to be
fully carried out.
6.4 Confidentiality. Upon the termination of this Agreement prior to
Closing, Buyer shall keep confidential and shall not use in any manner any
information obtained from Seller concerning Seller or the Business.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
7.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall have been true and correct as of the
Effective Date and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent changes are permitted or contemplated pursuant to this
Agreement; and
(b) Buyer shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
7.2 Officer's Certificate. Buyer shall have furnished Seller with a
certificate, dated the Closing Date and duly executed by a duly authorized
manager of Buyer, in form and substance satisfactory to the Seller, certifying
that the conditions set forth in Sections 7.1(a) and (b) have been satisfied.
7.3 Deliveries. Buyer shall have complied with each and every one of
its obligations set forth in Section 9.2.
7.4 Consents. All of the consents required to be obtained pursuant
to Section 5.8 shall have been obtained.
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
8.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Seller
contained in this Agreement shall have been true and correct as of the
Effective Date and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent changes are permitted or contemplated pursuant to this
Agreement;
(b) Seller shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by it prior to or on the Closing Date; and
8.2 Officer's Certificate. Seller shall have furnished Buyer with a
certificate, dated the Closing Date and duly executed by a duly authorized
executive officer of Seller, to the effect that the conditions set forth in
Sections 8.1 (a) and (b) have been satisfied.
8.3 Deliveries. Seller shall have complied with each and every one
of its obligations set forth in Section 9.1.
8.4 Legal Requirements. Buyer and its counsel shall be satisfied (i)
that the consummation of the transactions contemplated herein comply with
applicable state and federal legal requirements, laws, and procedures
applicable to Buyer and Seller or the shareholders pursuant to which any of
them may be subject or bound and (ii) that by following the procedures and
making the Authorized Third Party Payments, Buyer will not succeed to any
liability of Seller.
ARTICLE IX
ITEMS TO BE DELIVERED AT THE CLOSING
9.1 Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer duly executed by Seller or such other signatory as may be required by the
nature of the document:
(a) Such xxxx of sale, assignment and other good and
sufficient instruments of sale, conveyance and transfer and assignment in form
and substance reasonably satisfactory to Buyer sufficient to sell, convey,
transfer and assign to Buyer all right, title and interest of Seller in and to
the Customer List;
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(b) Certified copies of resolutions, duly adopted by the
shareholders and board of directors of Seller which shall be in full force and
effect at the time of the Closing, authorizing the execution, delivery and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby;
(c) The Customer List in every embodiment of same together
with written certification confirmation by Seller that is retains no copy,
embodiment or other record of the date and information comprising the Customer
List in any form;
(d) The certificate referred to in Section 8.2;
(e) The Non-Compete Agreement executed by Seller; and
(f) The Escrow Agreement.
9.2 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller, duly executed by Buyer or other signatory as required by the nature of
the document:
(a) The Purchase Price;
(b) Certified copies of resolutions, duly adopted by the
directors of Buyer, which shall be in full force and effect at the time of the
Closing, authorizing the execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby; and
(c) The certificate referred to in Section 7.2.
9.3 Transfer Sales Tax. The Seller shall pay all the sales, use
transfer, recording or similar taxes (other than income taxes), if any, arising
out of the sale and transfer of the Customer List.
ARTICLE X
[RESERVED]
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller. Seller shall indemnify, defend and
hold harmless Buyer from and against any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including reasonable attorney's fees and costs (the "Losses")
that Buyer may incur or suffer, which arise, result from, or relate to: (i) any
inaccuracy of Seller's representations and warranties contained in this
Agreement or in any agreement, instrument or document entered into pursuant
hereto or in connection with the Closing, (ii) any breach of or failure by
Seller to perform any of its covenants or agreements contained in this
Agreement or in any
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agreement, instrument or document pursuant hereto or in connection with the
Closing, (iii) any violation of environmental or health and safety or other
laws (as in effect at the Closing) arising out of the ownership or operation of
Seller's business, including the real estate upon the business is located,
based on conditions existing prior to the Closing, regardless of when such
claim, liability or loss is asserted, claimed or sustained, or (iv) any other
liability or obligation of Seller presently existing or determined to be due
after the Closing Date regardless of when such liability actually arose or was
accrued. Seller shall not have any liability under this Section 11.1(a) unless
Buyer gives written notice to Seller asserting a claim for such Losses,
including reasonably detailed facts and circumstances pertaining thereto,
before the expiration of two (2) years from the Closing Date, except for claims
arising from breach of: (i) representations and warranties as to taxes and
environmental matters, which shall survive until the expiration of the
applicable statute of limitations.
11.2 Defense of Third Party Actions.
(a) Promptly after receipt of notice of any written assertion
of a claim, or the commencement of any action, suit, or proceeding, by a third
party against a party to this Agreement ("Third Party Action"), the party in
receipt of such notice who believes that it is entitled to indemnification
under this Article XI (the "Indemnified Party") shall give notice to the other
party hereto (the "Indemnifying Party") of such action. The failure of the
Indemnified Party to give such notice to the Indemnifying Party will not
relieve the Indemnifying Party of any liability hereunder unless it was
prejudiced thereby, nor will it relieve it of any Liability which it may have
other than under this Article XI.
(b) Upon receipt of a notice of a Third Party Action, the
Indemnifying Party shall have the right, at its option and at its own expense,
to participate in and be present at the defense of such Third Party Action, but
not to control the defense, negotiation or settlement thereof, which control
shall remain with the Indemnified Party, unless the Indemnifying Party makes
the election provided in paragraph (c) below.
(c) By written notice within 20 days after receipt of a notice
of a Third Party Action, an Indemnifying Party may elect to assume control of
the defense, negotiation and settlement thereof, with counsel reasonably
satisfactory to the Indemnified Party; provided, however, that the Indemnifying
Party agrees (a) to promptly indemnify the Indemnified Party for its expenses
to date, and (b) to hold the Indemnified Party harmless from and against any
and all Losses caused by or arising out of any settlement of the Third Party
Action approved by the Indemnifying Party or any judgment in connection with
that Third Party Action. The Indemnifying Party shall not in the defense of
the Third Party Action enter into any settlement which does not include as a
term thereof the giving by the third party claimant of an unconditional release
of the Indemnified Party, or consent to entry of any judgment except with the
consent of the Indemnified Party.
(d) Upon assumption of control of the defense of a Third Party
Action under paragraph (iii) above, the Indemnifying Party will not be liable
to the Indemnified Party hereunder for any legal or other expenses subsequently
incurred in connection with the defense of the Third Party Action, other than
reasonable expenses of investigation.
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(e) If the Indemnifying Party does not elect to control the
defense of a Third Party Action under paragraph (c), the Indemnifying Party
shall promptly reimburse the Indemnified Party for expenses incurred by the
Indemnified Party in connection with defense of such Third Party Action, as and
when the same shall be incurred by the Indemnified Party.
(f) Any party who has not assumed control of the defense of
any Third Party Action shall have the duty to cooperate with the party which
assumed such defense.
11.3 Miscellaneous.
(a) Buyer shall be entitled to indemnification hereunder
whether or not the matter giving rise to the applicable liability, payment,
obligation or expense was previously disclosed in writing to the Buyer prior to
the Closing Date.
(b) If any Loss is recoverable under more than one provision
hereof, the Indemnified Party shall be entitled to assert a claim for such Loss
until the expiration of the longest period of time within which to assert a
claim for Loss under any of the provisions which are applicable.
ARTICLE XII
MISCELLANEOUS
12.1 Termination of Agreement. This Agreement may be terminated at
any time on or prior to the Closing Date: (a) by the mutual consent of Seller
and Buyer; (b) by either Buyer or Seller if the Closing has not occurred on or
before September 3, 1997 unless such date is extended by Buyer, in which case,
the Closing shall not have occurred on or before September 15, 1997; or (c) by
Buyer at any time prior to five (5) days after Seller has supplied all of the
requested due diligence materials to Buyer if Buyer, prior to such date,
determines in its sole discretion that the results of its due diligence
investigation of Seller is in any way unsatisfactory. A termination pursuant
to this Section 12.1 shall not relieve any Party of any liability it otherwise
has for a breach of this Agreement. As a condition to any termination by Buyer
hereunder, all information and materials relating to the Business and to which
Buyer obtained access during the negotiations leading to, or following,
execution of this Agreement, and any other writings containing excerpts of such
materials or information, and any or all copies thereof, shall be delivered to
Seller.
12.2 Expenses. Each party hereto shall bear all of its expenses
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith.
12.3 Further Assurances. From time to time prior to, on and after the
Closing Date, each party hereto will execute all such instruments and take all
such actions as any other party, being advised by counsel, shall reasonably
request, without payment of further consideration, in connection with carrying
out and effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including without limitation the
execution and delivery of any and
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all confirmatory and other instruments in addition to those to be delivered on
the Closing Date, and any and all actions which may reasonably be necessary or
desirable to complete the transactions contemplated hereby. The parties shall
cooperate fully with each other and with their respective counsel and
accountants in connection with any steps required to be taken as part of their
respective obligations under this Agreement.
12.4 Survival of Representations and Warranties and Indemnities. All
covenants, agreements, representations and warranties of the parties under this
Agreement, in any Disclosure Memorandum, and any schedule or certificate or
other document delivered pursuant hereto shall survive the Closing.
ARTICLE XIII
DISPUTE RESOLUTION
13.1 Direct Discussion. In the event of any dispute, claim, question,
or disagreement arising out of or relating to this Agreement (a "Dispute"), the
parties involved in such Dispute shall use their best efforts to settle such
Dispute. To this effect, senior management of the parties involved shall
consult and negotiate with each other in good faith to attempt to reach a just
and equitable solution satisfactory to both parties.
13.2 Arbitration. In the event that the Dispute cannot be settled
under Section 13.1 above, the Dispute shall be submitted to binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and the procedures set forth below. In the event of any
inconsistency between the Rules of the American Arbitration Association and the
procedures set forth below, the procedures set forth below shall control.
Judgment upon the award rendered by the arbitrators may be enforced in any
court having jurisdiction thereof.
(a) Location. The location of the arbitration shall be in San
Diego County, California.
(b) Selection of Arbitrators. The arbitration shall be
conducted by a panel of three neutral arbitrators who are independent and
disinterested with respect to the parties, this Agreement, and the outcome of
the arbitration. Each party shall appoint one neutral arbitrator, and these
two arbitrators so selected by the parties shall then select the third
arbitrator. If one party has given written notice to the other party as to the
identity of the arbitrator appointed by the party, and the party thereafter
makes a written demand on the other party to appoint its designated arbitrator
within the next thirty days, and the other party fails to appoint its
designated arbitrator within thirty-one days after receiving said written
demand, then the arbitrator who has already been designated shall appoint the
other two arbitrators.
(c) Discovery. Unless the parties mutually agree in writing
to some additional and specific pre-hearing discovery, the only pre-hearing
discovery shall be (a) reasonably limited production of relevant and non-
privileged documents, and (b) the identification of witnesses to be called at
the hearing, which identification shall give the witness's name, general
qualifications and position, and a brief statement as to the general scope of
the testimony to be given by the witness.
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The arbitrators shall decide any disputes and shall control the process
concerning these pre-hearing discovery matters. Pursuant to the Rules of the
American Arbitration Association, the parties may request the arbitrator or
other person authorized by law to subpoena witnesses and documents for
presentation at the hearing.
(d) Case Management. Prompt resolution of any dispute is
important to the parties; and the parties hereto agree that the arbitration of
any dispute shall be conducted expeditiously. The arbitrators are instructed
and directed to assume case management initiative and control over the
arbitration process (including scheduling of events, pre-hearing discovery and
activities, and the conduct of the hearing), in order to complete the
arbitration as expeditiously as is reasonably practical for obtaining a just
resolution of the Dispute.
(e) Legal Representation. Counsel to the parties in
connection with the negotiation of and consummation of the transactions under
this Agreement shall be entitled to represent their respective party in any and
all proceedings under this Section 13.2 or in any other proceeding. Seller and
Buyer, respectively, waive the right and agree they shall not seek to
disqualify any such counsel in any such proceeding for any reason, including
but not limited to the fact such counsel or any member thereof may be a witness
in any such proceeding or possess or have learned of information of a
confidential or financial nature of the party whose interests are adverse to
the party represented by such counsel in any such proceeding.
(f) Remedies. The arbitrators may grant any legal or
equitable remedy or relief that the arbitrators deem just and equitable, to the
same extent that remedies or relief could be granted by a state or federal
court, provided however, that no punitive damages may be awarded. The decision
of any two of the three arbitrators appointed shall be binding upon the
parties.
(g) Expenses. The expenses of the arbitration, including the
arbitrators' fees, expert witness fees, and attorney's fees, may be awarded to
the prevailing party, in the discretion of the arbitrators, or may be
apportioned between the parties in any manner deemed appropriate by the
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses, both parties shall share equally in the
payment of the arbitrators' fees as and when billed by the arbitrators.
(h) Confidentiality. Except as set forth below, the parties
shall keep confidential the fact of the arbitration, the dispute being
arbitrated, the decision of the arbitrators, and any documents produced by the
parties in the course of the arbitration. Notwithstanding the foregoing, the
parties may disclose information about the arbitration to persons who have a
need to know, such as directors, trustees, management employees, witnesses,
experts, investors, attorneys, lenders, insurers, and others who may be
directly affected. Once the arbitration award has become final, if the
arbitration award is not promptly satisfied, then the prevailing party may,
notwithstanding the foregoing, disclose information about the arbitration only
to the extent necessary to obtain judicial enforcement of the award.
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ARTICLE XIV
GENERAL PROVISIONS
14.1 Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective representative, successors and assigns.
No party hereto may assign any of its rights or delegate any of its duties
hereunder without the prior written consent of the other party, and any such
attempted assignment or delegation without such consent shall be void. Seller
agrees not to unreasonably withhold its consent to any assignment by Buyer of
its rights hereunder prior to Closing to a corporation or other entity
controlled by Buyer, provided that (a) such assignee will assume all
obligations of Buyer hereunder, without Buyer being released, and (b) such
assignment will not, in Seller's reasonable judgment, delay in any material way
or make more doubtful the Closing.
14.2 Amendments; Waivers. The terms, covenants, representations,
warranties and conditions of this Agreement may be changed, amended, modified,
waived, discharged or terminated only by a written instrument executed by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision of this Agreement shall in no manner
affect the right of such party at a later date to enforce the same. No waiver
by any party of any condition or the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any
other provision, term, covenant, representation or warranty of this Agreement.
14.3 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by
Federal Express or a similar overnight courier service, expenses prepaid, or,
if sent by telex, graphic scanning or other facsimile communications equipment,
delivered by such equipment, addressed as set forth below:
(a) If to Buyer, then to:
Southwestern Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X. X. Xxxxx, III, President
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
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and to:
Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(b) If to Seller, then to:
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (___) _____________
(c) With a copy to:
Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
(d) With a copy to:
Xxxxxx Xxxxx
00000 Xxx Xxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Any party may alter the address to which communications are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section 14.3 providing for the giving of notice.
14.4 Announcements. Neither party shall make any written or other
announcement regarding this Agreement or any of its terms without the prior
written consent of the other party.
14.5 Non-Disclosure of Purchase Price. Seller and Buyer shall keep
confidential the amount of and payment terms of the Purchase Price.
Notwithstanding the foregoing, either party may disclose the terms of the
Purchase Price to persons who have a need to know, such as directors, trustees,
management, investors, attorneys, lenders, accountants or insurers.
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14.6 Captions. The captions of Articles and Sections of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any of the provisions of this Agreement.
14.7 Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of California.
14.8 Entire Agreement. This Agreement and the other documents
delivered hereunder constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof, and supersedes
all prior agreements, understandings, inducements or conditions, express or
implied, oral or written, relating to the subject matter hereof, except as
herein contained. The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
14.9 Execution; Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized signatories, all as of the day and year first
above written.
SOUTHWESTERN ICE, INC., a Texas corporation
By: /s/ X. X. Xxxxx, III
-----------------------------------------
X. X. Xxxxx, III, President
CJC, INC., a California corporation
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx, President
19
EXHIBIT A
COVENANT NOT TO COMPETE
This COVENANT NOT TO COMPETE ("Covenant") is made and effective on
______________, 1997, by and between Southwestern Ice, Inc., a Texas
corporation ("Company"), and CJC, Inc., a California corporation ("CJC") and is
made with reference to the following facts:
A. The Company and CJC have entered into an Asset Purchase Agreement
(the "Asset Purchase Agreement"), providing for the Company to purchase certain
assets of CJC.
B. The Company is unwilling to enter into the Asset Purchase
Agreement unless CJC agrees to enter this Covenant.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
representations and warranties contained herein and in the Asset Purchase
Agreement, the parties agree as follows:
1. NON-COMPETITION.
(a) Covenant Not To Compete.
(i) CJC shall not at any time within the five (5) year
period immediately following the date of this Covenant ("Restricted Period),
directly or indirectly, in any territory in the United States or any foreign
country in which the Company, any subsidiary of the Company, Packaged Ice,
Inc., a Texas corporation, or any subsidiary of Packaged Ice, Inc.
(collectively, the "Company Entities") are doing business or have actually
investigated doing business or where their products are sold as of the date
hereof:
(a) engage in, or have any interest in any person,
firm, corporation, or business (whether as a shareholder, creditor, partner,
consultant, holder of any beneficial interest or otherwise other than as a
beneficial holder of not more than 5 percent of the outstanding voting stock of
a company having at least 500 holders of voting stock) that engages in the
business of producing, selling or distributing ice, which on the date hereof is
conducted by the Company Entities (the "Business"), as long as the Company
Entities, or any transferee of all or substantially all of the assets or stock
of any of the Company Entities ("Transferee"), shall engage in the Business or
similar activity during such Restricted Period;
(b) attempt to hire any person who is employed
by the Company Entities, assist in the hiring by any other entity or person of
any person who is at the time employed by the Company Entities or encourage any
such employee to terminate his or her relationship with the Company Entities;
or
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(c) solicit or encourage any customer of the
Company Entities to terminate its relationship with the Company Entities or to
conduct with any other person any business that such customer conducts with the
Company Entities.
(b) Rights and Remedies Upon Breach. If CJC commits a breach
of, or threatens to commit a breach of, Section 1(a) the Company shall have the
following rights and remedies, each of which shall be independent of the other
and severally enforceable, and all of which shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company under law or in
equity:
(c) Specific Performance. CJC recognizes and agrees that any
violation of Section 1(a) may not be reasonably or adequately compensated in
damages and that, in addition to any other relief to which the Company may be
entitled by reason of such violation, the Company shall also be entitled to
permanent and temporary injunctive and equitable relief and, pending
determination of any dispute with respect to such violation, no bond or
security shall be required in connection therewith. Without limiting the
generality of the foregoing, CJC specifically acknowledges that a showing by
the Company of any breach of any provision of Section 1(a) shall constitute,
for the purposes of all judicial determinations of the issue of injunctive
relief, conclusive proof of all of the elements necessary to entitle the
Company to interim and permanent injunctive relief against CJC with respect to
such breach. If any dispute arises with respect to Section 1(a) without
limiting in any way any other rights or remedies to which the Company may be
entitled, CJC agrees that Section 1(a) shall be enforceable by a decree of
specific performance.
(d) Severability of Covenants. If any part of this Section 1 is
held by a court of competent jurisdiction or any other governmental authority
to be invalid, void, unenforceable or against public policy for any reason, the
remainder of such provision shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and such court or authority shall
be empowered to substitute, to the extent enforceable, provisions similar
thereto or other provisions so as to provide to the Company the benefits
intended by such provisions, to the fullest extent permitted by applicable law.
2. PERMITTED ACTIVITIES. Provided one hundred percent (100%) of
its requirements for block ice are purchased from Company Entities at their
standard prices for block ice, CJC may engage in the following activities only
within the territories in which such activities are otherwise forbidden to CJC
under the introductory clause to Section 1(a) above:
(a) The fulfillment of supply contracts for block ice related
to pier construction at U.S. government facilities; and
(b) The manufacture of artificial snow utilizing block ice for
snowboarding ramps.
3. TERM. The term of this Covenant is to be five (5) years from the
date of this Covenant.
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4. ASSIGNMENT. No rights under this Covenant shall be assignable
nor duties delegable by either party, except that the Company may assign and
delegate any of its rights and duties hereunder to a Transferee. Nothing
contained in this Covenant is intended to confer upon any person or entity,
other than the parties hereto, their successors in interest and Transferees,
any rights or remedies under or by reason of this Covenant unless expressly so
stated to the contrary.
5. CONSTRUCTION. This Covenant shall be construed and enforced in
accordance with the laws of the State of California.
6. SUCCESSORS AND ASSIGNEES. All covenants, representations,
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of their respective heirs, executors, administrators,
personal representatives, successors, and Transferees.
7. UNENFORCEABILITY. It is the intention of the parties hereto that
the provisions of this Covenant shall be enforced to the fullest extent
permissible under all applicable laws and public policies, but that the
unenforceability or the modification to conform with such laws or public
policies of any provision hereof shall not render unenforceable or impair the
remainder of the Covenant. Accordingly, if any provision shall be determined
to be invalid or unenforceable either in whole or in part, this Covenant shall
be deemed amended to delete or modify, as necessary, the invalid or
unenforceable provisions to alter the balance of this Covenant in order to
render the same valid and enforceable.
8. COUNTERPARTS. This Covenant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
9. ATTORNEYS' FEES. If an action is instituted to enforce any of
the provisions of this Covenant, the prevailing party in such action shall be
entitled to recover from the losing party its or his reasonable attorneys' fees
and costs as set by the court.
10. NOTICES. Any notice required or permitted to be given under this
Covenant shall be sufficient if such notice is in writing, delivered personally
or sent by registered or certified mail, return receipt requested, addressed as
follows:
To CJC : CJC, Inc.
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
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To the Company: Southwestern Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X. X. Xxxxx, III, President
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
and to: Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Notice shall be deemed given on the date of personal delivery or the date it is
placed, postage prepaid, in a depository for United States Mail located within
the State of California.
11. ENTIRE AGREEMENT. This Covenant contains the entire agreement of
the parties with respect to CJC's non-competition. This Covenant supersedes
all other agreements whether oral or in writing, hereto before made or existing
between the Company and CJC relating to CJC's non-competition. This Covenant
may not be changed orally, but may be changed only by an agreement in writing
signed by the party against whom enforcement of any change, modification,
extension, waiver or discharge is sought.
12. WAIVER. The waiver by either party of a breach of any provision
of this Covenant shall not operate or be construed as a waiver of any
subsequent breach.
CJC: COMPANY:
CJC, INC., a California corporation SOUTHWESTERN ICE, INC., a Texas
corporation
By:
--------------------------------
Xxxxxx X. Xxxxx, President By:
--------------------------------
X. X. Xxxxx, III, President
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EXHIBIT B
PLEDGE AND ESCROW AGREEMENT
This Pledge and Escrow Agreement (this "Escrow Agreement"), dated as of
_____________, 1997, is entered into by and among Packaged Ice, Inc., a Texas
corporation ("PI") and Southwestern Ice, Inc., a Texas corporation ("SWI"),
Xxxxxx Xxxxxxx, an individual ("Xxxxxxx") and CJC, Inc., a Nevada corporation
("CJC") and PI, as escrow agent and pledgeholder (the 'Escrow Agent'). PI and
SWI are respectively parent and wholly own subsidiary and are sometimes herein
referred to as the "Texas Parties". Xxxxxxx and CJC are related parties and
are sometimes herein referred to as the "California Parties".
RECITALS:
A. PI and A Alaska Ice, Inc., a California corporation, ("Alaska")
have entered into that certain Agreement and Plan of Reorganization dated
___________, 1997 (the "Reorganization Agreement"). Pursuant to the
Reorganization Agreement, PI will purchase substantially all of the assets of
Alaska and Alaska will receive shares of PI Common Stock, $0.01 par value per
share (the "Shares").
B. SWI, CMC Ice, Inc. a California corporation ("CMC") and Xxxxxxx
have entered into that certain Asset Purchase Agreement dated ____________,
1997, (the "Asset Agreement"). Pursuant to the Asset Agreement, SWI will
purchase the ice business assets of CMC including assets owned by Xxxxxxx
individually and used in the ice business of CMC. Xxxxxxx and CMC will receive
cash in such sales ("Asset Cash").
C. SWI and CJC, Inc., a California corporation, ("CJC") have entered
into that certain Asset Purchase Agreement, dated _________, 1997 (the "List
Agreement"). Pursuant to the List Agreement, SWI will purchase an ice business
customer list from CJC and CJC will receive cash in such sale ("List Cash").
D. Pursuant to each of the Agreements referenced in Recitals A and
B, the California Parties and the Texas Parties, as the case may be, have
agreed that, at the closings held under each of such Agreements, (collectively
the "Closing"), the California Parties will cause to be deposited into escrow a
portion of the consideration received (Shares and Asset Cash ) to be received
by said California Parties. The Shares and Asset Cash shall be pledged to PI
to secure the indemnification of PI, as Buyer under the Reorganization
Agreement and SWI, as Buyer under the Asset Agreement, which is provided for in
Articles XI of the Reorganization Agreement and Asset Agreement. such deposit
and pledge of Shares and Asset Cash shall be made, held and disbursed as
provided in the Pledge and Escrow Agreement (the "Share/Asset Cash Pledge
Agreement"), the form of which is attached to the Reorganization Agreement and
Asset Agreement as Exhibit D to said agreements.
EXHIBIT B
Page 1 of 9
24
The Share/Asset Pledge Agreement shall be delivered by Alaska, CMC, Xxxxxxx and
the Texas Parties at the Closings under the Reorganization Agreement and Asset
Agreement.
E. It is a condition to the consummation of the transactions
contemplated by the List Agreement that at or prior to the Closing, this Escrow
Agreement be entered into by the parties hereto.
F. It is understood and agreed that the List Cash pledged
hereunder (the "Escrow Fund") to PI shall constitute security for the payment,
liquidation or direct satisfaction of indemnity claims ("Claims") for which any
of the Texas Parties is entitled to indemnity from and against any of the
Sellers, Shareholders and California Parties under any of the Reorganization
Agreement , Asset Agreement and List Agreement, without regard to whether or
not the source of the Escrow Fund was received under or pursuant the Agreement
under which a Claim is being asserted.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth and of other good and valuable
consideration, the parties hereto agree as follows:
1. Escrow and Pledge of List Cash.
a. CJC has caused to be delivered to Escrow Agent the
aggregate sum of $260,000 in accordance with the List Agreement. The aforesaid
sum has been deposited in the Escrow with the Escrow Agent and is hereby
pledged by CJC to the Texas Parties. CJC hereby grants a security interest in
said cash to the Texas parties.
b. The deposit and Pledge of the List Cash by CJC shall be
referred to as the Escrow Fund. The Escrow Agent shall hold the Escrow Fund
not as the agent of any of the California Parties, but as pledgeholder with
respect to the pledge of same pursuant to this Escrow Agreement. The Escrow
Fund shall include the property referred to in Section 1a above. The Escrow
Fund shall serve to secure the indemnification obligations of the California
Parties to the Texas Parties under Article XI respectively of the
Reorganization Agreement and the Asset Agreement and Recital E above with
respect to a notice of claim (a "Notice of Claim") delivered to any of the
California Parties under the Reorganization Agreement and Asset Agreement
within one (1) year from the date of the Closing. Any Notice of Claim shall be
deemed effective when delivered to the California parties and the Escrow Agent
within one (1) year from the date of the Closing. The Escrow Fund may be held
and commingled with the escrow fund held under the agreements referred to in
Recitals A and B hereof.
c. The deposit hereunder by the California Parties shall in
no way limit the indemnification obligations of said parties under the
Reorganization Agreement, Asset Agreement or List Agreement.
d. The Escrow Fund shall be available and used to satisfy
Claims arising under any of the Reorganization Agreement and Asset Agreement
notwithstanding the fact that any portion of the
EXHIBIT B
Page 2 of 9
25
Escrow Fund so used shall have been deposited by one of the California Parties
under one of said Agreements under which no indemnification Claim has arisen or
is then pending. The California Parties hereby agree that with respect to the
use and application of the Escrow Fund, their liabilities and obligations are
joint and several and acknowledge that the deposit and Pledge hereunder by them
is made on that basis. The California Parties shall have the right of
contribution among themselves; however, in pursuing any such right, the
California Parties shall not involve or join in any action any of the Texas
Parties or seek in any manner, through judicial action or otherwise, to attach,
levy or otherwise restrain the disbursement or application of the Escrow Fund.
2. Restriction on Transferability; Release From Pledge and
Escrow; Proceeds.
a. No part of the Escrow Fund shall be released from Escrow
and the Pledge except as follows upon the later of (a) 120 days from the date
of the Closing or (b) the date upon which all claims in respect of which a
Texas Party has submitted Notices of Claim prior to the end of the above-
referenced 120 days shall have been disposed of, the Escrow Agent shall release
from the Escrow and shall deliver to the order of the California Parties the
balance of the List Cash, if any, remaining in the Escrow and the List Cash
shall thereupon cease to be subject to the Pledge and this Escrow Agreement.
b. With the prior approval of the Texas Parties, upon the
request of a seller under the Reorganization Agreement or under the Asset
Agreement, the Escrow Fund may be disbursed to pay claims, debts and
obligations of any of said sellers or of the California Parties.
3. Requirements for Notice of Claim. Any Notice of Claim
filed by a Texas Party shall specify in reasonable detail the facts and
circumstances of the claim; the basis on which a California Party is believed
to have liability therefor; and the estimated amount of loss alleged to have
been suffered or liability incurred by the Texas Party as a result thereof.
Such estimates of loss or liability (while not binding on the Texas Party)
shall be prepared by the Texas Party on a reasoned basis consistent with the
facts and circumstances out of which the claim arose.
4. Satisfaction of Claims.
a. Claims for Indemnification. The following procedures
shall prevail as to satisfaction of a Claim for indemnification in favor of the
Texas Parties:
(i) Uncontested Claims. If the Escrow Agent is
furnished by the Texas Party with a Notice of Claim, and no notice of objection
to such claim (a "Notice of Objection") is furnished by the California Parties
to the Escrow Agent within 30 days of the date of receipt of the Notice of
Claim by the Escrow Agent (which the Escrow Agent may assume to be the same as
the date of receipt of the Notice of Claim by the California Parties); or
(ii) Agreed Claims. If the Escrow Agent shall have been
furnished by the California Parties with a timely Notice of Objection, upon
receipt by the Escrow Agent of a notice (a "Notice of Resolution") that the
parties have subsequently agreed upon, resolved or compromised
EXHIBIT B
Page 3 of 9
26
the claim specified in the Notice of Claim (which Notice of Resolution shall be
executed by the Texas Parties and acknowledged by the California Parties); or
(iii) Judicial Awards. If the Escrow Agent shall have
been furnished by the California Parties with a timely Notice of Objection and
shall subsequently be furnished with a copy of an award (an "Award") made by an
arbitrator or court of competent jurisdiction with respect to the Claim
specified in the Notice of Claim, and upon receipt by the Escrow Agent of an
opinion of counsel for Texas Parties to the effect that the time for filing an
appeal, an application for correction of the Award or a petition to vacate or
correct the Award has passed, and that no such appeal, application or petition
has been filed, or that the parties have waived such rights; thereupon, the
Escrow Agent shall deliver to the Texas Parties that amount of the Escrow Fund
which is equal to the amount specified in (i) the Notice of Claim, (ii) the
Notice of Resolution or (iii) the Award, as the case may be.
The Escrow Agent may deliver cash to the Texas Parties in satisfaction
of a Claim.
b. Government Creditors. Notwithstanding Section 4a hereof,
Escrow Agent is irrevocably authorized and instructed hereby to pay directly
the claims of any Government Creditor of any of the California Parties. Escrow
Agent shall be entitled to disburse any such payment at any time three (3)
business days following the date Escrow Agent is instructed in writing to make
such payment by PI, which shall concurrently provide the California Parties
with a copy of any such written instruction.
5. Concerning the Escrow Agent.
a. Under no circumstances shall the Escrow Agent be liable to
the California Parties for any act it may take in its capacity as Escrow Agent,
or for the failure to take any action, or for any damage, loss or expenses
suffered or incurred resulting therefrom or in acting hereunder, except only
for acts of gross negligence or willful misconduct.
b. The Escrow Agent may consult with counsel of its choice
and may rely in good faith on advice of such counsel.
c. The California Parties each shall indemnify and hold the
Escrow Agent harmless in respect of any and all losses, costs, expenses,
liabilities, judgments, assessments, penalties, damages, deficiencies, suits,
actions, proceedings or demands, and attorneys fees and expenses incident
thereto resulting from any action or refusal to act by the Escrow Agent in
accordance with the instructions of any of the California Parties. The Escrow
Agent shall promptly notify the California Parties of any asserted liability
for which the Escrow Agent would be entitled to indemnification by the
California Parties, and the California Parties and their legal representatives
shall have, at the election of the California Parties, a right to compromise or
defend any such matter involving asserted liability, through counsel of their
own choosing, at their expense; provided, however, that the California Parties
shall indemnify the Escrow Agent, its officers, employees and agents, against
any damage resulting from the failure to pay any claims on all such litigation
pending. In the event any
EXHIBIT B
Page 4 of 9
27
of the California Parties undertakes to compromise or defend any such
liability, the California Parties shall notify the Escrow Agent in writing
promptly of their intention to do so, and the Escrow Agent shall cooperate with
the California Parties and their counsel in the compromising of or the
defending against any such liabilities or claims, at the expense of the
California Parties.
d. The Escrow Agent may resign from its duties and
obligations hereunder by giving at least 30 days advance notice in writing of
when such resignation shall take effect. Upon any resignation or discharge of
the Escrow Agent, the Texas Parties and California Parties shall jointly
designate a new Escrow Agent. If the Texas Parties and California Parties
cannot promptly agree upon a new Escrow Agent, a new Escrow Agent shall be
appointed by the Presiding Judge of the Superior Court for the County of San
Diego upon petition by PI. If the Escrow Agent is served with conflicting
demands which cannot be promptly resolved, the Escrow Agent shall interplead
the matter by petition in the Superior Court for the County of San Diego, which
shall resolve such matter. The parties hereto consent to such proceeding being
commenced and shall indemnify and hold the Escrow Agent harmless from any
expense or cost including attorneys' fees, incurred in such action.
6. Fees of the Escrow Agent. The Escrow Agent shall charge
no fees for its services in acting hereunder.
7. Miscellaneous.
a. Successors. This Escrow Agreement shall be binding upon
and shall inure to the benefit of the parties herein and their respective
heirs, executors, successors and assigns.
b. Amendment, Etc. This Escrow Agreement may not be
released, discharged, abandoned, changed or modified in any manner, except by
an instrument in writing signed on behalf of each of the parties hereto by
their duly authorized officers or representatives. The failure of any party
hereto to enforce at any time any provision of this Escrow Agreement shall in
no way be construed to be a waiver of such provision, nor in any way to affect
the validity of this Escrow Agreement or any part thereof or the right of any
party thereafter to enforce each and every such provision. No waiver of any
breach of this Escrow Agreement shall be held to be a waiver of any other or
subsequent breach.
c. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
telecopier (confirmed thereafter by such certified mail) to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice:
EXHIBIT B
Page 5 of 9
28
(a) if to the Texas Parties or Escrow Agent:
Packaged Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx, III, President
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
and to:
Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(b) if to the California Parties:
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (___) ______________
and to:
Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Notice so given shall (in the case of notice so given by mail) be deemed to be
given and received on the fifth calendar day after posting and (in the case of
notice so given by telecopier or personal delivery) on the date of actual
transmission or (as the case may be) personal delivery.
EXHIBIT B
Page 6 of 9
29
d. Defined Terms. The Capitalized terms used herein without
definition and which are defined in the Reorganization Agreement, Asset
Agreement or List Agreement shall have the respective meanings herein as
defined in said agreements.
e. Captions. The captions appearing in this Escrow Agreement
are inserted only as a matter of convenience and as a reference and in no way
define, limit or describe the scope or intent of this Escrow Agreement or any
of the provisions hereof.
f. Governing Law. This Escrow Agreement shall be construed
and the rights of the parties hereafter shall be governed by the laws of the
State of California.
g. Counterparts. This Escrow Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
h. Fractional Shares. No fractional shares of the Shares
shall be issued or delivered pursuant to any provision of this Escrow
Agreement. In making delivery of the Shares to PI or Alaska, the Escrow Agent
shall round off any fractional share resulting from any calculation hereunder
to the nearer whole share.
i. Distribution by Consent. Any other provision of this
Escrow Agreement to the contrary notwithstanding, the Escrow Agent shall
distribute any assets held in Escrow in such manner at such time or times as
the Texas and California Parties may, in writing, jointly direct.
j. Security Agreement. This Escrow Agreement shall
constitute a Security Agreement within the meaning of the California Commercial
Codes.
k. Termination. This Escrow Agreement shall terminate when
the Escrow Fund has ceased to be subject to this Escrow Agreement.
l. Tax Identification Number. Each party hereto, except the
Escrow Agent, shall provide the Escrow Agent with its Tax Identification Number
("T.I.N.") as assigned by the IRS. All interest and other income earned under
the Escrow Agreement shall be allocated and paid as provided hereunder and
reported by the recipient to the IRS as having been so allocated and paid.
EXHIBIT B
Page 7 of 9
30
IN WITNESS WHEREOF, the parties have executed this Reorganization
Agreement as of the date set forth herein.
CJC, INC. SOUTHWESTERN ICE, INC.
By: By:
------------------------------- ------------------------------
Its: Its:
------------------------------- ------------------------------
PACKAGED ICE, INC., as Escrow Agent
PACKAGED ICE, INC.
By: By:
------------------------------- ------------------------------
Its: Its:
------------------------------- ------------------------------
------------------------------------
Xxxxxx Xxxxxxx
EXHIBIT B
Page 8 of 9
31
The undersigned, A Alaska Ice, Inc., CMC Ice, Inc., Xxxxxx Xxxxxxx and Xxxxx
Xxxxxxx for valuable consideration, the adequacy and receipt of which is hereby
acknowledged, hereby undertake, agree and confirm to the Texas Parties that the
Shares and the Asset Cash, defined in, deposited under and pledged by the
undersigned pursuant to the Share/Asset Cash Pledge Agreement to PI to secure
the indemnification of PI, as Buyer under the Reorganization Agreement and SWI,
as Buyer under the Asset Agreement, which indemnification is provided for in
Articles XI of the Reorganization Agreement and Asset Agreement, shall be
deemed pledged hereunder and under the Share/Asset Cash Pledge Agreement to
secure the indemnification of SWI, as Buyer under the List Agreement, which
indemnification is provided for in Article XI of the List Agreement. The
Share/Asset Cash Pledge Agreement shall be deemed and is hereby amended to so
provide.
This Escrow Agreement and the Share/Asset Cash Pledge Agreements shall operate
and be interpreted to so provide.
Upon terminating of this Escrow Agreement the Escrow Fund, if any, shall be
disbursed as follows: (a) Up to 100% of the original sum deposited by CJC with
Escrow Agent hereunder shall be disbursed by CJC and (b) the balance, if any,
to CMC Ice, Inc. and A Alaska Ice, Inc. as they shall instruct PI in writing.
A Alaska Ice, Inc. CMC Ice, Inc.
By: By:
------------------------------- ------------------------------
-------------------------------------
Xxxxxx Xxxxxxx CJC, Inc.
-------------------------------------
Xxxxx Xxxxxxx By:
------------------------------
Agreed:
Packaged Ice, Inc.
By:
----------------------------------
X.X. Xxxxx III
(As a California Party, Buyer and Esrow Agent)
Southwestern Ice, Inc.
By:
----------------------------------
X.X. Xxxxx III
EXHIBIT B
Page 9 of 9
