1
EXHIBIT 10.42
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of
this 13th day of August, 1997, by and among Packaged Ice, Inc., a Texas
corporation (the "Buyer"), and W. Xxxx Xxxxxxxx and Xxxxx X. Xxxxx, Xx. (each
individually, a "Stockholder" and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders are the owners of an aggregate of 501 shares
of common stock of First Ice Company, par value $1.00 per share, and 500 shares
of common stock of Codorus Leasing Company, par value $1.00 per share (the
"Stock"), being all of the issued and outstanding shares of First Ice Company
and Codorus Leasing Company, Inc., (collectively the "Company"); and
WHEREAS, the Stockholders desire to sell, and the Buyer desires to
purchase all of the outstanding shares of Stock of the Company through the
purchase of the stock owned by the Stockholders; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Stockholders and Buyer agree as
follows:
1. PURCHASE AND SALE OF STOCK.
1.1. SALE OF STOCK. At the Closing (as defined below), the
Stockholders shall sell to Buyer and Buyer shall purchase from the
Stockholders, the Stock, for the purchase price set forth herein in Article 2
of this Agreement. Upon payment of the Purchase Price, each Stockholder shall
execute all necessary documents and/or instruments to effectively transfer each
Stockholder's interest in the Stock to Buyer.
2. PURCHASE PRICE
2.1. PURCHASE PRICE.
(a) The Purchase Price for the Stock shall be five million
($5,000,000) dollars as adjusted under Section 2.2. Up to 20% of the
Purchase Price, at the sole discretion of Stockholders, may be paid in
the form of Buyer's common stock valued at $10 per share and issued
directly to the Stockholders on a pro rata basis. Such election to
receive any portion of the Purchase Price in Buyer's common stock shall
be made no later than August 26, 1997 by giving written Notice (as that
term is defined herein) to Buyer.
(b) The Purchase Price that is paid in cash shall first be
used to pay and discharge all of the Company's debts, obligations and
other liabilities including, without limitation, all current
liabilities, all long term liabilities, all Liens (hereinafter defined)
against the assets of the Company and all leases of any personal
property, excluding accounts payable (collectively, the "Liabilities")
which are estimated to exist as of the Closing Date. The cash portion of
the Purchase Price remaining after the estimated Liabilities have been
paid and discharged shall be paid directly to the Stockholders in
exchange for all of the Stock owned by the Stockholders. In addition,
all cash and accounts receivable as of the Closing Date will be
distributed to the Stockholders at the Closing. The intent and effect
of this Section 2.1(b) is to convey all of the outstanding stock of the
Company to Buyer with there being no cash, Liabilities or Liens
(hereinafter defined) immediately after Closing. Stockholders hereby
agree all Liabilities which are not discharged at Closing are assumed by
the Stockholders through an Undertaking Agreement attached as Exhibit
2.1.
2
2.2 CASH ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be
subject to the following adjustments:
(a) The Purchase Price shall be increased to reflect the value
of the Inventory on hand at Closing. For the purposes of this Agreement,
the term "Inventory" shall mean up to 100,000 bags of ice valued at $.12
per eight pound bag, useable plastic bags at cost, spare truck tires
(not including spares carried on trucks) at cost, and Event Deposits.
For the purpose of this Agreement, the term "Event Deposits" shall mean
the $2,500.00 on deposit with The Oklahoma State Fair. The amount of
increase to the Purchase Price shall be determined by the parties at
Closing and shall be added to the Purchase Price as a whole, subject to
terms and provisions governing payment of the Purchase Price as set
forth in this Agreement.
(b) On or before September 20, 1997, the Stockholders shall
deliver to Buyer a copy of the balance sheet of the Company as of the
Effective Date (the "Effective Date Balance Sheet") certified by the
Shareholders to the best of their knowledge and belief to be true and
correct. The Effective Date Balance Sheet shall (i) fairly present the
financial position of the Company as at the close of business on the
Effective Date in accordance with the accounting methods consistently
utilized by the Company, and (ii) include a detailed schedule of
Liabilities. The Effective Date Balance Sheet shall be used to
calculate any adjustments to the Purchase Price and the amount of any
liabilities to be paid by Stockholders in accordance with the terms and
conditions set forth in this Agreement.
(c) The Stockholders and the Buyer agree that they will, and
will cause the Company's employees and representatives to, cooperate and
assist in the preparation of the Effective Date Balance Sheet including
without limitation, the making available to the extent necessary of
books, records, work papers and personnel.
3. CLOSING.
Unless this Agreement shall have been terminated, the closing of this
Agreement shall take place, subject to the terms and conditions set forth in
this Agreement, on or before September 2, 1997 at 11:00 a.m. Central Daylight
Time in a manner and place that is mutually agreeable to the parties hereto,
with an effective date of August 31, 1997 at 11:59 p.m. ("Effective Date")
provided that if the conditions to Closing set forth in this Agreement have not
been satisfied or waived, the Stockholders and Buyer may mutually agree, in
writing, to delay such Closing until such condition has been satisfied.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
The Stockholders, jointly and severally, represent and warrant to the
Buyer as of the date hereof and as of the Closing Date as follows:
4.1. OWNERSHIP OF STOCK. Each Stockholder has full legal right, power
and authority to sell, assign, transfer and convey the shares Stock so owned by
such Stockholder in accordance with the terms and subject to the conditions of
this Agreement. Each Stockholder is the record and beneficial owner of the
number of shares of Stock, listed in the Company's stock registry, free and
clear of all Liens, and any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of the shares), and
the Stockholders hold in the aggregate all of the outstanding shares of the
Company's capital stock. The delivery to the Buyer of the Stock pursuant to the
provisions of this Agreement will transfer to the Buyer valid title thereto,
free and clear of any Lien and any such limitation or restriction. For the
purposes of this
STOCK PURCHASE AGREEMENT - PAGE 2
3
Agreement, the term "Lien" means, with respect to the Stock or any property or
asset of the Company, any restrictions on or conditions to transfer or
assignment, and any mortgages, liens, pledges, charges, security interests,
conditional sales agreements, encumbrances, equities, claims, easements, rights
of way, covenants, conditions, restrictions or other adverse claims or
interests of any nature whatsoever. For the purposes of this Agreement, a
Person (as defined in Section 11.5 herein) shall be deemed to own subject to a
Lien any property or asset which it has any claim or encumbrance whatsoever
from whatever source against said property or asset.
4.2. EXISTENCE AND GOOD STANDING OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Oklahoma and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Company is duly qualified or licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in
which property may be owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary and has all
governmental licenses, authorizations, permits, consents and approvals required
for the operation of its business, except where the failure to be so duly
qualified or licensed or to have such governmental licenses, authorizations,
permits, consents and approvals would not have a material adverse effect on the
condition (financial or otherwise), business, assets, results of operations or
prospects of the Company (hereinafter a "Material Adverse Effect").
4.3. VALIDITY OF AGREEMENT. This Agreement has been duly executed and
delivered by the Stockholders and constitutes the valid and legally binding
obligation of the Stockholders enforceable against the Stockholders in
accordance with its terms.
4.4. CAPITALIZATION. First Ice Company has an authorized
capitalization consisting of 50,000 shares of Stock, of which 501 shares are
issued and outstanding. Codorus Leasing Company has an authorized
capitalization consisting of 1,000 shares of Stock of which 500 are issued and
outstanding. All such outstanding shares have been duly authorized and validly
issued and are fully paid and nonassessable. As of the Closing Date, there are
no outstanding subscriptions, options, warrants, rights, calls, commitments,
conversion rights, rights of exchange, plans or other agreements providing for
the purchase, issuance or sale of any shares of the capital stock of the
Company, other than as contemplated by this Agreement. Except as contemplated
by this Agreement, there are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company.
4.5. SUBSIDIARIES. As of the Closing Date, the Company will have no
subsidiaries and will own no capital stock, bonds or other securities of, nor
will it have any proprietary interest in, any other corporation, association or
business organization. First Ice Company presently owns all of the common
stock of Hot Ice Company, an inactive Oklahoma corporation with no assets.
First Ice Company will convey said stock to Stockholders who will then change
the name of said corporation and will cause the corporation to assign to Buyer
any rights the corporation holds to the name Hot Ice Company.
4.6. FINANCIAL STATEMENTS. Stockholders have previously caused to be
furnished to Buyer the Company's unaudited balance sheet as of December 31,
1996, and the related unaudited statements of income for the fiscal year then
ended, and the unaudited balance sheet of the Company as of June 30, 1997
("June 30, 1997 Balance Sheet"), and the related unaudited statement of income
for the six month period beginning January 31, 1997 and ending June 30, 1997
(such balance sheets and related statements are collectively referred to herein
as the "Financial Statements"). The Financial Statements taken as a whole
fairly present the financial position of the Company as of December 31, 1996,
and June 30, 1997, respectively, and the statements of income of the Company
for the respective periods then ended.
STOCK PURCHASE AGREEMENT - PAGE 3
4
Except as and to the extent reflected or reserved against in the
Financial Statements or as is disclosed herein and except for liabilities
arising in the ordinary course of business and consistent with past practice
since the date of the June 30, 1997 Balance Sheet, the Company has been
operated in the ordinary course and has incurred no material liabilities as of
the date hereof. Since June 30, 1997 there has not been any material adverse
change in the business, operations, properties, prospects, assets or condition
of the Company, and no event has occurred or circumstance exists that may
result in such a material adverse change. The Stockholders further warrant and
represent that the actual sales made and expenses incurred of the Company are
reflected in the December 31, 1996 and June 30, 1997 Financial Statements.
4.7. BOOKS AND RECORDS. The Company's books and records are complete
and correct in all material respects, have been maintained on a consistent
basis and reflect the basis for the Financial Statements.
4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as is disclosed
herein, or in the schedule of disclosures to be provided at Closing and
incorporated herein (the "Disclosure Schedule"), since December 31, 1996 the
Company's business has been conducted in the ordinary course consistent with
past practices and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be expected to have a
Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the Company of
any outstanding shares of capital stock or other securities of the Company
except for cash dividends paid prior to the Closing out of operating cash flow;
(c) any amendment of any material term of any outstanding
security of the Company;
(d) any incurrence, assumption or guarantee by the Company of
any indebtedness for borrowed money;
(e) any creation or assumption by the Company of any Lien on
any material asset;
(f) any making of any loan, advance or capital contributions
to or investment in any Person;
(g) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company
which, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company relating to its assets or business or
any relinquishment by the Company of any contract or other right, that has not
been in the ordinary course of business consistent with past practices;
(i) any change in any method of accounting or accounting
practice by the Company;
STOCK PURCHASE AGREEMENT - PAGE 4
5
(j) any (i) employment, severance, termination, retirement or
other similar agreement entered into with any director, officer or employee of
the Company (or any amendment to any such existing agreement), (ii) grant of
any severance or termination pay to any director, officer or employee of the
Company, or (iii) change in compensation or other benefits payable to any
director, officer or employee of the Company except in the ordinary course of
business consistent with past practices, except a $5.00 per future working day
raise commencing September 1, 1997 for truck drivers who have perfect
attendance at work for the month of August, 1997, and who have been employed by
the Company in excess of one year;
(k) any labor dispute, or any activity or proceeding by a
labor union or representative thereof to organize any employees of the Company,
which employees were not subject to a collective bargaining agreement at the
Closing Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to any employees of the Company;
(l) any transaction between the Company and any of the Persons
referred to in Section 4.12(j);
(m) any significant change in the pricing of materials or
supplies or for the sale of products in connection with the Company's business
or the introduction or discontinuance of any menu items which could reasonably
be expected to have a Material Adverse Effect; or
(n) any capital expenditure by the Company (except as set
forth herein).
4.9. TITLE TO PROPERTIES; ENCUMBRANCES.
(a) The Company has good and marketable title to all of its
assets and properties, whether real, personal or mixed, tangible or intangible
(the "Assets"). The Assets constitute all of the operating assets used in the
businesses of the Company. All of the Assets are free and clear of except for
those disclosed in the June 30, 1997 Balance Sheet or in Sections 4.9 of the
Disclosure Schedule. Except as set forth in Sections 4.10 or 4.11 of the
Disclosure Schedule, there is no real property or personal property necessary,
appropriate or used in the business of the Company that is not owned by the
Company or possessed by the Company pursuant to a binding written agreement
therefor permitting the use of the property in the manner used by the Company
on the date hereof. Any such agreement is set forth in Sections 4.12 of the
Disclosure Schedule.
(b) Except as set forth in Sections 4.10 and 4.11 of the
Disclosure Schedule, all real property and tangible personal property included
in the Assets is in good operating condition and repair, ordinary wear and tear
excepted
4.10. REAL PROPERTY .
(a) Section 4.10 of the Disclosure Schedule contains (i) a
complete and accurate legal description of each parcel of real property owned
by, leased to or used by the Company (the "Real Property") and (ii) a complete
and accurate list of all current leases, lease amendments, subleases,
assignments, licenses and other agreements to which the Real Property is
subject (the "Leases"). The Company has delivered to Purchaser true and
complete copies of the Leases.
(b) Except as disclosed in Section 4.10 of the Disclosure
Schedule, (i) each of the Leases is in full force and effect and has not been
amended or modified; (ii) neither the
STOCK PURCHASE AGREEMENT - PAGE 5
6
Company, nor any other party thereto, is in default thereunder, nor is there
any event which with notice or lapse of time, or both, would constitute a
default thereunder; (iii) the Company has received no notice that any party to
any Lease intends to cancel, terminate or refuse to renew the same or to
exercise or decline to exercise any option or other right thereunder; and (iv)
no rental under the Leases has been paid more than one month in advance.
(c) To the best of Stockholders' knowledge and belief, except
as disclosed in Section 4.10 of the Disclosure Schedule, (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 constitutes a violation of any law,
ordinance, rule or regulation of any governmental entity having jurisdiction
thereof or subjects or could subject Purchaser to any liability to third
parties, and (iii) the Real Property has never been used by the Company 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.
(d) The zoning of each parcel of the Real Property permits the
improvements located thereon and the continuation of business presently being
conducted thereon. The Real Property is served by utilities and services
necessary for the normal and continued operation of the business presently
conducted thereon.
4.11 PERSONAL PROPERTY.
(a) Section 4.11 of the Disclosure Schedule is a complete and
accurate schedule as of June 30, 1997 describing, and specifying the location
of, all inventory, motor vehicles, machinery, fixtures, equipment, furniture,
supplies, tools and all other tangible or intangible personal property (other
than the rights arising under the Contracts and the accounts receivable) owned
by, in the possession of, or used by the Company (the "Personal Property").
(b) Each lease, license, rental agreement, contract of sale or
other agreement applicable to any Personal Property is listed as a "Contract"
under Section 4.12 of the Disclosure Schedule and is in full force and effect;
neither the Company nor any other party thereto is in default thereunder, nor
is there any event which with notice or lapse of time, or both, would
constitute a default thereunder. The Company has received no notice that any
party to any such lease, license, rental agreement, contract of sale or other
agreement intends to cancel, terminate or refuse to renew the same or to
exercise or decline to exercise any option or other right thereunder. No
Personal Property is subject to any lease, license, contract of sale or other
agreement that is adverse to the business, properties or financial condition of
the Company.
(c) The inventory of the Company as described in Section 4.11
of the Disclosure Schedule consisted and consists of items substantially all of
which were and will be of the usual quality and quantity necessary for the
normal conduct of the Company and reasonably expected to be usable or salable
within a reasonable period of time in the ordinary course of business of the
Company, except items of inventory which have been written down to realizable
market value or written off completely, and damaged or broken items in an
amount which does not materially affect the value of the inventory as reflected
on the Financial Statements. With respect to inventory in the hands of
suppliers for which the Company is committed as of the date hereof, such
inventory is reasonably expected to be usable in the ordinary course of
business of the Company as presently being conducted.
STOCK PURCHASE AGREEMENT - PAGE 6
7
4.12 MATERIAL CONTRACTS. Except as disclosed on Schedule 4.12 of the
Disclosure Schedule, the Company has no or is not bound by any of the following
("Contracts"):
(a) mortgage, security agreement, financing statement or
conditional sales agreement or any similar instrument or agreement;
(b) agreement, commitment, note, indenture or other instrument
relating to the borrowing of money, or the guaranty of any such obligation for
the borrowing of money;
(c) joint venture or other agreement with any person, firm,
corporation or unincorporated association doing business either within or
outside the United States relating to sharing of present or future commissions,
fees or other income or profits;
(d) lease, license, rental agreement, contract of sale or
other agreement applicable to the Personal Property;
(e) franchise agreement;
(f) warranty;
(g) noncompetition agreement;
(h) broker or distributorship contract; or
(i) advertising, marketing and promotional agreement
(including, but not limited to, any agreements providing for discounts and/or
rebates).
(j) any agreement with any Stockholder or any of its affiliate
or any director or officer of any such affiliate or the Company or with any
"associate" or member of the "immediate family" (as such terms are respectively
defined in Rules 12b-2 and 16a-1 of the Securities Exchange Act of 1934) of any
such Stockholder, affiliate, director or officer; or
(k) any other agreement, commitment, arrangement or plan not
made in the ordinary course of business that is material to the Company.
Except as disclosed in the Disclosure Schedule, each Contract
disclosed or required to be disclosed in this Agreement is a valid and binding
agreement of the Company and is in full force and effect and neither the
Company nor, to the knowledge of the Stockholders, any other party thereto, is
in default or breach in any material respect under the terms of any such
Contract, and no condition exists that with notice or lapse of time or both
would constitute a default of the Company or any other party thereto, under,
any agreement or other instrument binding upon the Company.
4.13. NO CONFLICT. Except as set forth in the Disclosure Schedule the
consummation of the transactions contemplated herein (i) will not conflict with
or violate any provision of the Articles of Incorporation or by-laws of the
Company, each as amended (ii) will not conflict with or violate any applicable
law, rule, regulation, judgment, injunction, order or decree or require any
action by or in respect of, or filing with, any governmental body, agency, or
official, and (iii) will not conflict with or result in a violation or breach
of, or constitute a default under, any license, franchise, permit, indenture,
agreement or other instrument to which the Company is a party, or by which the
Company or any of its assets or properties is bound or result in the creation
or imposition of any Lien on any asset of the Company.
STOCK PURCHASE AGREEMENT - PAGE 7
8
4.14. LITIGATION. Except as set forth in Section 4.14 of the
Disclosure Schedule there is no action, suit or proceeding at law or in equity
by any Person or any arbitration or any administrative or other proceeding or
investigation by or before any governmental or other instrumentality or agency,
pending, or, to the knowledge of the Stockholders, threatened against or
affecting the Company.
4.15. TAXES.
(a) The Company has, at all times, been an S corporation, as
defined under the Internal Revenue Code of 1986, as amended (the "Code") since
the effective date of the valid election as disclosed in Section 4.15 of the
Disclosure Schedule.
(b) Except as set forth on Section 4.15 of the Disclosure
Schedule, (i) all Tax returns, statements, reports and forms (including
estimated tax or information returns and reports) required to be filed with any
Taxing Authority with respect to any Pre-Closing Tax Period by or on behalf of
the Company (collectively, the "Returns"), have, to the extent required to be
filed, been filed when due (including any applicable extensions thereof); (ii)
all Taxes shown as due and payable on the returns that have been filed have
been timely paid, or withheld and remitted to the appropriate Taxing Authority;
(iii) the charges, accruals and reserves for Taxes not previously paid with
respect to the Company for any Pre-Closing Tax Period (including any Pre-
Closing Tax Period for which no Return has yet been filed) reflected on the
books of the Company (excluding any provision for deferred income Taxes) are
adequate to cover such Taxes; (iv) there have been proper withholding and
reporting of all employees compensation (including tips income and allocated
tips) and employment Taxes throughout the Pre-Closing Tax Period; (v) the
Company is not delinquent in the payment of any Tax (including any applicable
extensions); (vi) the Company has not requested any extension of time within
which to file any Return which it has subsequently not filed; (vii) the Company
has not granted any extension or waiver of the statute of limitations period
applicable to any Return, which period (after giving effect to such extension
or waiver) has not yet expired; (viii) there is not a claim, audit, action,
suit, proceeding, or investigation now pending or threatened against or with
respect to the Company in respect of any Tax; (ix) there are no requests for
rulings or determinations in respect of any Tax pending between the Company and
any Taxing Authority; (x) none of the property owned by the Company is "tax-
exempt" use property within the meaning of Section 168(h) of the Code; (xi)
neither the Stockholders nor the Company, nor any other person on behalf of the
Company has entered into nor will it enter into any agreement or consent
pursuant to Section 341(f) of the Code; (xii) there are no liens for Taxes upon
the assets of the Company except liens for current Taxes not yet due; (xiii)
the Stockholders are not subject to withholding under Section 1445 of the Code
with respect to any transaction contemplated hereby; (xiv) the Company will not
be required to include any adjustment in taxable income for any Post-Closing
Tax Period under Section 481(c) of the Code (or any similar provision of the
Tax laws of any jurisdiction) as a result of a change in method of accounting
for a Pre-Closing Tax Period or pursuant to the provisions of any agreement
entered into with any Taxing Authority with regard to the Tax liability of the
Company for any Pre-Closing Tax Period; (xv) the Company has not been a member
of an affiliated group (as defined in Section 1504(a) of the Code) or a
consolidated, combined or unitary group for purposes of any other Taxes; (xvi)
no Returns of the Company have been examined or audited; and (xvii) none of the
material property used by the Company is subject to a lease, other than a
"true" lease for federal income tax purposes.
(c) Oklahoma is the only state to which any Tax is properly
payable by the Company.
4.16. INTELLECTUAL PROPERTIES. Section 4.16 of the Disclosure Schedule
sets forth a list of the material domestic and foreign patents, patent
applications, patent licenses, software licenses,
STOCK PURCHASE AGREEMENT - PAGE 8
9
trade names, trademarks, service marks, service names, trademark registrations
and applications, service xxxx registrations and applications, copyright
registrations and applications or any other similar type of proprietary
intellectual property right owned, used or held for such use by the Company
(collectively, the "Intellectual Property"). To the knowledge of the
Stockholders, (a) there are no pending proceedings or litigation or other
adverse claims made in writing affecting or with respect to the Intellectual
Property, (b) there is no business operating in the State of Oklahoma under the
name "First Ice Company" or "Codorus Leasing Company" or any deceptively
similar name other than the Company, (c) neither the Stockholders nor the
Company has been sued or charged in writing with or been a defendant in any
claim, suit, action or proceeding relating to its business that has not been
finally terminated prior to the date hereof and that involves a claim of
infringement by the Company of any the intellectual property rights of any
other Person, and (c) the Stockholders have no knowledge of any basis for any
such claim of infringement and have no knowledge of any continuing infringement
by any other Person of any Intellectual Property. No Intellectual Property of
the Company is subject to any outstanding order, judgment, decree, stipulation
or agreement restricting the use thereof by the Company or restricting the
licensing thereof by the Company to any Person. The Company has not entered
into any agreement to indemnify any other Person against any charge of
infringement of any Intellectual Property.
4.17. COMPLIANCE WITH LAWS. To the best of the Stockholders' knowledge
and belief, except as set forth on Section 4.17 of the Disclosure Schedule;
(a) The Company is and has been in compliance with all
applicable Federal, state, local or other laws, rules, regulations, judgments,
injunctions, orders or decrees (excluding for the purposes of this subparagraph
(a) all environmental laws and regulations) in all aspects as those laws
related to the Company, its business operations and its assets to include all
real property owned or leased by the Company;
(b) The Company has complied in all material respects with all
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof) which have jurisdiction over the
Company concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes (collectively, "Hazardous
Materials") and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply. There are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge or disposal (on-site or off-site)
of any Hazardous Materials that could form the basis of any claim or liability
under any applicable Federal, state, local or other environmental law against
the Company or against any Person or entity whose liability the Company may
have retained or assumed either contractually or by operation of law or
otherwise. Without limiting the generality of the preceding sentences, the
Company 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.
(c) The Company is not in default under, and no condition
exists that with notice or lapse of time or both would constitute a default of
the Company under any license,
STOCK PURCHASE AGREEMENT - PAGE 9
10
franchise, permit or similar authorization held by the Company.
4.18. EMPLOYEE BENEFIT PLANS. Each material employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), maintained by the Company (collectively, the
"Plans") is set forth in Schedule 4.18 to be provided at Closing, is in
substantial compliance with applicable law and has been administered and
operated in all material respects in accordance with its terms and applicable
law. Each Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter from the Internal Revenue Service
and, to the knowledge of the Stockholders, no event has occurred and no
condition exists which could reasonably be expected to result in the revocation
of any such determination. No event which constitutes a "reportable event" (as
defined in Section 4043(b) of ERISA) for which the 30-day notice requirement
has not been waived by the Pension Benefit Guaranty Corporation (the "PBGC")
has occurred with respect to any Plan. No Plan subject to Title IV of ERISA
has been terminated or is or has been the subject of termination proceedings
pursuant to Title IV of ERISA. Full payment has been made of all amounts which
the Company was required under the terms of the Plans to have paid as
contributions to such Plans (excluding any amounts not yet due) and no Plan
which is subject to Part 3 of Subtitle B of Title 1 of ERISA has incurred any
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived. Neither the Company or any
other "disqualified person" or "party in interest" (as defined in Section
4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in
any transactions in connection with any Plan that could reasonably be expected
to result in the imposition of a material penalty pursuant to Section 502(i) of
ERISA, damages pursuant to Section 409 of ERISA or a tax pursuant to Section
4975(a) of the Code. No material liability, claim, action or litigation, has
been made, commenced or, to the knowledge of the Stockholders, threatened with
respect to any Plan (other than for benefits payable in the ordinary course and
PBGC insurance premiums). No Plan or related trust owns any securities in
violation of Section 407 of ERISA. With respect to all Plans which are subject
to Title IV of ERISA, as of the most recent actuarial valuation prepared for
each such Plan, the aggregate present value of the accrued liabilities thereof
did not exceed the aggregate fair market value of the assets allocable thereto.
Each "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which
the Company is obligated to contribute ("Multiemployer Plan") is listed on
Schedule 4.18 to be provided at Closing. Except as set forth in Schedule 4.18,
all contributions required to have been made by the Company to a Multiemployer
Plan have been made on a timely basis. The Company has not been advised by any
Multiemployer Plan that it has any withdrawal liability under Sections 4201 or
4204 of ERISA with respect to any Multiemployer Plan, nor is the Company aware
of any such withdrawal liability.
4.19. INSURANCE. Schedule 4.19 to be provided at Closing contains a
list of all significant policies and contracts for insurance maintained by the
Company. All such policies are in full force and effect. The Stockholders
shall cause the Company to keep or cause to be kept such policies (or
substantial equivalents) in such amounts duly in force until the end of the
Closing Date and shall give the Buyer notice of any material change in such
policies. The term life insurance policies on Stockholders' lives shall be
assigned to Stockholders on or before closing who will assume the obligation to
pay premiums.
4.20. BROKER'S OR FINDER'S FEES. The Company and Stockholders have not
employed, commissioned or otherwise engaged any agent, broker, person or firm
to act on its behalf of either party that is or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, except
for the services provided by Xxxxxxx Xxxxx to the Stockholders whose fee, if
any, shall be payable solely by the Stockholders.
STOCK PURCHASE AGREEMENT - PAGE 10
11
4.21. OWNERSHIP OF ASSETS. All of the assets used in the Company's
business are owned by the Company except certain leased equipment and certain
office furniture and equipment as set forth on Schedule 4.21 of Company's and
Stockholders' Disclosure Schedule.
4.22. LABOR MATTERS.
(a) Section 4.22 of the Disclosure Schedule contains a
complete and accurate list of the name, base compensation, bonus and
position(s) of each person employed by the Company, together with a description
of all bonus formulas used by the Company to produce the bonus amounts set
forth.
(b) Except as disclosed in Section 4.22 of the Disclosure
Schedule, the Company is not a party to any of the following:
(i) management, employment or other contract providing
for the employment or rendition of executive services;
(ii) contract for the employment of any employee which
is not terminable by the Company on thirty (30) days' notice;
(iii) collective bargaining agreement or other agreement
with any labor union or other employee organization (and no such
agreement is currently being requested by, or is under discussion by
management with, any group of employees or others); or
(iv) any other employment contract or other compensation
agreement or arrangement (including, without limitation, any contract,
agreement or arrangement dealing with vacation pay or other benefits)
affecting or relating to current or former employees of the Company.
(c) There are no controversies pending or, to the best
knowledge of the Stockholders, threatened between the Company and any employees
of the Company. The Company has complied with all laws relating to the
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining, immigration, safety and the payment of withholding and
social security and similar taxes, and the Company has no liability for any
arrears of wages or taxes or penalties for failure to comply with any of the
foregoing.
4.23 CAPITAL IMPROVEMENTS . There are no capital improvements or
purchases or other capital expenditures which the Company has committed to or
contracted for which have not been completed prior to the date hereof.
4.24 FULL DISCLOSURE . No information furnished by the Stockholders
to Buyer in connection with this Agreement (including, without limitation, the
Financial Statements and all information in the Disclosure Schedules) is false
or misleading and such information includes all facts required to be stated
therein or necessary to make the statements therein not misleading. All copies
of original documents delivered to Buyer are true and correct copies of such
original documents.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Buyer represents and warrant to the Stockholders as follows:
5.1. 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
STOCK PURCHASE AGREEMENT - PAGE 11
12
duly qualified to do business in all other jurisdictions as a foreign
corporation, and is in good standing in all such jurisdictions, where the
nature of its business would require such qualification.
5.2. POWER AND AUTHORITY. Buyer has the requisite corporate power and
authority, and has been duly authorized, to enter into this Agreement and the
ancillary documents required hereunder and to perform all of its obligations
hereunder and thereunder. The consummation of the transactions contemplated
hereby (i) will not violate any provision of the Bylaws or Articles of
Incorporation of the Buyer, as amended to date, will not violate any statute,
rule, regulation, order or decree of any public body or authority by which
Buyer is bound.
5.3. BROKER'S OR FINDER'S FEES. Except as otherwise contemplated
hereby, no agent, broker, person or firm acting on behalf of Buyer is, or will
be, entitled to any commission or broker's or finder's fees from any of the
parties hereto, or from any Person controlling, controlled by or under common
control with any of the parties hereto, in connection with any of the
transactions contemplated herein.
6. COVENANTS AND AGREEMENTS.
6.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as disclosed on
Schedule 6.1 and in Section 4.8(j), during the period from the date of this
Agreement to the Closing Date, the Stockholders agree to cause the Company to,
and the Company shall, conduct its operations in the ordinary course of
business consistent with past practices. Except as may be first approved by
the Buyer (such approval not to be unreasonably withheld) or as is otherwise
required by this Agreement, the Stockholders agree that as of the execution of
this Agreement and through the Closing Date (i) the Company's Articles of
Incorporation and by-laws shall not be amended, (ii) the salaries payable to
all employees shall not be increased, (iii) the Company shall refrain from
making any bonus, pension, retirement or insurance payment or arrangement to or
with any such persons, (iv) the Company shall refrain from entering into any
contract or commitment except contracts and commitments in the ordinary course
of business, (v) the Company shall refrain from increasing indebtedness for
borrowed money, (vi) the Company shall not cancel or waive any claims or rights
of substantial value to the Company, (vii) the Stockholders shall not take or
agree to take any action that would make any representation and warranty of the
Stockholders hereunder inaccurate in any material respect on or prior to the
Closing Date, and (vii) the Stockholders shall not agree, whether or not in
writing, to do any of the foregoing.
6.2. REVIEW OF THE COMPANY. The Buyer may, prior to the Closing Date,
through their representatives, review the properties, books and records of the
Company to become familiarized with such properties and the business of the
Company. The Stockholders shall cause the Company to permit the Buyer and their
representatives to have reasonable access to the premises and to the books and
records of the Company during normal working hours and to furnish the Buyer
with such financial and operating data and other information with respect to
the business and properties of the Company as the Buyer shall from time to time
reasonably request.
STOCK PURCHASE AGREEMENT - PAGE 12
13
6.3. REASONABLE EFFORTS. Each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action to do, or cause to
be done, and to assist and cooperate with the other parties hereto in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement, including, but not limited to, (i) the obtaining of all necessary
waivers, consents and approvals from governmental or regulatory agencies or
authorities and the making of all necessary registrations and filings and the
taking of all reasonable steps as may be necessary to obtain any approval or
waiver from, or to avoid any action or proceeding by, any governmental agency
or authority, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties and (iii) the defending of any lawsuits or any other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby
including, without limitation, seeking to have any temporary restraining order
entered by any court or administrative authority vacated or reversed.
6.4. PUBLIC ANNOUNCEMENT. The Buyer and the Stockholders shall
consult with one another in advance of and agree on the timing and content of
all press releases or public announcements and disclosures with respect to this
Agreement and the transactions contemplated hereby.
6.5 FURTHER ASSURANCES. From time to time prior to and after the
Closing, each party hereto shall, at their own expense, execute and deliver, or
cause to be executed and delivered, all such other instruments, including
instruments of conveyance, assignment and transfer, and to make all filings
with and to obtain all consents, approvals or authorizations of any
governmental or regulatory authority or any other Person under any permit,
license, agreement, indenture or other instrument and take all such other
actions as such party may reasonably be requested to take by the other party
hereto, consistent with the terms of this Agreement, in order to effectuate
better the provisions and purposes of this Agreement and the transactions
contemplated hereby.
6.6. NONCOMPETITION. Each party to this Agreement acknowledges and
agrees to the execution of the Noncompetition Agreement attached hereto as
Exhibit 6.6.
6.7. NO SHOPPING. Unless and until this Agreement has been terminated
in accordance with its terms, the Stockholders will not solicit, initiate or
participate, directly or indirectly, or cause or cause or permit 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
stock of the Stockholders in the Company or any part (whether by merger,
purchase of stock or assets or other similar transaction), other than the
acquisition contemplated by this Agreement. Stockholders further represent and
warrant that they will disclose to Buyer any and all communications they
receive from any third parties (to include the identity of the third party)
with respect to any proposals, inquiries, discussions, or negotiations with any
such third parties regarding the sale, merger or disposition of the Company or
its assets or the sale, merger or other disposition of Stockholders' Stock,
after execution of this Agreement.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF STOCKHOLDERS.
The sale of the Stock by the Stockholders to the Buyer on the Closing
Date is conditioned upon the satisfaction or waiver, at or prior the Closing
Date, of the following conditions:
7.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Buyer herein contained shall be true and correct in all
material respects on the Closing Date as though made on and as of such date.
STOCK PURCHASE AGREEMENT - PAGE 13
14
7.2. PERFORMANCE OF AGREEMENTS. Buyer shall have performed all
obligations and agreements in all material respects and complied with all
covenants and conditions in all material respects contained in this Agreement
to be performed or complied with by it at or prior to the Closing.
7.3. OFFICER'S CERTIFICATE. Buyer shall have delivered to the
Stockholders a certificate of an officer of Buyer, dated the Closing Date,
certifying on behalf of such Buyer that the conditions set forth in Sections
7.1 and 7.2 have been fulfilled.
7.4. PROHIBITION. There shall have been no order or preliminary or
permanent injunction entered in any action or proceeding before any United
States federal or state court of competent jurisdiction or governmental
authority (which has jurisdiction over the enforcement of any applicable laws)
making illegal the consummation of any of the transactions hereunder.
7.6. PROCEEDINGS. All proceedings to be taken by the Buyer in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Stockholders and their counsel, and the Stockholders shall
have received copies of all such documents and other evidences as they or their
counsel may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER.
The purchase of the Stock by the Buyer and the paying of the Purchase
Price on the Closing Date is conditioned upon the satisfaction or waiver, at or
prior to the Closing, of the following conditions:
8.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Stockholders contained in this Agreement shall be true
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.
8.2. PERFORMANCE OF AGREEMENTS. The Stockholders shall have performed
all obligations and agreements in all material respects and complied with all
covenants and conditions in all material respects contained in this Agreement
to be performed or complied with by them at or prior to the Closing.
8.3. CERTIFICATE OF THE STOCKHOLDERS. Each Stockholder shall have
executed and delivered to the Buyer a certificate dated the Closing Date
certifying that the conditions set forth in Sections 8.1 and 8.2 have been
fulfilled.
8.4. PROHIBITION. There shall have been no order or preliminary or
permanent injunction entered in any action or proceeding before any United
States federal or state court of competent jurisdiction or governmental
authority (which has jurisdiction over the enforcement of any applicable laws)
making illegal or prohibiting the consummation of the transactions hereunder.
8.5. CONSENTS. All material consents, approvals, authorizations or
permits of, or filings with or notifications to any third party required for
the consummation of the transaction, contemplated herein shall have been
obtained.
8.6. DUE DILIGENCE. Buyer shall have conducted and shall be satisfied
with its due
STOCK PURCHASE AGREEMENT - PAGE 14
15
diligence investigation.
8.7. CERTIFICATES EVIDENCING THE STOCK. Stockholders shall have
delivered to the Buyer validly issued certificates representing the Stock to be
transferred in accordance with this Agreement, duly endorsed or accompanied by
duly executed documents of transfer in accordance with this Agreement.
8.8. OPINION OF COUNSEL TO THE STOCKHOLDERS. At the Closing, the
Stockholders shall have delivered to the Buyer the opinion of counsel to the
Stockholders and the Company, dated the Closing Date, in a form that is
satisfactory to the Buyers.
8.9. NO MATERIAL ADVERSE CHANGE. From the date of this Agreement
until the Closing Date, there shall not have been any material adverse change
in the financial condition of the Company.
8.10. RESIGNATIONS. The Buyer shall have received the written
resignation of all directors, officers and consultants of the Company unless
the Buyer shall have notified the Stockholders that it wishes certain of such
directors, officers and consultants to continue in such positions after the
Closing.
8.11. PROCEEDINGS. All proceedings to be taken by the Stockholders or
the Company in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Buyer and their counsel, and the Buyer shall have received
copies of all such documents and other evidences as they or their counsel may
reasonably request in order to establish the consummation of such transactions
and the taking of all proceedings in connection therewith.
8.12. SIGNING AUTHORITY. The Stockholders and all officers of the
Company shall have taken the necessary action to terminate their (i) access to
all bank accounts of the Company and (ii) authority to sign on behalf of the
Company, except as otherwise agreed to by the Buyer.
9. TAX MATTERS.
9.1. TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Federal Tax" means any Tax imposed under Subtitle A of the Code.
STOCK PURCHASE AGREEMENT - PAGE 15
16
"Final Determination" shall mean (i) with respect to Federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870AD and, with respect to Taxes other than
Federal Taxes, any final determination of liability in respect of a Tax that,
under applicable law, is not subject to further appeal, review or modification
through proceedings or otherwise (including the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns
or appeals from adverse determinations) or (ii) the payment of Tax by the
Company or the Stockholders, whichever are responsible for payment of such Tax
under applicable law, with respect to any item disallowed or adjusted by a
Taxing Authority, provided that such responsible party determines that no
action should be taken to recoup such payment and the other party agrees.
"Post-Closing Tax Period" means any Tax period (or portion thereof)
beginning after the close of business on the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"Buyer Indemnitee" means the Buyer Indemnified Parties as defined in
Section 10.1.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts (including gross receipts tax in respect of any
franchise operation), royalty, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding on amounts paid to or by the Company,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other governmental fee,
assessment or charge of any kind whatsoever, together with any interest,
penalty, addition to tax or additional amount imposed by any governmental
authority (a "Taxing Authority") responsible for the imposition of any such tax
(domestic or foreign). "Tax" includes any employment or withholding tax
relating to employee tips income (actual and allocated).
"Tax Indemnification Period", means with respect to any Tax, any Pre-
Closing Tax Period of the Company.
9.2. FILING OF SHORT PERIOD RETURNS. The Buyer and the Stockholders
shall treat and cause the Company to treat August 31, 1997 as the last day of
the taxable period in which the Company is an S corporation, as defined under
the Code. All Tax returns of the Company, which are required and/or permitted
by the authorized taxing authorities (herein collectively referred to as the "S
Short Year Returns"), shall be filed accordingly. In accordance with Section
1362(e)(6)(D) and related regulations of the Code, the books of the Company
shall be closed August 31, 1997. The Stockholders will cause their accounting
firm to prepare, at the Stockholders' expense, the S Short Year Returns.
9.3. COVENANTS.
(a) Without the prior written consent of the Buyer, the
Stockholders shall not cause the Company to make or change any tax election,
change any annual tax accounting period, adopt or change any method of tax
accounting, file any amended Return, enter into any closing agreement, settle
any Tax claim or assessment, surrender any right to claim a Tax refund, consent
to any extension or waiver of the limitations period applicable to any Tax
claim or assessment or take or omit to take any other action, if any such
action or omission would have the effect of increasing the Tax liability of the
Company or the Buyer.
(b) All Returns not required to be filed on or before the date
hereof (including any applicable extensions) will be filed when due in
accordance with all applicable laws.
STOCK PURCHASE AGREEMENT - PAGE 16
17
(c) All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees incurred in connection
with this Agreement (including any real property transfer Tax and any similar
Tax) shall be accrued by the Company on the Effective Date Balance Sheet and be
paid by the Company when due (including any applicable extensions), and the
Company will, at the Stockholders' expense, file all necessary Tax returns and
other documentation with respect to all such Taxes and fees.
9.4. COOPERATION ON TAX MATTERS.
(a) The Buyer and the Stockholders shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the preparation and filing of any Tax return, statement, report or form
(including any report required pursuant to Section 6043 of the Code and all
Treasury Regulations promulgated thereunder), any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other
proceeding. The Buyer and Stockholders shall cause the Company to: (i) to
retain all books and records with respect to Tax matters pertinent to the
Company relating to any Pre-Closing Tax Period, and to abide by all record
retention requirements of any Taxing Authority or any record retention
agreements entered into with any Taxing Authority, and (ii) to give the
Stockholders reasonable written notice prior to destroying or discarding any
such books and records and, if the Stockholders so request, the Buyer shall
allow the Stockholders to take possession of such books and records.
(b) The Buyer and the Stockholders further agree, upon
request, to use all reasonable efforts to obtain any certificate or other
document from any governmental authority or any other person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
9.5. TAX INDEMNIFICATION. The Stockholders hereby jointly and
severally indemnify Buyer Indemnitee against and agree to hold Buyer Indemnitee
harmless from any loss, liability or expense attributable to (i) any Tax with
respect to income (including, to the extent based on income, state franchise
Taxes), transfer Tax, employment or withholding Tax related to employee tips
income (actual and allocated) and related reporting requirements, and gross
receipts or royalty Tax in respect of any franchise operation and any other Tax
of the Company related to the Tax Indemnification Period, (ii) any Tax
resulting from a breach of the provisions of Section 9.3, and (iii) any
liabilities, costs, expenses (including, without limitation, reasonable
expenses of investigation and attorneys' fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any Tax described in (i) or (ii),
including those incurred in the contest in good faith in appropriate
proceedings relating to the imposition, assessment or assertion of any such
Tax, and any liability as transferee or successor (the sum of (i), (ii), and
(iii) being referred to herein as a "Loss").
9.6. PURCHASE PRICE ADJUSTMENT. Any amount paid by the Stockholders,
the Buyer or the Company under Section 9.5 or Section 10 will be treated as an
adjustment to the relevant purchase price for all Tax purposes unless a Final
Determination causes any such amount not to constitute an adjustment to the
relevant purchase price. In the event of such a Final Determination, the
Buyer, the Company or the Stockholders, as the case may be, shall pay an amount
that reflects the hypothetical Tax consequences of the receipt or accrual of
such payment, using the maximum statutory rate (or rates, in the case of an
item that affects more than one Tax) applicable to the recipient of such
payment for the relevant year, reflecting for example, the effect of deductions
available for interest paid or accrued and for Taxes such as state and local
STOCK PURCHASE AGREEMENT - PAGE 17
18
income Taxes. Any payment required to be made by the Buyer or the Stockholders
under Section 9 that is not made when due shall bear interest at the rate per
annum determined, from time to time, under the provision of Section 6621(a)(2)
of the Code for each day until paid.
9.7. SURVIVAL. The provisions of this Section 9 with respect to
income (including to the extent based on income, state franchise Taxes),
transfer Taxes, employment or withholding Taxes related to employee tips income
(actual and allocated) and related reporting requirements, gross receipts or
royalty Taxes in respect of any franchise operation shall survive for the full
period of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof) and, with respect to all other Taxes, the
provisions shall survive the Closing Date until the earlier of (a) ninety days
after the completion of the audit of the Company's financial statements for the
fiscal year ended December 31, 1995 and (b) June 30, 1996, in each such case
regardless of any investigations or inquiries made by the Buyer, the
Stockholders or any of their respective representatives. Notwithstanding the
preceding sentence, any covenant, agreement, representation or warranty in
respect of which indemnity may be sought under this agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence,
if a Notice of Claim relating to the inaccuracy or breach thereof giving rise
to such right of indemnity shall have been given to the party against whom such
indemnity may be sought prior to such time.
10. INDEMNIFICATION.
10.1. INDEMNIFICATION BY THE STOCKHOLDERS. Stockholders shall, jointly
and severally, indemnify, defend, reimburse and hold the Buyer and its
affiliates (including its affiliates, each of their respective directors,
officers, employees and agents, and each of their respective heirs, executors,
successors and assigns of any of the foregoing, collectively, the "Buyer
Indemnified Parties") harmless from, against and in respect of any and all
claims, losses, liabilities, and expenses, including reasonable fees and
disbursements of counsel (including any such fees and expenses for the
collection of any claim against any third party incurred by any Buyer
Indemnified Party arising from or in connection with any or all of the
following:
(a) Any breach of any covenant, obligation or agreement of the
Stockholders under this Agreement or because any representation or warranty
made by the Stockholders pursuant to this Agreement (ignoring for this purpose
any qualification as to materiality or Material Adverse Effect contained in any
such representation or warranty) shall be inaccurate.
(b) Any action, suit, proceeding, compromise, assignment or
judgment arising out of or incidental to any of the matters indemnified against
in this Section 10.1 to include, but not limited to all liabilities,
obligations, claims and/or lawsuits incurred by the Company on or prior to the
Closing Date.
10.2. INDEMNIFICATION BY BUYER. From and after the Closing Date, the
Buyer shall indemnify, defend, reimburse and hold harmless the Stockholders and
their affiliates, each of their employees and agents, and each of their
respective heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Stockholder Indemnified Parties") from, against and in
respect of, any and all claims, losses, liabilities, and expenses, including
reasonable fees and disbursements of counsel, incurred by any Stockholder
Indemnified Party arising from or in connection with any or all of the
following:
(a) Any breach of any covenant, obligation or agreement of the
Buyer under this Agreement, or because any representation or warranty made by
the Buyer pursuant to this Agreement shall be inaccurate.
STOCK PURCHASE AGREEMENT - PAGE 18
19
(b) Any action, suit, proceeding, compromise, assignment or
judgment arising out of or incidental to any of the matters indemnified against
in this Section 10.2.
(c) Any action, suit, proceeding, compromise, assignment or
judgment arising out of Buyer's operation of the business after Effective Date.
10.3. 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.
10.4. 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 10.5 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 Company is the Indemnified Party for
any actual or threatened claim or demand by any third party, the Company shall
have the right to control the prosecution of any counterclaim or right related
to such a claim or demand, provided that the Company agrees to reasonably
cooperate with the Stockholders with respect to the prosecution of such
counterclaim or right.
10.5. SETTLEMENT. Except as provided in Section 10.4, (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 Section 10 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.
10.6. CLAIM REDUCTION. Any claim for indemnification under this
Section 10 shall be
STOCK PURCHASE AGREEMENT - PAGE 19
20
reduced to the extent of any third party insurance (excluding any deductibles
or arrangements in the nature of a financing) or condemnation payment actually
received by the Indemnified Party.
11. MISCELLANEOUS.
11.1. EVENTS OF TERMINATION. This Agreement may be terminated (i) by
mutual written agreement of the Buyer and the Stockholders, (ii) by the Buyer
by written notice to the Stockholders, if the conditions set forth in Section 8
hereof shall not have been complied with or performed on or prior to the
Closing Date or (iii) by the Stockholders by written notice to the Buyer, if
the conditions set forth in Section 7 hereof shall not have been complied with
or performed on or prior to the Closing Date, and, in either case, such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) on or before September 30, 1997.
STOCK PURCHASE AGREEMENT - PAGE 20
21
11.2. EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to Section 11.1, all further obligations of the parties
hereto under this Agreement (other than pursuant to Section 11.3 and Section
11.4 and as provided in the Noncompetition Agreement) shall terminate without
further liability or obligation of either party to the other party hereunder.
11.3. FAILURE TO CLOSE.
(a) If the Buyer fail to consummate the transactions
contemplated on its part to occur in circumstances where all conditions of the
Closing set forth in Section 8 have been satisfied or waived, then Stockholders
may enforce this Agreement either by the specific performance of this Agreement
and Stockholders shall be entitled to recover the costs associated with
enforcing such specific performance or Stockholders may recover the actual
costs incurred with the negotiating of this Agreement.
(b) If the Stockholders fail to consummate the transactions
contemplated on their part to occur in circumstances where all conditions of
the Closing set forth in Section 7 have been satisfied or waived, the Buyer
shall be entitled to either enforce this Agreement through specific performance
and recover the costs associated with enforcing such specific performance or
Buyer may recover the actual costs (including attorneys' fees) incurred with
the negotiating of this Agreement.
11.4. EXPENSES. Each party to this Agreement shall pay its own costs
and expenses (including attorneys' and accountants' fees) incurred in
connection with the negotiation, execution and performance of this Agreement.
Any sales, transfer, stamp, or other like taxes applicable to the conveyance of
the Company's Stock to Buyer shall be borne by Buyer.
11.5. CERTAIN DEFINITIONS. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof. An "Affiliate of any Person" shall mean an "Affiliate" of such Person
as defined in Rule 405 promulgated under the Securities Act. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and polices of a Person, whether
through the ownership of voting securities, by contract or otherwise.
11.6. NOTICES. All notices, requests, demands, waivers or other
communications provided for herein shall be made in writing and shall be deemed
to have been duly given if delivered personally or sent by first class mail
with postage prepaid, or sent by telex, telegram or facsimile, as follows:
if to the Buyer: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx III, President
STOCK PURCHASE AGREEMENT - PAGE 21
22
with a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxxx, P.C.
if to the Company: First Ice Company/Codorus Leasing Company
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
if to the Shareholders: Xxxxx X. Xxxxx, Xx.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
W. Xxxx Xxxxxxxx
0000 Xxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
with a copy to: White, Coffey, Galt & Xxxx, P.C.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
or to such other address as a party shall have specified by notice in
writing to the other parties. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of personal
delivery or on the third business day after the mailing thereof or on the date
of confirmation of transmission of any telex, telegram or facsimile.
11.7. ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits, constitutes the entire agreement among the parties and supersedes all
prior agreements, correspondence, conversations and negotiations, with respect
to the subject matter hereof.
11.8. SEVERABILITY. If any provisions of this Agreement shall be
declared by any court of competent jurisdiction illegal, void or unenforceable,
the other provisions shall not be affected, but shall remain in full force and
effect.
11.9. MODIFICATION. This Agreement may not be modified or changed
except by an instrument in writing duly executed by the parties hereto, and no
waiver of compliance of any provision or condition hereof and no consent
provided for herein shall be effective unless evidenced by an instrument in
writing duly executed by the party seeking to be charged with such waiver or
consent.
11.10. CHOICE OF LAW. This Agreement shall be governed by and construed
according to the laws of the State of Oklahoma.
STOCK PURCHASE AGREEMENT - PAGE 22
23
11.11. ASSIGNABILITY; SUCCESSOR AND ASSIGNS. This Agreement shall not
be assignable by any party without the prior written consent of the other
parties; provided, however, that the Buyer may assign their interest in this
Agreement to any of their Affiliates if such Affiliate undertakes to perform
the Buyer' obligations hereunder. This Agreement shall be binding upon and
shall inure to the benefit of the parties and, subject to the preceding
sentence, their respective successors in interest and assigns. Nothing in this
Agreement expressed or implied, is intended to confer on any person other than
the parties and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement. No
attempted assignment shall relieve the assignor of any of its obligations
hereunder without the written consent of the other party hereto. Any permitted
assignor of this Agreement shall give the other party to this Agreement notice
of any such assignment.
11.12. PRINCIPLES OF CONSTRUCTION. All references to sections,
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States in conformity with those used in the preparation of the Financial
Statements.
11.13. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
11.14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
11.15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Any and all
representations and warranties set forth herein or in any Schedule or Exhibit
(including but not limited to any such representations, warranties or
statements made in or in connection with any amendment), or any certificate,
financial statement, or other instrument, delivered to Buyer by or on behalf of
Shareholders pursuant to or in connection with this Agreement shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the date of this Agreement and at the Closing Date. Unless otherwise
provided herein, all representations and warranties made or deemed to be made
under this Agreement shall survive the closing Date for a period of one (1)
year, regardless of any investigations or inquiries made by Buyer, and shall
not be waived by the Closing or by operation of law, except those
representations relating to any taxes which shall run indefinitely.
11.16. PARTIES IN INTEREST. This Agreement shall bind and inure to the
benefit of each party hereto and their legal representative, successors and
assigns.
11.17. ATTACHMENTS. All Exhibits and Schedules shall be attached to
this agreement and shall form an integral part hereof.
11.18. CONSTRUCTION. This Agreement is in all respects intended by each
party hereto to be deemed and construed to have been jointly prepared by the
parties. The parties hereby expressly agree that any uncertainty or ambiguity
existing herein shall not be interpreted against either of them as a result of
the actual identity of the draftsman.
11.19. WAIVER. No delay or failure by any party hereto in exercising
any of its rights, remedies, powers or privileges under this Agreement or at
law or in equity and no custom,
STOCK PURCHASE AGREEMENT - PAGE 23
24
practice or course of dealing between or among any of such parties or any other
person shall be deemed a waiver by such party of any such rights, remedies,
powers or privileges, even if such delay or failure is continuous or repeated.
No single or partial exercise of any right, remedy, power or privilege shall
preclude any other or further exercise thereof by any such party or the
exercise of any other right, remedy, power or privilege by such party,
including, without limitation, the right of such party subsequently to demand
exact compliance with the terms of this Agreement.
11.20. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, including without limitation
any alleged violations of securities laws, shall be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in Oklahoma City, Oklahoma County, Oklahoma and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof, and shall not be appealable. Judicial proceedings
may be commenced only to enforce this arbitration agreement or to enforce the
results of arbitration; provided that such prohibition shall not apply in the
event that a court ordered injunction is an appropriate remedy for a breach of
this Agreement.
11.21. TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement, and all time limitations shall be strictly enforced, 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.
[STOCK PURCHASE AGREEMENT SIGNATURE PAGE FOLLOWS]
STOCK PURCHASE AGREEMENT - PAGE 24
25
[STOCK PURCHASE AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
parties as of the date first above written.
STOCKHOLDERS:
/s/ W. Xxxx Xxxxxxxx
---------------------------------------------
W. XXXX XXXXXXXX, Stockholder
/s/ Xxxxx X. Xxxxx, Xx.
---------------------------------------------
XXXXX X. XXXXX XX., Stockholder
BUYER:
PACKAGED ICE, INC.
By: /s/ X. X. Xxxxx III
------------------------------------------
X.X. XXXXX III, President
[SPOUSAL DISCLAIMERS FOLLOW]
STOCK PURCHASE AGREEMENT - PAGE 25
26
DISCLAIMER
The undersigned disclaims any interest in and to the capital stock of
First Ice Company/Codorus Leasing Company and consents, if necessary, to its
sale by her husband, Xxxxx X. Xxxxx, Xx.
/s/ Xxxx X. Xxxxx
-----------------------------
XXXX X. XXXXX
STOCK PURCHASE AGREEMENT - PAGE 26
27
DISCLAIMER
The undersigned disclaims any interest in and to the capital stock of
First Ice Company/Codorus Leasing Company and consents, if necessary, to its
sale by her husband, W. Xxxx Xxxxxxxx.
/s/ Xxxxx X. Xxxxxxxx
-----------------------------
XXXXX X. XXXXXXXX
STOCK PURCHASE AGREEMENT - PAGE 27
28
EXHIBIT 6.6
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of August
13, 1997, by and among Packaged Ice, Inc., a Texas corporation ("Parent"),
First Ice Company, an Oklahoma corporation and wholly-owned subsidiary of
Parent ("First Ice"), and W. Xxxx Xxxxxxxx ("Xxxxxxxx") and Xxxxx X. Xxxxx, Xx.
("White").
RECITALS
WHEREAS, Xxxxxxxx and White have sold or agreed to sell all of the stock
they own in First Ice Company to Parent pursuant to that certain Stock Purchase
Agreement dated as of August 13, 1997 (the "Stock Purchase Agreement"); and
WHEREAS, Section 6.6 of the Stock Purchase Agreement requires that
Xxxxxxxx and White execute and deliver a noncompetition agreement as a
condition to the consummation of the transactions contemplated by the Stock
Purchase Agreement.
AGREEMENT
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. ACKNOWLEDGMENTS BY XXXXXXXX AND WHITE.
Xxxxxxxx and White understand, acknowledge and agree that (a) First Ice
and Parent have required that Xxxxxxxx and White make the covenants set forth
in Sections 2 and 3 of this Agreement as a condition to Parent's acquisition of
the Stock (as defined in the Stock Purchase Agreement); (b) the provisions of
Sections 2 and 3 of this Agreement are reasonable and do not impose a greater
restraint on Xxxxxxxx and White than is necessary to protect the goodwill or
other business interest of First Ice and Parent; (c) the provisions set forth
in Sections 2 and 3 are not oppressive to Xxxxxxxx and White nor injurious to
the public; and (d) First Ice and Parent would be irreparably damaged if
Xxxxxxxx or White were to breach the covenants set forth in Sections 2 and 3 of
this Agreement.
2. CONFIDENTIAL INFORMATION.
Xxxxxxxx and White acknowledge and agree that all confidential
information known or obtained by Xxxxxxxx and White, whether before or after
the date hereof, relating to First Ice is now the property of First Ice.
Therefore, Xxxxxxxx and White agree that they will not, at any time, disclose
to any unauthorized persons or use for their own account or for the benefit of
any third party any confidential information, whether Xxxxxxxx and White have
such information in their respective memory or embodied in writing or other
physical form, without the written consent of First Ice of Parent, unless and
to the extent that such confidential information (i) is or becomes generally
known to and available for use by the public, other than as a result of the
fault of Xxxxxxxx or White or any other person bound by a duty of
confidentiality to Parent of First Ice, (ii) becomes available to Xxxxxxxx or
White on a non-confidential basis from a source other than Parent of First Ice,
provided that such source is not bound by a confidentiality agreement or other
contractual, legal or fiduciary obligation of confidentiality to Parent or
First Ice, or (iii) Xxxxxxxx and White or any of their representatives are
compelled to disclose by judicial or
29
administrative process or, in the opinion of Xxxxxxxx'x or White's respective
or joint counsel, by other mandatory requirements of law. Xxxxxxxx and White
agree to deliver to Parent or First Ice at any time Parent or First Ice may
request, all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or in other form (and all copies of all of the foregoing,
excluding Xxxxxxxx'x and White's personal copies of the transactional documents
related to the aforementioned Stock Purchase Agreement), relating to First Ice
that Xxxxxxxx and White may then possess or have under their respective or
joint control. Xxxxxxxx'x and White's obligations with respect to this Section
2 shall terminate five years after the date of this Agreement.
3. NONCOMPETITION.
As an inducement for Parent to enter into and consummate the Stock
Purchase Agreement, and in exchange for the consideration paid to Xxxxxxxx and
White under the Stock Purchase Agreement, Xxxxxxxx and White agree that:
(a) For a period of five (5) years after the date hereof with the
State of Oklahoma or any state bordering Oklahoma:
(i) Except with respect to services provided to First Ice or
Parent, Xxxxxxxx and White will not, directly or indirectly, engage or invest
in, own, manage, operate, finance, control or participate in the ownership,
management, operation, financing or control of, be employed by, associated
with, or in any manner connected with, lend Xxxxxxxx'x and/or White's name or
any similar name to, lend Xxxxxxxx'x and/or White's credit to, or render
services or advice to, any business whose products or activities compete in
whole or in part with the products or activities of First Ice or Parent as it
relates to the production, distribution, transportation, and sale of packaged
ice products, as of the date hereof; provided, however, that Xxxxxxxx and White
may purchase or otherwise acquire up to (but not more than) one percent of
any class of securities of any enterprise (but without otherwise participating
in the activities of such enterprise) if such securities are listed on any
national or regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934. Xxxxxxxx and White agree that
this covenant is reasonable with respect to its duration, geographical area,
and scope;
2
30
(ii) Xxxxxxxx and White will not, directly or indirectly,
either for their respective selves or any other person (a) solicit or attempt
to solicit any employee of Parent or First Ice in attempt to encourage the
employee to leave the employ of Parent or First Ice, (b) in any way interfere
with the relationship between Parent, First Ice and any employee of Parent or
First Ice, (c) knowingly employ, or otherwise engage as an employee,
independent contractor, or otherwise any employee of Parent or First Ice or (d)
induce or attempt to induce any customer, supplier, licensee, or business
relation of Parent or First Ice to cease doing business with Parent or First
Ice, or in any way interfere with the relationship between any customer,
supplier, licensee, or business relation of Parent or First Ice; and
(iii) Xxxxxxxx and White will not, directly or indirectly,
either for itself or any other person, solicit the business of any person known
to Xxxxxxxx and White to be a customer or prospective customer of Parent or
First Ice, whether or not Xxxxxxxx or White had personal contact with such
person, with respect to products or activities which compete in whole or in
part with the products or activities of Parent, First Ice or any subsidiary
thereof.
(b) In the event of a breach by Xxxxxxxx and White of any covenant
set forth in Subsection 3(a) of this Agreement, the term of such covenant will
be extended by the period of the duration of such breach;
(c) The provisions set forth in this Section 3 shall not preclude the
shareholders or members, other than White, of White, Coffey, Galt & Xxxx, P.C.,
an Oklahoma professional corporation, from undertaking future representation of
other ice companies.
4. REMEDIES.
If either Xxxxxxxx and/or White breaches the covenants set forth in
Sections 2 or 3 of this Agreement, Parent and First Ice will be entitled to the
following remedies;
(a) Damages from Xxxxxxxx and White; and
(b) In addition to its right to damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 2 and 3 of this Agreement, it being agreed that money damages alone
may be inadequate to compensate the Parent and First Ice and would be an
inadequate remedy for such breach.
3
31
(c) Prior to commencing any legal action, Parent and/or First Ice
shall first give notice, as provided for herein, to Xxxxxxxx and White. Upon
the giving of notice by Parent and/or First Ice, Xxxxxxxx and/or White shall
have no more than thirty (30) days to cure whatever breach of this Agreement is
alleged by Parent and/or First Ice.
5. SUCCESSORS AND ASSIGNS.
This Agreement will be binding upon Xxxxxxxx and White and their
respective assigns, heirs and legal representatives and will inure to the
benefit of Parent and First Ice and their affiliates, successors and assigns.
Neither this Agreement nor any rights or obligations hereunder shall be
assignable by Xxxxxxxx and White. First Ice and Parent shall have the right
to assign their rights under this Agreement to any entity which acquires all
or substantially all of the assets of First Ice or Parent.
6. WAIVER.
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement will operate as
a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power, or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law: (a) no
claim or right arising out of this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing and signed by the other party; (b) no waiver that may be given by a
party will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party will be deemed to be a waiver of
any obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.
7. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Oklahoma.
8. JURISDICTION.
The parties hereto intend to and hereby confer jurisdiction to enforce
the covenants contained in this Agreement upon the District Court of Oklahoma
County, Oklahoma.
4
32
9. SEVERABILITY.
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by law or invalid, then such
provision or term will be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement. If any of the covenants set forth in this Agreement are held by
a court of competent jurisdiction to contain limitations as to time,
geographical area or scope of activity to be restrained that are not reasonable
and impose a greater restraint than is necessary to protect the goodwill or
other business interest of First Ice or Parent, the court shall reform the
covenants to the extent necessary to cause the limitations contained in the
covenants as to time, geographical area and scope of activity to be restrained
to be reasonable and to impose a restraint that is not greater than necessary
to protect the goodwill or other business interest of First Ice or Parent and
enforce the covenants as reformed.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11. SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will
be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
12. NOTICES.
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when:
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as
a party may designate by notice to other parties):
W. Xxxx Xxxxxxxx: 0000 Xxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxx, Xx.: 0000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
5
33
With a copy to: Xxxx Xxxxxx
White, Coffey, Galt & Xxxx
0000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Parent and First Ice: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx, President
With a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
13. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter of this Agreement. This Agreement may not be
amended except by a written agreement executed by the party to be charged with
the amendment.
[NONCOMPETITION AGREEMENT SIGNATURE PAGE FOLLOWS]
6
34
[NONCOMPETITION AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
/s/ W. Xxxx Xxxxxxxx
------------------------------------
W. XXXX XXXXXXXX
/s/ Xxxxx X. Xxxxx, Xx.
------------------------------------
XXXXX X. XXXXX, XX.
FIRST ICE COMPANY:
By: /s/ X. X. Xxxxx III
-----------------------------
X.X. XXXXX III, PRESIDENT
PACKAGED ICE, INC.:
By: /s/ X. X. Xxxxx III
----------------------------
X.X. XXXXX III, PRESIDENT
7
