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EXHIBIT 10.12
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
March 26, 1998, by and among Packaged Ice Southeast, Inc., a Texas corporation
(the "Buyer"), Cumberland Gas and Ice, Inc., a Georgia corporation (the
"Seller"), S. Xxxxx Xxxxx, an individual residing in the State of Georgia, and
Xxxxx Xxx Xxxxx, an individual residing in the State of Georgia, who together
own all of the outstanding shares of Seller (together, the "Shareholders").
PRELIMINARY STATEMENTS
Seller is engaged in the production, distribution and sale of packaged
ice products (such business being referred to herein as the "Seller's Business"
or the "Business"); and
Seller is desirous of selling to Buyer, and Buyer is desirous of
purchasing, certain assets of Seller's Business, upon the terms and conditions
hereafter set forth; and
The Seller and Shareholders are desirous of entering into a
noncompetition agreement and other ancillary agreements.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties hereafter set forth, the
parties hereby agree as follows:
I. DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Section I shall have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined.
"Assets" shall mean the First Closing Assets and the Brunswick
Property. The Assets shall not include the Excluded Assets (defined
hereinbelow).
"Assigned Leases" shall have the meaning set forth in Section 3.7 of
this Agreement.
"Xxxx of Sale" shall refer to the Xxxx of Sale conveying title to the
Assets from Seller to Buyer attached to this Agreement as Exhibit A.
"Brunswick Property" shall have the meaning set forth in Section 2.2
of the Agreement.
"Encumbrances" shall have the meaning set forth in Section 3.4 of
this Agreement.
"Excluded Assets" shall have the meaning set forth in Section 2.3 and
Schedule 2.3 of this Agreement.
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"First Closing " shall have the meaning set forth in Section 7.1 of
this Agreement.
"First Closing Assets" shall have the meaning set forth in Section 2.1
of this Agreement.
"First Closing Date" shall have the meaning set forth in Section 7.1
of this Agreement.
"First Closing Real Property" shall mean the real property to be
conveyed to Buyer on the First Closing Date, and the legal description of which
is in Schedule 2.1 and is attached to this Agreement and is incorporated
herein.
"Financial Statements" shall have the meaning set forth in Section 3.3
of this Agreement.
"Governmental Authority" shall mean any federal, state, local, foreign
or other governmental agency, department, commission, board, bureau,
instrumentality or body.
"Intangible Assets" shall mean all patents, trademarks, trademark
licenses, trade names, brand names, slogans, copyrights, reprint rights,
franchises, licenses, authorizations, inventions, processes, know-how,
formulas, trade secrets and other intangible assets of, and only of, the
Business (together with all pending applications, continuations-in-part and
extensions for any of the above).
"Leased Real Property" shall have the meaning set forth in Section 2.1
of this Agreement.
"Letter of Credit" shall have the meaning set forth in Section 2.10 of
this Agreement.
"Macon Lease" shall mean the lease entered into by and between
Mini-Food Stores, Inc. and Cumberland Gas and Ice, Inc. on June 10, 1992 for
real property located in Macon, Georgia.
"Real Property" shall mean the First Closing Real Property and the
Brunswick Property.
"Seller's Disclosure Memorandum" shall mean a memorandum prepared by
the Seller and Shareholders and delivered to Buyer that lists all disclosures
by the Seller and Shareholders concerning the Assets and the Business which are
the subject of this Agreement.
"Second Closing" shall have the meaning set forth in Section 7.1 of
this Agreement.
"Second Closing Date" shall have the meaning set forth in Section 7.1
of this Agreement.
"Taxes" shall mean all excise, added value, sales, use, real and
personal property, occupancy, business and occupation, mercantile, real estate,
or other tax (including interest and penalties thereon and including estimated
taxes thereof).
"Tifton Lease" shall mean that certain Lease entered into on August
21, 1995 by and between Cumberland Gas and Ice, Inc. and Georgia Cold Storage
Co. for real property located in Tifton, Georgia.
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II. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF ASSETS AT FIRST CLOSING. Subject to the
terms and conditions of this Agreement, and in reliance upon the
representations and warranties of Seller contained herein, Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer agrees to purchase, at
the First Closing, the personal property, Intangible Assets, contracts and
rights of Seller related to the Seller's Business, including but not limited to
those items which are described on Schedule 2.1 attached hereto and
incorporated herein by reference, all of the goodwill of Seller's Business
associated therewith, all of the First Closing Real Property together with a
title insurance policy or policies (with premiums paid by Seller in an amount
equal to the value allocated to each parcel or leasehold interest provided in
Schedule 2.8 attached hereto, and otherwise in form and substance satisfactory
to Buyer) (collectively, the "First Closing Assets"), free and clear of
Encumbrances.
2.2 PURCHASE AND SALE OF ASSETS AT SECOND CLOSING. Subject to
the terms and conditions of this Agreement, and in reliance upon the
representations and warranties of Seller contained herein, Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer agrees to purchase, at
the Second Closing, the real property known as the Brunswick Property as more
particularly described in the legal description described in Schedule 2.2
attached hereto, as restored in accordance with the plans and specifications
set forth in Schedule 2.2 attached hereto, together with a title insurance
policy (with premium paid by Seller in an amount equal to, and otherwise in
form and substance satisfactory to Buyer), (the "Brunswick Property"), free and
clear of Encumbrances. Certain improvements constructed on the Brunswick
Property have been destroyed by an insured casualty event. Ranger Insurance
("Insurer") has agreed to pay the replacement costs of the destroyed equipment
and improvements which it estimates at $450,000 ("Insurance Funds") and such
funds will be used exclusively for the repair and restoration of improvements
at the Brunswick Property. In connection with such repair and restoration,
Seller represents and warrants that it has commenced construction to rebuild
the ice manufacturing plant at the Brunswick Property in accordance with the
plans and specifications set forth in Schedule 2.2 attached hereto. Seller
agrees to take such action as is necessary to complete such construction by
April 15, 1998, and to consult with Buyer as frequently as Buyer desires with
respect to the Contractor's work. In addition, Seller agrees to submit any and
all change orders requested by Buyer, and the cost of such change orders shall
be added to the Second Closing Purchase Price. Seller represents and warrants
that the Insurance Funds are sufficient to cover all costs necessary to rebuild
the ice manufacturing plant at the Brunswick Property in accordance with the
plans and specifications set forth in Schedule 2.2 attached hereto, and to
Buyer's satisfaction. If the construction on the Brunswick Property is not
complete by April 15, 1998, the Second Closing Purchase Price shall be reduced
by an amount of $2,500 per day, through April 30, 1998, then shall be reduced
by an amount of $5,000 per day thereafter, such sum being agreed upon as
liquidated damages for the failure of Seller to perform the duties, liabilities
and obligations imposed upon it by the terms and provisions of this Section 2.2
and because of the difficulty, inconvenience and uncertainty of ascertaining
actual damages. The Second Closing shall take place within ten (10) days after
completion of the construction on the Brunswick Property, to Buyer's reasonable
satisfaction.
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2.3 EXCLUDED ASSETS. The Assets shall not include, and Buyer
shall not acquire, the assets and properties described in Schedule 2.3 attached
hereto (the "Excluded Assets").
2.4 PURCHASE PRICE.
(a) First Closing Assets. The purchase price for the
First Closing Assets shall be THREE MILLION THREE HUNDRED THOUSAND
DOLLARS ($3,300,000.00).
(b) Brunswick Property. The purchase price for the
Brunswick Property shall be ONE MILLION DOLLARS ($1,000,000).
The Purchase Price shall be payable in accordance with Section 2.6 of
this Agreement.
2.5 ASSUMPTION OF LIABILITIES. It is hereby agreed and
understood that Buyer is assuming no liabilities whatsoever of Seller, and the
Assets will be conveyed free and clear of all Encumbrances arising out of
Seller's Business or otherwise. Seller shall be responsible for all employment
related expenses which accrue before the First Closing Date, including, without
limitation, salaries, wages, accrued vacation pay, sick pay or leave,
unemployment compensation, ERISA obligations, pension and profit sharing plans,
income tax withholding, and Social Security taxes. Seller will continue to be
responsible for all tort, contractual, statutory and environmental liabilities
(including, without limitation, all cleanup requirements) relating to (a) the
First Closing Assets existing on or prior to the First Closing Date, and (b)
the Brunswick Property existing on or prior to the Second Closing Date, and
shall discharge all accounts payable and other liabilities and obligations
(save and except Seller's obligations for the construction of the Brunswick
Property) promptly after the First Closing, and shall discharge all liabilities
and obligations relating to the construction of the Brunswick Property prior to
the Second Closing. Seller will terminate its employees related to the
Business as of the First Closing Date, and Buyer may thereafter hire any or all
of such employees. The parties agree that Buyer is not assuming any of
Seller's pension or profit sharing plans, and Seller shall remain responsible
therefor.
2.6 PAYMENT OF PURCHASE PRICE.
(a) The purchase price for the First Closing Assets shall
be payable as follows:
(i) the First Closing Date payoff amounts of all
current and long-term interest bearing debt and capital leases
(including any unpaid interest and prepayment penalties) shall
be paid directly to Seller's creditors;
(ii) the remaining cash shall be paid to Seller;
(b) The purchase price for the Brunswick Property (less
any adjustments made for Liquidated Damages) shall be paid to Seller
on the Second Closing Date after the
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conditions set forth in Section 2.2 and the closing conditions set
forth in Section 7.4 have been completed by the Seller.
2.7 PRORATION. The parties shall prorate at the First Closing
and the Second Closing, the current year's ad valorem taxes and vehicle license
fees on the property comprising the assets conveyed at such closing, based on
the latest available statements from taxing authorities, whether for the
current tax year or the preceding tax year. In addition, the parties shall
prorate at Closing the rent and other charges due under the Assigned Leases
("Lease Charges"). The prorated amounts shall be payable in the manner set
forth below. Seller's pro rata share of such taxes, vehicle license fees and
Lease Charges shall be the portion attributable to the period through the day
preceding the closing date which the real property or the personal property is
conveyed to Buyer, prorated by days.
(a) If a prorated amount is payable by Buyer and
determinable on a closing date, it shall be added to the amount
payable by Buyer at the respective closing.
(b) If a prorated amount is payable by Buyer and not
determinable on a closing date, it shall be billed by Seller when
determinable and promptly paid by Buyer to Seller.
(c) If a prorated amount is payable by Seller and
determinable on a closing date, it shall be deducted from the amount
otherwise payable by Buyer on a respective closing date
(d) If a prorated amount is payable by Seller and not
determinable on a closing date, it shall be billed by Buyer when
determinable and promptly paid by Seller to Buyer.
2.8 ALLOCATION. The parties hereto agree and acknowledge that
the Purchase Price shall be allocated as set forth in Schedule 2.8 attached
hereto, and Seller and Buyer agree to file all Tax returns or reports
including, without limitation, IRS Form 8594, for their respective taxable
years in which the First Closing and Second Closing occur, and to reflect the
allocation of the Purchase Price on any such return or report, and agree not to
take any position inconsistent therewith before any Governmental authority
charged with the collection of any Tax or in any administrative proceeding.
2.9 CONSULTING AGREEMENTS. Buyer shall enter into a consulting
agreement in the form of Exhibit C attached hereto, with Xxxxx Xxxxx for a term
of ten (10) years, with an annual compensation of $61,000. Buyer shall enter
into a consulting agreement in the form of Exhibit D attached hereto, with
Xxxxxx Xxxxxxxxx for a term of five (5) years, with annual compensation of
$18,000 per year (together the two agreements are hereinafter referred to as
the "Consulting Agreements").
2.10 LETTER OF CREDIT. At the First Closing, Seller shall provide
to Buyer an irrevocable letter of credit in a form acceptable to Buyer, from a
nationally recognized financial
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institution reasonably acceptable to Buyer, in the amount of $430,000 (the
"Letter of Credit") to reimburse Buyer for any Damages (hereinafter defined)
incurred by Buyer as set forth in Article IX hereof. The Letter of Credit shall
be effective as of the First Closing Date and be continuously in effect for a
period of one (1) year and forty (40) days after the Second Closing Date, and
permit Buyer to unilaterally withdraw sums for Damages incurred by Buyer and
which are indemnified pursuant to Article IX of this Agreement, by presenting
the original Letter of Credit to the issuing bank accompanied by a letter
signed by a representative of Buyer which states "The undersigned are entitled
to draw upon this letter of credit pursuant to that certain agreement dated
March ____, 1998 by and among Packaged Ice Southeast, Inc., S. Xxxxx Xxxxx and
Xxxxx Xxx Xxxxx (the "Asset Purchase Agreement")." If the Second Closing has
not occurred by April 15, 1998, Seller agrees to renew or replace the Letter of
Credit for a like term by March 22, 1999, and if Seller has not provided such
renewal or replacement Letter of Credit by March 22, 1999, Buyer is entitled to
draw the entire amount of the Letter of Credit. If any Damages which are
indemnifiable by Seller have not been paid or are not finally determined at May
14, 1999, then Seller shall cause a renewal or replacement Letter of Credit to
be delivered to Buyer ten (10) days prior to the expiration of the then current
Letter of Credit, which will entitle Buyer to draw upon the issuing bank until
ten (10) days after such dispute is finally determined. If such replacement
letter is not provided by the ten (10) day period before the expiration of the
then current Letter of Credit, then Buyer shall be entitled to draw the entire
amount of the Letter of Credit.
III. REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND SHAREHOLDERS
Except as otherwise disclosed in the Seller's Disclosure Memorandum,
each of the Seller and Shareholders represent and warrant, jointly and
severally, to Buyer as follows:
3.1 ORGANIZATION. Seller is a corporation duly incorporated and
organized under the laws of the State of Georgia, and is qualified to do
business in the State of Georgia. The Seller has all requisite power and
authority to own, lease and operate the Business as presently conducted and to
enter into this Agreement and to perform its respective obligations hereunder.
3.2 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. The
execution, delivery and performance by the Seller and Shareholders of this
Agreement, and the consummation of each of them of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by the Seller and
Shareholders and constitutes the valid and binding obligations of the Seller
and Shareholders, enforceable against them in accordance with its terms. The
execution, delivery and performance of this Agreement by the Seller and
Shareholders will not, with or without the giving of notice, the passage of
time, or both, violate, conflict with, result in a default, breach or loss of
rights under, or result in the creation of any lien, claim or encumbrance
pursuant to any lien, encumbrance, instrument, agreement or understanding, or
any law, regulation, rule, order, judgment or decree, to which the Seller
and/or the Shareholders are a party or by which they are bound or affected.
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3.3 FINANCIAL STATEMENTS. Seller has previously caused to be
furnished to Buyer the balance sheets of Seller's Business (separate from any
propane gas or other business conducted by Seller) as of December 31, 1996 and
December 31, 1997, the related unaudited statements of income and statements of
cash flow for the period then ended and the balance sheet and statements of
income and cash flow as of January 31, 1998 and February 28, 1998 (such balance
sheets and related statements are collectively referred to herein as the
"Financial Statements"). The Financial Statements taken as a whole present
fairly the financial position of Seller as of December 31, 1996, December 31,
1997, January 31, 1998, and February 28, 1998, respectively, and the results of
operations for such periods, all in accordance with generally accepted
accounting principles ("GAAP") consistently applied.
Except as and to the extent reflected or reserved against in the
Financial Statements, or as disclosed by the Seller and Shareholders in the
Seller's Disclosure Memorandum, and except for liabilities arising in the
ordinary course of business and consistent with past practice since the date of
the December 31, 1997 balance sheet of Seller, Seller has operated the Business
in the ordinary course and has incurred no material liabilities which would be
required to be reflected in accordance with generally accepted accounting
principles on a balance sheet as of the date hereof or disclosed in the notes
thereto. Since December 31, 1997, there has not been any material adverse
change in the business, operations, properties, prospects, assets or condition
of Seller, and no event has occurred or circumstance exists that may result in
such a material adverse change.
3.4 ENCUMBRANCES ON THE ASSETS. Except as set forth on the
Seller's Disclosure Memorandum, there are no debts, liabilities, mortgages,
liens, security interests, charges, pledges, conditional sale agreements, or
adverse claims or restrictions, transfers or any other encumbrances
(hereinafter "Encumbrances") whatsoever against the Assets.
3.5 BUSINESS OPERATIONS AND CONDITION OF ASSETS. The Seller and
Shareholders acknowledge that Buyer is purchasing the Assets for the express
purpose of operating a packaged ice manufacturing and distribution business.
All items comprising the Assets have been continuously used by Seller in
Seller's Business and are now in serviceable condition unless expressly
disclosed to the contrary by the Seller in the Seller's Disclosure Memorandum.
3.6 TITLE TO PERSONAL PROPERTY. Except as set forth in the
Seller's Disclosure Memorandum, Seller has good, legal and marketable title to
all of the personal property comprising the Assets; at the First Closing,
Seller shall deliver to Buyer good, legal and marketable title to the First
Closing Assets free from and clear of all Encumbrances; at the Second Closing,
Seller shall deliver to Buyer good, legal and marketable title to the Brunswick
Property free and clear of all Encumbrances.
3.7 REAL PROPERTY.
(a) Section 3.7 of Seller's Disclosure Memorandum
contains (i) a complete and accurate legal description of each parcel
of real property owned by, leased to or used by Seller which is to be
transferred to Buyer, and a complete and accurate list of all
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current leases, lease amendments, subleases, assignments, licenses,
and other agreements to which the Real Property is subject (the
"Assigned Leases"). Seller has delivered to Buyer true and complete
copies of the Assigned Leases. The Seller's Disclosure Memorandum
contains the address of each property, together with a summary
description of the buildings and improvements thereon, the name and
address of each landlord where Seller is a tenant, and of each tenant
where Seller is a landlord, the commencement and expiration date of
each lease, the monthly rent and additional rent payable under such
lease, and the date to which such rent has been paid, the amount of
any deposits, security or otherwise, made under such lease, and
whether the consent of any other party to the lease (or their
mortgagee) is required to consummate the transaction contemplated
hereby.
(b) Except as disclosed in Section 3.7 of Seller's
Disclosure Memorandum, (i) each of the Assigned Leases is in full
force and effect and has not been amended or modified; (ii) neither
Seller, nor any other party thereto, is in default thereunder, and
there is not, under any such Assigned Leases, any event which, with
notice and/or lapse of time, would constitute a default by any party
to any such Assigned Leases; (iii) Seller has received no notice that
any parties to any Assigned Leases intend to cancel, terminate, or
refuse to renew the same or to exercise or decline to exercise any
option or other right thereunder.
(c) Seller is the owner of, or is the tenant in good
standing under, valid and effective Assigned Leases, with respect to
all Real Property used by Seller in the operation of Seller's Business
which is to be transferred or assigned to Buyer.
(d) Except as set forth in Section 3.7 of Seller's
Disclosure Memorandum, the Real Property is properly zoned for, and
permits, the improvements located thereon and the continuation of the
business presently being conducted thereon. The Real Property is
served by utilities and services necessary for the normal and
continued operation of the Business. Seller has no knowledge of any
pending or threatened action or proceeding which could result in a
modification or termination of such zoning.
(e) Seller shall grant and convey the Real Property to
Buyer at the First Closing and the Second Closing, as contemplated
herein, free and clear of all Encumbrances or other restrictions which
would materially affect the use for which it is held by Seller.
Seller has not received notice that any of the Real Property is
subject to any governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any public authority
with or without payment of compensation therefor, nor has any such
condemnation, expropriation or taking been proposed.
(f) Except as disclosed in Section 3.7 of Seller's
Disclosure Memorandum, (i) there are no tanks on or below the surface
of the Real Property, (ii) there is no hazardous or toxic waste,
substance or material or other contaminant or pollutant (as determined
under federal, state or local law) present on or below the surface of
the Real Property including, without limitation, in the soil, subsoil,
groundwater or surface water, which
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constitutes a violation of any law, ordinance, rule or regulation of
any governmental entity having jurisdiction thereof or subjects or
could subject Buyer to any liability to third parties, and (iii) the
Real Property has never been used by Seller or by any previous owners
or operators to generate, manufacture, refine, produce, store, handle,
transfer, process or transport any hazardous or toxic waste, substance
or material or other contaminant or pollutant.
3.8 LITIGATION. Except as set forth in the Seller's Disclosure
Memorandum, there is no pending claim, action, suit, proceeding or
investigation (judicial, governmental or otherwise), nor any order, decree or
judgment in effect or threatened against or relating to Seller or the Assets,
or the transactions contemplated by this Agreement, and no event has occurred
or circumstance exists that will, or is reasonably likely to, give rise to or
serve as a basis for the commencement of any claim, action, suit, proceeding or
investigation.
3.9 COMPLIANCE WITH LAWS. Seller has complied with all laws, rules,
regulations, ordinances, orders, judgments and decrees relating to the Assets.
The ownership and use of the Assets and the conduct of the Business as it
specifically relates to the Assets does not conflict with the rights of any
other person.
3.10 TAXES. All returns, including estimated tax returns, required
to be filed after the First Closing Date by or with respect to Seller with
respect to Taxes, that, if unpaid, might result in a lien upon any of the
Assets, will be duly filed and will be true, correct and complete, and all
Taxes payable pursuant thereto will be paid, except such Taxes, if any, as may
be contested in good faith. No deficiency or adjustment in respect to any Taxes
that have been assessed against or with respect to Seller that if unpaid, might
result in a lien upon any of the Assets, remains unpaid.
All Taxes that relate to the Assets and that are payable or accruable
by Seller, or to which Seller has any liability with respect to events
occurring on or before either the First Closing Date or the Second Closing
Date, have been paid in full except for income, franchise or capital stock
taxes and transfer, sales and other taxes arising in connection with the
transactions contemplated by this Agreement.
3.11 ENVIRONMENTAL. The Seller has complied in all respects with
all laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of any Governmental
Authorities ("Laws") which have jurisdiction over the Seller and its
subsidiaries concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
wetlands, 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 (collectively, an "Environmental Action") has been
filed or commenced against any of them alleging any failure of Seller so to
comply, nor is the Seller and/or the Shareholders aware
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of any circumstances or conditions which may cause any such Environmental
Action to be filed or commenced against Seller.
Without limiting the generality of the preceding sentence, the Seller
has obtained and been in material 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.
Buyer, at Buyer's expense, shall have the right to conduct any and all
environmental investigations and surveys necessary to satisfy Buyer as to the
environmental condition of the Assets or the Leased Real Properties; provided,
however, that Seller shall provide to Buyer evidence that the development of
the Owned Real Property described in Section 3.7 of Seller's Disclosure
Memorandum as the "Kingsland Facility" was made in compliance with all Laws and
that Seller shall, at its expense, fulfill all the conditions laid out in
Schedule 8.1(i) attached hereto and incorporated herein by reference, as
provided in Section 8.1(i) hereof, prior to the First Closing Date.
3.12 EMPLOYEE BENEFITS. All employee benefit plans (whether or not
covered by ERISA), deferred compensation or executive compensation plans for
employees, directors or independent contractors, and all other employee or
independent contractor arrangements or programs that are maintained or
contributed to by the Seller (collectively, the "Company Plans") have been
administered and operated in all material respects in compliance with their
terms, ERISA, if applicable, the Code and other applicable law. All Company
Plans that are intended to be qualified under Section 401(a) of the Code are so
qualified and a current favorable IRS determination letter exists for each such
plan and covers the amendments required by the Tax Reform Act of 1986. All
funded Company Plans are fully funded according to their terms and applicable
law. To the knowledge of the Seller and Shareholders, no prohibited
transaction or breach of fiduciary duty under ERISA has been committed by any
fiduciary, disqualified person or party in interest of any Company Plan. The
Seller has no liability, contingent or otherwise, under Title IV of ERISA.
3.13 CONSENTS. Except as set forth in the Seller's Disclosure
Memorandum, no consent or approval of any public body or authority, and no
consents or waivers from other parties to the Assigned Leases, material
licenses, franchises, permits, agreements or other instruments are required to
be obtained by the Seller as a result of the transfer of the Assets
contemplated by this Agreement to (i) avoid the loss of any Assigned Leases,
material license, franchise, permit or other instrument or the creation of any
lien or other claim on any Asset pursuant to the terms of any law, regulation,
order, agreement or other legal requirement binding upon Seller and/or
Shareholders relating to the Business or to which any such Asset may be
subject, or (ii) to enable Buyer to continue the operation of the Business
substantially as conducted prior to the First Closing.
3.14 CONTRACTS. Seller is not a party to any contracts relating to
the Business or the Assets that are not terminable at will, other than those
contracts of Seller relating to the Business listed and described in the
Seller's Disclosure Memorandum.
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3.15 INSURANCE AND WARRANTIES.
(a) Insurance. Seller has in force all policies of
insurance described in Section 3.15(a) of the Seller's Disclosure
Memorandum insuring it (including descriptions of whether such
policies and binders are "claims made" or "occurrences" policies, and
the respective issuers and expiration dates thereof). Unless otherwise
described on the Seller's Disclosure Memorandum, the Seller and the
Shareholders have not been advised of (i) any risks or any fact or
matter which might render such policies void or voidable, or (ii) any
cancellations of insurance coverage, or material increases in premium,
or other costs related to insurance, to take effect, or that are
proposed, or that may or will occur, following the First Closing
and/or the Second Closing. To the Seller's and Shareholders'
knowledge, all such policies are underwritten by reputable insurers,
and there is no basis to believe the insurers are or are likely to
become financially unsound. Seller has not been refused insurance or
been notified of any cancellation or involuntary reduction or other
limitation of insurance during the past three years. Section 3.15(a)
of the Seller's Disclosure Memorandum lists all claims made or due to
be made by Seller, and all matters for which a claim could reasonably
have been but was not made, against an insurer on account of events
occurring since December 31, 1996.
(b) Warranties. Except as described in Section 3.15(b)
of the Seller's Disclosure Memorandum, (i) Seller has not agreed to
become responsible for consequential damages or made any express
warranties to third parties with respect to any products distributed
or sold by Seller, and (ii) there are no warranties (express or
implied) outstanding with respect to any products other than any such
implied by law. A copy of each standard warranty of Seller with
respect to such product is included in Section 3.15(b) of the Seller's
Disclosure Memorandum.
3.16 INVENTORIES.
(a) All inventories shown on the December 31, 1997
balance sheet of Seller consisted of, and all inventories thereafter
acquired will consist of, items of good and merchantable quality and
quantity usable or salable in the ordinary and regular course of
Seller's business except for obsolete items and items below standard
quality, all of which have been written off, or written down to net
realizable value on the December 31, 1997 balance sheet of Seller.
Each inventory or class was priced at the lower of cost or market on
the first-in, first-out basis and, as to the classes of items
inventoried and methods of counting and pricing, such inventories were
determined in a manner consistent with prior years. Except to the
extent, if any, disclosed in Section 3.16 of the Seller's Disclosure
Memorandum, Seller has neither sold any of its inventory under
agreements with an express right of return, nor consigned any
inventory, and Seller and Shareholders have no knowledge of any
pending returns of inventory in any material quantity.
(b) There have been no material changes in the
inventories reflected in the December 31, 1997 balance sheet of Seller
and there will be no further changes in any such inventories except
those changes resulting from write down or write-offs, purchases
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in the ordinary and regular course of business, and sale of
merchandise inventory in the ordinary and regular course of business.
3.17 SUPPLIERS AND CUSTOMERS. Except as set forth in Section 3.17
of the Seller's Disclosure Memorandum and to Seller's and Shareholders' actual
knowledge, no customer of Seller has communicated to Seller or Shareholders, in
any manner, his or its intention to cease to do business with or trade with
Seller, or materially alter, modify or amend the terms with which it has
conducted business with Seller whether as a result of, or in contemplation of,
the consummation of the transactions contemplated by this Agreement.
3.18 COMPLETE AND ACCURATE DISCLOSURE. No representation or
warranty made to Buyer in this Agreement or in connection with this transaction
contains or will contain an untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make such representation or
warranty not misleading or necessary to enable a prospective Buyer of Seller's
Business or the Assets to make a fully informed decision. All documents and
information which have been or will be delivered to Buyer or its
representatives by or on behalf of the Seller and the Shareholders are and will
be true, correct and complete copies of the documents they purport to
represent.
IV. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 CORPORATE EXISTENCE; GOOD STANDING; CAPITALIZATION. Buyer is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of Texas and is qualified to conduct business in the State of
Georgia. Buyer is a wholly owned subsidiary of Packaged Ice, Inc., a Texas
corporation ("Packaged Ice"). Packaged Ice is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Texas and
is qualified to conduct business in the State of Georgia.
4.2 POWER AND AUTHORITY. Buyer has the requisite corporate power
and authority, and has been duly authorized, to enter into this Agreement and
to perform all of its obligations hereunder. Buyer represents and warrants to
the Seller and Shareholders that this Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation in accordance
with its terms. The execution, delivery and performance of this Agreement by
the Buyer will not, with or without the giving of notice, the passage of time,
or both, violate, conflict with, result in a default, breach or loss of rights
under, or result in the creation of any lien, claim or encumbrance pursuant to,
any lien, encumbrance. instrument, agreement, or understanding, or any law,
regulation, rule, order, judgment or decree, to which the Buyer is a party or
by which it is bound or affected. Buyer has received the necessary approval
from Packaged Ice to complete the transactions contemplated herein.
V. COVENANTS OF THE SELLER AND SHAREHOLDERS
The Seller and Shareholders hereby covenant and agree as follows:
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5.1 CONDUCT OF BUSINESS. Seller shall operate the Business in
the ordinary course and continue normal capital expenditures and maintenance in
connection with the First Closing Assets during the period from the date hereof
until to the First Closing Date, and in connection with the Brunswick Property
during the period from the date hereof until the Second Closing Date except (i)
as may be permitted by this Agreement or (ii) as may be necessary to consummate
the transactions contemplated hereby. However, Seller's activities involving
the Brunswick Property be limited to the reconstruction of the Brunswick
Property as provided in Section 2.2 hereof from the period beginning with the
First Closing Date through the Second Closing Date.
5.2 INVESTIGATION BY BUYER.
(a) Between the date hereof and the Second Closing Date,
the Seller and Shareholders shall (i) give Buyer and its authorized
representatives and advisors access, at reasonable times and on
reasonable notice, to all items of personal property and real property
or leasehold interest comprising the Assets, books and records,
personnel, offices, and other facilities of the Assets, (ii) permit
Buyer to make such inspections thereof as Buyer may reasonably
require, and (iii) cause their employees, and their advisors to
furnish to Buyer and its authorized representatives and advisors such
financial and operating data and other information with respect to the
Business prepared in the ordinary course of the Business as Buyer or
its agent shall from time to time reasonably request.
(b) The Seller and Shareholders agree that, subsequent to
the Second Closing Date, Buyer and its agents and accountants will be
permitted reasonable access, during normal business hours, and as
often as Buyer may reasonably request, consistent with reasonable
requirements of the Seller and Shareholders, to the books and records
of Seller and its affiliates, insofar as such books and records
contain information or data pertaining to the Assets prior to the
Second Closing Date to the extent such information is not otherwise
available at the offices or other facilities of the Buyer, and Buyer
shall have the right to make copies thereof and excerpts therefrom.
5.3 CLOSING CONDITIONS. The Seller and Shareholders will, to the
extent within their control, use their best efforts to cause the conditions set
forth in Article VII to be satisfied by the First Closing Date.
5.4 CONFIDENTIALITY. From and after the date hereof, the Seller
and Shareholders will, and will cause their respective officers, employees,
representatives, consultants and advisors to, hold in confidence all
confidential information in the possession of the Seller and Shareholders,
their affiliates or their financial advisors concerning the Assets and the
Leased Properties. The Seller and Shareholders will not release or disclose
any such information to any person other than Buyer and its authorized
representatives. Notwithstanding the foregoing, the confidentiality obligations
of this Section shall not apply to information:
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(a) which the Seller and/or Shareholders are compelled to
disclose by judicial or administrative process, or, in the reasonable
opinion of counsel, by other mandatory requirements of law;
(b) which can be shown to have been generally available
to the public other than as a result of a breach of this Section; or
(c) which can be shown to have been provided to the
Seller and/or Shareholders by a third party who obtained such
information other than as a result of a breach of a confidential
relationship.
5.5 PUBLIC ANNOUNCEMENT. The Seller, Shareholders and Buyer will
cooperate in the public announcement of the transactions contemplated by this
Agreement, and, other than as may be required by applicable law, no such
announcement will be made by either party without the consent of the other
party, which consent shall not be unreasonably withheld.
5.6 NO SHOPPING. The Seller and the Shareholders shall not
solicit, initiate or participate, directly or indirectly, or cause any other
person to solicit, initiate or participate, directly or indirectly, in
discussions or negotiations with, or provide any information to, any other
person (other than the Buyer) concerning, or enter into any agreement providing
for (other than in the ordinary course of business) the acquisition of the
Assets or part thereof (whether by merger, purchase of stock or assets or other
similar transaction), other than the acquisition contemplated by this
Agreement. The restrictions of this paragraph shall terminate if the First
Closing has not taken place by the date referred to in Section 7.1.
5.7 FURTHER ASSURANCES. The Seller and the Shareholders will use
their best efforts to implement the provisions of this Agreement, and for such
purpose the Seller and Shareholders, at the request of Buyer, at or after the
First Closing Date, will, without further consideration, promptly execute and
deliver, or cause to be executed and delivered, to Buyer such deeds,
assignments, bills of sale, consents, documents evidencing title and other
instruments in addition to those required by this Agreement, in form and
substance satisfactory to Buyer, as Buyer may reasonably deem necessary or
desirable to implement any provision of this Agreement.
5.8 INSURANCE. Seller shall maintain insurance through the First
Closing Date with respect to the First Closing Assets and through to the Second
Closing Date with respect to the Brunswick Property with financially sound and
reputable insurers unaffiliated with the Seller and/or Shareholders in such
amounts and against such risks as are adequate to protect the Assets and the
Business.
5.9 NONCOMPETITION AGREEMENT. At the First Closing, the Seller,
the Shareholders, and Xxxxxx Xxxxxxxxx will each enter into a noncompetition
agreement in the form attached hereto as Exhibit E (the "Noncompetition
Agreement").
5.10 CESSATION OF BUSINESS/CHANGE OF NAME. At and after the First
Closing, the Seller will cease to conduct any business constituting the
manufacturing, packaging, distribution and/or
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storage of packaged ice products. In addition, Seller will promptly, after the
First Closing (but in no event more than 30 days after the First Closing Date)
effectuate the change of the names of the business from Cumberland Gas and Ice,
Inc. by filing all necessary documents with the Georgia Secretary of State's
office or such other proper state and local governmental authority as is
necessary to effectuate such name change, and will terminate all of its assumed
name filings. Seller and Shareholders further agree that they will execute any
and all other documents requested by Buyer to facilitate Buyer's use of the
name "Cumberland Ice" or any variant thereof.
5.11 OPINION OF LEGAL COUNSEL. At the First Closing and the
Second Closing, the Seller and Shareholders shall deliver to Buyer a Legal
Opinion of Sellers counsel in the form attached hereto as Exhibit F (the
"Seller's Opinion of Counsel").
5.12 DISCHARGE OF SELLER'S DEBTS. Seller hereby agrees and
acknowledges that Buyer is not assuming any of Seller's debts, and that Seller
remains responsible for and will discharge all debts that relate to the
Business and/or the Assets and were incurred by Seller at or prior to the First
Closing.
5.13 TITLE COMMITMENT. Seller, at Seller's sole cost and expense,
shall cause a nationally recognized title company acceptable to Buyer (the
"Title Company") to issue and deliver to Buyer (i) current title commitments
(the "Title Commitments") accompanied by two copies of all recorded documents
affecting the Real Property, and which will constitute encumbrances against the
Real Property at the First Closing for the First Closing Real Property to be
conveyed as part of the First Closing Assets and at the Second Closing Date for
the Brunswick Property, and (ii) current reports of searches made of the
Uniform Commercial Code Records of the County and State where each parcel of
Real Property is located (the "UCC Reports") setting forth the state of title
to the personal property to be conveyed hereunder. Seller, at Seller's sole
cost and expense, shall also obtain and deliver to Buyer current surveys (the
"Surveys") of the Real Property prepared by a duly licensed land surveyor
acceptable to Buyer. The Surveys shall:
(a) set forth an accurate metes and bounds description of
the Real Property which shall contain the gross square footage and the
net square footage of the Real Property;
(b) locate all existing easements and rights-of-way
(setting forth the book and page number of all recorded instruments
creating the same), alleys, streets, and roads;
(c) show any encroachments upon the Real Property;
(d) show all existing improvements;
(e) show all dedicated public streets providing access to
the Real Property and whether such access is paved to the property
line of the Real Property; and
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(f) contain the Surveyor's certification in the form and
substance satisfactory to Buyer's counsel.
Buyer shall give Seller written notice on or before the expiration of
fifteen (15) days after the receipt of the Title Commitments, UCC Reports and
the Surveys, whichever is received last, whether the condition of the title as
set forth in such Title Commitments, UCC Reports and Surveys is or is not
satisfactory, and in the event Buyer states that the condition of title is not
satisfactory, Seller shall, at its sole cost and expense, promptly undertake to
eliminate or modify to the reasonable satisfaction of Buyer those title matters
which Buyer states to be unsatisfactory. Seller agrees to use Seller's best
efforts to satisfy promptly Buyer's timely objections to title, and in the
event Seller does not satisfy said objections within ten (10) days after said
notice, Buyer may, at its option, either (i) accept title subject to the
objections raised by Buyer, without an adjustment in the Purchase Price, in
which event said objections shall be deemed waived for all purposes, or (ii)
terminate this Agreement and receive back any deposits or escrowed funds
delivered by Buyer, and this Agreement shall be of no further force and effect.
The Real Property shall be conveyed to Buyer subject to no Encumbrances or
reservations of any kind or character other than those specifically approved by
Buyer in writing (the "Permitted Exceptions").
5.14 COMPUTER/ACCOUNTING SERVICES.
Following the First Closing, Seller shall ensure that, for a period
not longer than ninety (90) days, the current procedures for collecting,
recording and processing information carried on by the Seller and which are
related to the Business (including but not limited to financial and customer
relations) shall be carried on in their ordinary and usual manner, and Seller
shall provide access and unrestricted use of office, telephone (excluding the
cost of long distance charges), personnel, computer and other systems and
common areas used by the Business. Such use by Buyer shall not cause an
unreasonable disruption of Seller's gas business. Seller further agrees that
the costs of such continuation of collection, recording and processing of such
information during the aforementioned period shall be solely borne by Seller.
Seller further agrees that the period between the First Closing Date and the
Second Closing Date, Buyer shall be entitled to use the Brunswick Property for
any purposes Buyer sees fit including but not limited to the production of ice,
the servicing of clients and general office work. Buyer will be responsible
for the utility costs of the Brunswick Property which are related to Buyer's
use of such facility beginning with the date on which Buyer first incurs such
expenses, and in no case beginning earlier than the First Closing Date.
5.15 ACCOUNTS PAYABLE. Seller shall provide Buyer with an
affidavit of accounts payable indicating the amount owed by Seller to each
creditor individually as of the First Closing Date and includes the address to
which each creditor payments are to be made, and the date the last payment was
made. Seller covenants that the creditors of Seller as of the First Closing
Date and the Second Closing Date shall be paid in full when due and that no
liability for any amounts due by Seller on either the First Closing Date or the
Second Closing Date shall attach to Buyer.
5.16 UPDATED FINANCIAL STATEMENTS. Within thirty (30) days of the
First Closing Date, Seller shall provide Buyer with the compiled financial
statements (prepared by an
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independent certified public accountant) of the Seller's Business through the
First Closing Date, such statements shall be related solely to the ice business
activities of Seller and shall not include information related to Seller's
propane or other business.
5.17 SEPARATION OF BUSINESS. As of the First Closing Date with
respect to the First Closing Real Property, and as of the Second Closing Date
with respect to the Brunswick Property, Seller shall have removed all equipment
related to Seller's propane business from the Real Property and shall cease to
conduct any operations related to the propane business on any of the Real
Property.
5.18 POST FIRST CLOSING INVENTORY SCHEDULE. Seller shall provide,
at the First Closing, a schedule of packaging materials, supplies and ice
inventory separated by category and location, as of the First Closing Date (the
"Closing Date Inventory Schedule"). Seller shall also include all supporting
documentation for the inventory schedule including invoices and other sales
records. The purchase price for the First Closing Assets shall be reduced by
the amount of the difference in inventory paid for, or received on the account
of Buyer or its parent corporation, and the amount of the same such inventory
on hand as of the First Closing Date. The intent of this provision is to
reimburse the Buyer (and/or its parent corporation) for amounts or credits
extended for merchandise ordered or received by Seller prior to the First
Closing Date.
VI. COVENANTS OF BUYER
6.1 ANCILLARY AGREEMENTS. At the Closing, Buyer will pay the
purchase price as set forth in Section 2.6 hereof, and enter into the
Noncompetition Agreement, the Escrow Agreement, the Consulting Agreements, and
all other ancillary documents required hereunder.
VII. CLOSING
7.1 TIME AND PLACE. The consummation of the sale and purchase of
the First Closing Assets and the execution of the Noncompetition Agreement as
contemplated hereby (the "First Closing") shall take place at the offices of
Seller's counsel whose address is Whelchel, Brown, Xxxxxxxx & Xxxxxxxxxx, 0
Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000. The date of the First Closing shall
herein be referred to as the "First Closing Date" and shall take place no later
than March ___, 1998. The consummation of the sale and purchase of the
Brunswick Property (the "Second Closing") shall take place at a location
mutually agreeable to the parties. The date of the Second Closing shall herein
be referred to as the "Second Closing Date."
7.2 THE SELLER'S AND THE SHAREHOLDERS' OBLIGATIONS AT FIRST
CLOSING. At the First Closing, the Seller and the Shareholders shall, where
appropriate, execute, acknowledge and deliver to Buyer in form satisfactory to
Buyer:
(a) a General Warranty Deed covering the First Closing
Real Property in recordable form, subject only to the Permitted
Exceptions insofar as they affect the First Closing Real Property;
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(b) an assignment of the Macon Lease, in recordable form,
subject only to the Permitted Exceptions, insofar as they affect the
Leased Real Property, which, if necessary, has been consented to by
the lessor thereof;
(c) an Estoppel Certificate as referred to in Section
8.1(g) hereof from the lessee of the Macon Lease;
(d) copies of all certificates of occupancy, licenses,
permits, authorizations, and approvals required by law and issued by
all Governmental Authorities having jurisdiction, if any, and the
original of each xxxx for current real estate and personal property
taxes, together with proof of payment thereof (if any of the same have
been paid);
(e) Non-disturbance Agreements from the lender(s) of the
lessor(s) of the Macon Lease;
(f) an Owner's Policy of Title Insurance in the amount of
the value allocated to each parcel provided in Schedule 2.8 attached
hereto of the First Closing Real Property, subject only to the
Permitted Exceptions, insofar as they affect the First Closing Real
Property;
(g) a memorandum of the lease for the leased premises in
Tifton, Georgia in recordable form;
(h) Xxxx of Sale, assignments or other suitable transfer
documents transferring to Buyer the First Closing Assets, free and
clear of all liens and encumbrances, in form reasonably satisfactory
to counsel for Buyer which includes the form WCC-3 or other
appropriate form indicating release of liens by any secured party and
that no action of redress or reclamation shall be sought by any
secured party against Buyer or the Assets;
(i) the Noncompetition Agreements executed by Seller,
Shareholders, and Xxxxxx Xxxxxxxxx;
(j) a Certificate of Compliance, in form and substance
satisfactory to Buyer, from the Seller and the Shareholders indicating
that the Seller and the Shareholders have materially complied with
their obligations contained in this Agreement, that all
representations and warranties contained in this Agreement or in any
certificate required to be delivered in connection with this Agreement
shall be accurate at and as of the First Closing with the same force
and effect as though made at the First Closing, and no material
adverse change with respect to the Seller has occurred;
(k) a copy of Seller's Opinion of Counsel to Buyer;
(l) the officer's certificate referred to in Section
8.1(f);
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(m) the documents evidencing the transfers of all motor
vehicles and registrations thereof which are part of the Assets;
(n) an affidavit of creditors indicating the amount owed
to each creditor as of the First Closing Date, the address of the
creditor, and the last payment made to creditor as provided in Section
5.14 hereof;
(o) the Letter of Credit;
(p) a termination statement, acceptable to Buyer, of the
Tifton Lease;
(q) a lease for the property located in Tifton in the
form attached hereto as Exhibit B signed by the lessee of the Tifton
Lease; and
(r) all other previously undelivered documents,
instruments and writings required to be delivered at or prior to the
First Closing pursuant to this Agreement or otherwise in connection
herewith.
7.3 BUYER'S OBLIGATIONS AT FIRST CLOSING. At the First Closing,
Buyer will:
(a) pay the purchase price for the First Closing Assets
in accordance with Section 2.6;
(b) deliver to the Seller and Xxxxxx Xxxxxxxxx and the
Shareholders executed counterparts of the Noncompetition Agreements,
the Consulting Agreements, and all other ancillary documents required
hereunder; and
(c) deliver a Certificate of Compliance, dated as of the
First Closing Date, from an officer of Buyer indicating that Buyer has
materially complied with its obligations, representations and
warranties contained in this Agreement.
7.4 THE SELLER'S AND SHAREHOLDER'S OBLIGATIONS AT THE SECOND
CLOSING. At the Second Closing, the Seller and Shareholders shall, where
appropriate, execute, acknowledge and deliver to Buyer in form satisfactory to
Buyer:
(a) a General Warranty Deed covering the Brunswick
Property (and all improvements), in recordable form, subject only to
the Permitted Exceptions relating to the Brunswick Property;
(b) all transferable warranties related to the Brunswick
Property;
(c) an Owner Policy of Title Insurance in the amount of
the value allocated to the Brunswick Property in Schedule 2.8 attached
hereto, subject only to the Permitted Exceptions, insofar as they
relate to the Brunswick Property;
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(d) Xxxx of Sale, assignments or other suitable transfer
documents transferring to Buyer the Brunswick Property, free and clear
of all liens and encumbrances, in form reasonably satisfactory to
counsel for Buyer which includes the form WCC-3 or other appropriate
form indicating release of liens by any secured party and that no
action of redress or reclamation shall be sought by any secured party
against Buyer or the Brunswick Property;
(e) a Certificate of Compliance, in form and substance
satisfactory to Buyer, from the Seller and the Shareholders indicating
that the Seller and the Shareholders have materially complied with
their obligations contained in this Agreement, that all
representations and warranties contained in this Agreement or in any
certificate required to be delivered in connection with this Agreement
shall be accurate at and as of the Second Closing with the same force
and effect as though made at the Second Closing, and no material
adverse change with respect to the Seller or the Brunswick Property
has occurred;
(f) a copy of Seller's Opinion of Counsel to Buyer dated
as of the Second Closing Date;
(g) the officer's certificate referred to in Section
8.1(f) dated as of the Second Closing Date; and
(h) all other previously undelivered documents,
instruments and writings required to be delivered at or prior to the
Second Closing pursuant to this Agreement or otherwise in connection
herewith.
7.5 THE BUYER'S OBLIGATIONS AT THE SECOND CLOSING. At the Second
Closing, Buyer will:
(a) pay to Seller the purchase price for the Brunswick
Property, less any Liquidated Damages or other adjustments in
accordance with Section 2.2; and
(b) deliver to Seller any other documents required to be
delivered by Buyer at or prior to the Second Closing pursuant to this
Agreement.
VIII. CONDITIONS TO CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to complete the transactions contemplated on the First Closing Date and the
Second Closing Date shall be subject to the satisfaction, on or prior to the
First Closing Date and the Second Closing Date, respectively, of the following
conditions:
(a) Performance. Each agreement and obligation of the
Seller and the Shareholders to be performed on or before the First
Closing Date and the Second Closing
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Date, respectively, (including, but not limited to, covenants set
forth in Article V) shall have been duly performed in all material
respects;
(b) Representations and Warranties True; No Material
Adverse Change. The representations and warranties of the Seller and
Shareholders contained herein, or in any certificate required to be
delivered in connection with this Agreement, shall have been accurate
on the date hereof and shall be accurate at and as of the First
Closing Date and the Second Closing Date respectively, and since the
date hereof there shall have occurred no material adverse change in
the business operations, properties, prospects, Assets or condition of
Seller. Seller shall deliver to Buyer certificates dated as of the
First Closing Date and the Second Closing Date executed by the
President of Seller so stating;
(c) No Violation of Statutes, Orders, etc. There shall
not be in effect any decree or judgment enjoining Buyer from
consummating the transactions contemplated hereby;
(d) Third-Party Creditors. All third-party creditors of
the Business will be paid in full and have released all liens or
claims against the Assets, or Seller shall provide to Buyer
documentation from all third-party creditors indicating that the
third-party creditors have released their liens against the Assets and
consented to Seller's conveyance of the Assets to Buyer free and clear
of all liens or other Encumbrances;
(e) Opinion of Counsel. On the First Closing and the
Second Closing Date, the Seller and the Shareholders shall have
delivered Seller's Opinion of Counsel as described in Section 5.11
herein to Buyer;
(f) Corporate Approval. On the First Closing Date, Buyer
shall have received a certified copy of the resolutions of the
Shareholders and Board of Directors of Seller, certified by its
Secretary or Assistant Secretary, authorizing the execution of this
Agreement and the consummation of the transactions contemplated
hereby;
(g) Estoppel Certificate. Seller shall deliver to Buyer
an estoppel certificate signed by the Landlord of the Assigned Leases
in the form of Exhibit G attached hereto (the "Estoppel Certificate");
(h) Due Diligence. As of the First Closing Date, Buyer
shall have completed and shall be satisfied with its due diligence
investigation;
(i) Environmental Clean Up. As of both the First Closing
Date and the Second Closing Date, Seller shall be in compliance with
all laws as warranted in Section 3.11 and, in addition, shall have, by
the First Closing Date completed all of the environmental tasks
provided in Schedule 8.1(i) attached hereto and incorporated herein by
reference; and
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(j) Brunswick Property. The construction of the
Brunswick Property shall be completed in accordance with the plans and
specifications set forth on Schedule 2.2 attached hereto to the
reasonable satisfaction of Buyer or Buyer shall have waived its
objections in writing before it is required to complete the Second
Closing. Notwithstanding any other provision of this Agreement, Buyer
and Seller agree that the obligation of Buyer to acquire the Brunswick
Property (and Seller's right to any consideration therefrom) shall not
be subject to "material compliance" or any other form of legal or
equitable relief and shall be solely dependent on the satisfaction of
the conditions and obligations set forth in Sections 2.5, 7.4 and 8.1
of this Agreement.
8.2 CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE SHAREHOLDERS.
The obligation of the Seller and the Shareholders to complete the transactions
contemplated at the First Closing and the Second Closing shall be subject to
the satisfaction on or prior to the First Closing Date and Second Closing Date,
respectively, of the following conditions:
(a) Performance. Each agreement of Buyer to be performed
on or before the First Closing Date or the Second Closing Date,
respectively, shall have been duly performed in all material respects;
(b) Representations and Warranties True. The
representations and warranties of Buyer contained herein shall have
been true in all material respects; and
(c) No Violation of Statutes, Orders, etc. There shall
not be in effect any decree or judgment enjoining the Seller and the
Shareholders from consummating the transactions contemplated hereby.
IX. INDEMNIFICATION
9.1 INDEMNIFICATION OF BUYER BY THE SELLER AND THE SHAREHOLDERS.
The Seller and the Shareholders agree to individually and severally indemnify,
defend and hold harmless Buyer and Buyer's employees, agents, heirs, legal
representatives, and assigns from and against any and all claims, suits,
losses, expenses (legal, accounting, investigation and otherwise), damages and
liabilities, including, without limitation, tax liabilities (hereinafter,
collectively "Damages"), arising out of or relating to (i) any liability or
obligation of the Seller and/or the Shareholders not expressly assumed by Buyer
hereunder, (ii) the conduct of, or conditions existing with respect to, the
Business or the Assets prior to the First Closing, and prior to the Second
Closing, with respect to the Brunswick Property, (iii) any inaccuracy of any
representation or warranty set forth in this Agreement or the breach of any
covenant made by the Seller and/or Shareholders in or pursuant to this
Agreement, and (iv) any noncompliance with any bulk sales law by Buyer or
Seller. In the event that any Damages are incurred under this Section 9.1,
Buyer shall be entitled to draw upon the Letter of Credit, as well as being
entitled to any and all remedies provided for herein.
9.2 INDEMNIFICATION OF THE SELLER AND THE SHAREHOLDERS BY BUYER.
Buyer agrees to indemnify, defend and hold harmless the Seller and the
Shareholders from and against only those
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Damages arising out of or relating to any inaccuracy or any representation or
warranty of Buyer set forth in this Agreement or the breach of any covenant
made by Buyer in or pursuant to this Agreement.
9.3 CLAIMS FOR INDEMNIFICATION. Whenever any claim arises for
indemnification hereunder, the indemnified party (hereafter the "Indemnified
Party") shall notify the indemnifying party (hereafter the "Indemnifying
Party") in writing by registered or certified mail promptly after the
Indemnified Party has actual knowledge of the facts constituting the basis for
such claim (the "Notice of Claim"). Such notice shall specify all material
facts known to the Indemnified Party giving rise to such indemnification right,
and to the extent practicable, the amount or an estimate of the amount of the
liability arising therefrom. The failure of any Indemnified Party to promptly
notify the Indemnifying Party shall not relieve the Indemnifying Party of its
obligation to indemnify in respect to such action and shall not relieve the
Indemnifying Party of any other liability which they may have to any
Indemnified Party unless such failure to notify the Indemnifying Party
prejudices the rights of the Indemnifying Party. In addition to all other
remedies provided hereunder or by law, Buyer shall specifically have the right
to, if after thirty (30) days following the notice to the Indemnifying Party
(in this case, the Seller and the Shareholders) as required by this paragraph,
the Indemnifying Party has not remedied the cause of such claim to the
satisfaction of Buyer, draw against the Letter of Credit for any of Buyer's
Damages.
9.4 RIGHT TO DEFEND. If the facts giving rise to any such claim for
indemnification involve any actual or threatened claim or demand by any third
party against the Indemnified Party, the Indemnifying Party shall be entitled
(without prejudice to the right of the Indemnified Party to participate in the
defense of such claim or demand at its expense through counsel of its own
choosing) to assume the defense of such claim or demand in the name of the
Indemnified Party at the Indemnifying Party's expense and through counsel of
its own choosing, which counsel shall be reasonably satisfactory to the
Indemnified Party, if it gives written notice to the Indemnified Party within
forty-five (45) days after receipt of the Notice of Claim, that the
Indemnifying Party intends to assume the defense of such claim and acknowledges
its liability to indemnify the Indemnified Party for any losses resulting from
such claim; provided, however, that if the Indemnifying Party does not elect to
assume the defense of any claim, then (a) the Indemnifying Party shall have the
right to participate in the defense of such claim or demand at its expense
through counsel of its own choosing, provided the Indemnified Party shall
control the defense of such claim, (b) the Indemnified Party may settle any
such claim without the consent of the Indemnifying Party, however, the
Indemnifying Party may not settle any such claim without the prior written
consent of the Indemnified Party; and (c) Section 9.5 hereof shall be
inapplicable. Whether or not the Indemnifying Party does choose to so defend
such claim, the parties hereto shall cooperate in the defense thereof and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be requested in
connection therewith. To the extent the Seller and the Shareholders are the
Indemnified Party for any actual or threatened claim or demand by any third
party, the Seller and the Shareholders shall have the right to control the
prosecution of any counterclaim or right related to such a claim or demand,
provided that the Seller and the Shareholders agree to reasonably cooperate
with Buyer with respect to the prosecution of such counterclaim or right.
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9.5 SETTLEMENT. Except as provided in Section 9.4, (i) the
Indemnified Party shall make no settlement of any claim that would give rise to
liability on the part of the Indemnifying Party under an indemnity contained in
this Article IX without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld and (ii) the Indemnifying Party can
settle without the consent of the Indemnified Party only if the settlement
involves only the payment of money for which the Indemnifying Party will be
fully liable. No other settlement of any claim may be made without the consent
of both the Indemnified Party and the Indemnifying Party, which consent shall
not be unreasonably withheld.
9.6 EFFECT OF TERMINATION. Without limiting any other rights the
parties may have, the parties specifically agree that the covenants contained
in this Article will continue to be enforceable following termination of this
Agreement.
9.7 TIME LIMITATIONS. If the First Closing and/or the Second
Closing occurs, the Seller and the Shareholders will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with on or prior to the
First Closing Date or the Second Closing Date, respectively, or representations
made again as of the First Closing Date or the Second Closing Date,
respectively, other than those in Sections 2.2, 3.4, 3.6, 3.7, 3.10. 3.11 and
3.12, unless on or before two years from the First Closing Date (or the Second
Closing Date if the claim relates to the Brunswick Property), Buyer notifies
Seller of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Buyer. A claim with respect to Sections 2.2,
3.4, 3.6, 3.7. 3. 10, 3.11, or 3.12 must be made prior to the expiration of the
applicable statutory period of limitations, including any extensions to such
period, and shall thereupon terminate. If the First Closing occurs, except as
otherwise provided for in this paragraph, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior to the First
Closing Date (or the Second Closing Date if the Second Closing occurs and the
claim relates to the Brunswick Property), unless on or before two years from
the First Closing Date (or the Second Closing Date if the claim refers to the
Brunswick Property), Seller notifies Buyer of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Seller.
9.8 LIMITATIONS ON AMOUNT. The Seller and the Shareholders will
have no liability (for indemnification or otherwise) with respect to the
matters described in Section 9.1 until the total of all Damages with respect to
such matters and the matters described in Section 9.1 exceeds $50,000 in the
aggregate (the "Basket"), and then the Seller and Shareholders shall be
responsible for all Damages based thereon from the first dollar of Damages
without regard to the Basket; provided, however, the Basket shall not apply to
any claim for indemnification arising out of a breach of any representations,
warranties or covenants contained in Sections 2.2, 3.4, 3.6, 3.7, 3.10. 3.11.
or 3.12 or any provisions herein to the extent of their relation to any of the
Excluded Assets and the Seller's and Shareholders obligation to discharge all
liabilities not assumed by Buyer. The Seller's and the Shareholders' maximum
liability with respect to the matters described in Section 9.1 will be limited
to Two Million Dollars ($2,000,000) in the aggregate (the "Cap"); provided,
however, this Cap will not apply to a claim for indemnification
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arising out of a breach of any of the Company s representations, warranties or
covenants contained in Sections 2.2, 3.4, 3.6, 3.7, 3.10, 3.11, or 3.12.
Damages resulting from willful or intentional misrepresentations, any
provisions herein to the extent of their relation to any of the Excluded
Assets, and the Seller's and Shareholders obligation to discharge all
liabilities not assumed by Buyer.
X. TERMINATION
10.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the First Closing Date by any of
the following:
(a) Mutual Consent. By mutual written consent of the
Seller, Shareholders and Buyer;
(b) Misrepresentation or Breach. By the Seller, the
Shareholders or the Buyer, if there has been a material
misrepresentation or a material breach of a warranty or covenant
herein or in any agreement required to be delivered pursuant hereto on
the part of the other party hereto;
(c) Failure of Condition to Buyer's Obligations. By
Buyer, if all of the conditions set forth in Section 8.1 have not been
satisfied by March ____, 1998.
(d) Failure of Condition to Seller's and Shareholders'
Obligations. By the Seller and Shareholders, if all of the conditions
set forth in Section 8.2 have not been satisfied by March ___, 1998;
(e) Court Order. By the Seller and Shareholders or Buyer
if consummation of the transactions contemplated hereby shall violate
any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction; or
(f) Material Adverse Change. By Buyer if any event has
occurred after the date hereof which is, or will result in a material
adverse change in the prospects, business or condition of the Assets.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.1(a), all further obligations of the Seller,
Shareholders and Buyer under this Agreement shall terminate without further
liability of the Seller, Shareholders or Buyer.
If the Seller and the Shareholders fail to consummate the transactions
contemplated on their part to occur on or before March __, 1998, in
circumstances whereby all conditions of a closing set forth in Section 8.2 have
been satisfied in all material respects or waived, Buyer's sole remedy shall be
to (i) to require the Seller and the Shareholders to consummate and
specifically perform the transactions contemplated hereby, in accordance with
the terms of this Agreement, and to obtain from the Seller and the Shareholders
any attorney fees incurred in connection with procuring such specific
performance or (ii) terminate this Agreement and obtain
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reimbursement of its out-of-pocket expenses incurred directly in connection
with the negotiation, preparation and performance of this Agreement.
If Buyer fails to consummate the transactions contemplated on its part
to occur on a closing date, in circumstances whereby all conditions of a
closing set forth in Section 8.1 have been satisfied in all material respects
or waived in writing by Buyer, the Seller's and Shareholders' sole remedy shall
be to (i) require Buyer to consummate and specifically perform the transactions
contemplated hereby, in accordance with the terms of this Agreement, and to
obtain from Buyer any attorney fees incurred in connection with procuring such
specific performance or (ii) terminate this Agreement and obtain reimbursement
of their out-of-pocket expenses incurred directly in connection with the
negotiation, preparation and performance of this Agreement.
10.3 RIGHT TO PROCEED. Notwithstanding anything in this Agreement
to the contrary, if any condition specified in Section 8.1 or 8.2 has not been
satisfied, the Seller, Shareholders and Buyer, in addition to any other rights
which may be available to them, shall have the right to waive any such
condition that is for their benefit and to require the other party hereto to
proceed with the First Closing and/or the Second Closing.
XI. MISCELLANEOUS
11.1 EXPENSES. Legal, accounting and other costs and expenses
incurred in connection with this transaction shall be paid by the party
incurring such expenses. Sales or use tax imposed on the Seller or Buyer as a
result of this transaction, if any, shall be paid by Seller.
11.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in or made in connection with this
Agreement shall survive the First Closing and the Second Closing.
11.3 INUREMENT; ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and, if properly assigned, assigns. This
Agreement may not be assigned by any party without the written consent of the
other parties hereto.
11.4 NUMBER AND GENDER OF WORDS. When the context so requires in
this Agreement, words of gender shall include either or both genders and the
singular number shall include the plural.
11.5 SEVERABILITY. Any provision of this Agreement which is
invalid, unenforceable or illegal in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such invalidity,
unenforceability or illegality without affecting the remaining provisions
hereof and without affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
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11.6 INCORPORATION OF EXHIBITS AND SCHEDULES. All Exhibits and
Schedules referenced in this Agreement, and any statements contained therein or
in any certificate or instrument delivered pursuant hereto, constitute an
integral part of this Agreement and shall be deemed made in this Agreement as
if set forth in full herein.
11.7 CAPTIONS AND HEADINGS; USE OF TERM "PERSON". Captions and
headings used herein are for convenience only, do not constitute a part of this
Agreement, and shall not be considered in construing this Agreement. Unless the
context otherwise requires, all article, section or subsection cross-references
are to articles, sections and subsections within this Agreement. As used
herein, the term "person" shall mean any corporation, partnership, venture,
proprietorship, trust, benefit plan or other entity or enterprise.
11.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
11.9 NOTICE. All notices of requests, demands or other
communications required or to be given hereunder shall be delivered by hand,
overnight courier, facsimile transmission, or by United States Mail, postage
prepaid, by registered or certified mail (return receipt requested), to the
addressed indicated below and shall be deemed given when received by the
addressee thereof:
to Seller: Cumberland Gas and Ice, Inc.
Attn.: Xxxxx Xxxxx, President
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxx 00000
to Shareholders: Attn.: Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxx 00000
to Buyer: Packaged Ice Southeast, Inc.
Attn.: X.X. Xxxxx III, President
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
with a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
Attn.: Xxxx Xxxxxxxxxx
000 Xxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
or such other address or addresses as may be expressly designated by either
party by notice given in accordance with the foregoing provision.
11.10 AGENTS OR BROKERS. Buyer represents that it has not retained
or used the services of any broker or finder which would result in the
imposition of a fee upon the Seller,
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Shareholders or Buyer. The Seller has, however, retained the services of The
Xxxxx Company and shall be unilaterally responsible for any fees, charges,
commissions or any other type of consideration requested by, or to be found due
to, The Xxxxx Company for its participation in the transactions contemplated by
this Agreement. Buyer expressly denies any obligation to compensate The Xxxxx
Company in any way for its participation in this transaction.
11.11 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement, and all time limitations shall be strictly construed and rigidly
enforced. The failure or delay in the enforcement of any rights or interests
granted herein shall not constitute a waiver of any such right or interest or
be considered as a basis for estoppel.
11.12 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute
the same instrument.
11.13 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by binding
arbitration in accordance with the Commercial Rules of the American Arbitration
Association by a single arbitrator to be located in Atlanta, DeKalb County,
Georgia, and judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof, and shall not be appealable.
11.14 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Schedules and
Exhibits hereto, and the related agreements referred to herein embody the
entire agreement of the parties hereto, and supersede all prior agreements and
understandings, with respect to the subject matter hereof.
[ASSET PURCHASE AGREEMENT SIGNATURE PAGE FOLLOWS]
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[ASSET PURCHASE AGREEMENT SIGNATURE PAGE]
Executed on the date first written above.
BUYER:
PACKAGED ICE SOUTHEAST, INC.
By:
--------------------------------------
Print Name: X.X. Xxxxx, III
Print Title: President
SELLER:
CUMBERLAND GAS AND ICE, INC.
By:
--------------------------------------
Print Name: S. Xxxxx Xxxxx
Print Title: President
SHAREHOLDERS:
------------------------------------------
S. Xxxxx Xxxxx, An Individual
------------------------------------------
Xxxxx Xxx Xxxxx, An Individual
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LIST OF SCHEDULES AND EXHIBITS
Exhibit A Xxxx of Sale
Exhibit B Lease of Tifton Property
Exhibit C Consulting Agreement - Xxxxx
Exhibit D Consulting Agreement - Xxxxxxxxx
Exhibit E Noncompetition Agreement
Exhibit F Seller's Opinion of Counsel
Exhibit G Estoppel Certificate
Schedule 2.1 First Closing Real Property and First Closing Assets
Schedule 2.2 Brunswick Plans
Schedule 2.3 Excluded Assets
Schedule 2.8 Allocation of Purchase Price
Schedule 8.1(i) Environmental Clean lip
Seller's Disclosure Memorandum
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