1
EXHIBIT 2.1
================================================================================
STOCK PURCHASE AGREEMENT
between
PACKAGED ICE, INC.
and
SUIZA FOODS CORPORATION
regarding the sale of all of the outstanding stock of Reddy Ice Corporation
dated as of March 27, 1998
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS AND RULES OF INTERPRETATION..............................................1
Section 1.1 Definitions................................................................1
Section 1.2 Accounting Terms...........................................................8
Section 1.3 Articles, Sections, Exhibits and Schedules.................................8
Section 1.4 Attorneys' Fees............................................................8
Section 1.5 Breach.....................................................................8
Section 1.6 Monetary Thresholds........................................................8
Section 1.7 Drafting...................................................................9
Section 1.8 Headings...................................................................9
Section 1.9 Include....................................................................9
Section 1.10 Or........................................................................9
Section 1.11 Plural and Singular Words.................................................9
Section 1.12 Predecessors..............................................................9
Section 1.13 Pronouns..................................................................9
ARTICLE II. PURCHASE PRICE AND RELATED TERMS....................................................9
Section 2.1 Purchase of the Shares.....................................................9
Section 2.2 Purchase Price.............................................................9
Section 2.3 Payment of Preliminary Purchase Price.....................................10
Section 2.4 Purchase Price Adjustment.................................................10
ARTICLE III. CLOSING...........................................................................11
Section 3.1 Closing...................................................................11
Section 3.2 Deliveries by Seller......................................................11
Section 3.3 Deliveries by Purchaser...................................................12
Section 3.4 Simultaneous Deliveries...................................................13
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER...........................................13
Section 4.1 Organization; Good Standing; Delivery of Charter Documents................13
Section 4.2 Power and Authority.......................................................13
Section 4.3 Capitalization............................................................13
Section 4.4 No Conflict; Seller Consents..............................................14
Section 4.5 Financial Statements......................................................14
Section 4.6 No Funded Indebtedness or Undisclosed Liabilities.........................15
Section 4.7 Absence of Certain Changes................................................15
Section 4.8 Sufficiency and Condition of and Title to Assets..........................15
Section 4.9 Accounts Receivable.......................................................15
Section 4.10 Inventory................................................................15
3
Section 4.11 Real Property............................................................16
Section 4.12 Personal Property........................................................17
Section 4.13 Compliance with Laws.....................................................17
Section 4.14 Insurance................................................................17
Section 4.15 Contracts................................................................18
Section 4.16 Litigation; Orders.......................................................18
Section 4.17 Environmental Matters....................................................18
Section 4.18 Permits..................................................................19
Section 4.19 Intangible Assets........................................................20
Section 4.20 Employees................................................................20
Section 4.21 Employee Benefits........................................................21
Section 4.22 Taxes....................................................................23
Section 4.23 Bank Accounts; Powers of Attorney........................................25
Section 4.24 Suppliers and Customers..................................................25
Section 4.25 Affiliated Transactions..................................................25
Section 4.26 Books and Records........................................................25
Section 4.27 Capital Projects.........................................................25
Section 4.28 Brokers..................................................................26
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................26
Section 5.1 Organization; Good Standing; Delivery of Charter Documents................26
Section 5.2 Power and Authority.......................................................26
Section 5.3 Authorization; Execution and Validity.....................................26
Section 5.4 No Conflict; Purchaser Consents...........................................26
Section 5.5 Brokers...................................................................27
Section 5.6 Financing.................................................................27
ARTICLE VI. COVENANTS OF SELLER................................................................27
Section 6.1 Cooperation by Seller.....................................................27
Section 6.2 Pre-Closing Access to Information.........................................27
Section 6.3 Conduct of Business.......................................................28
Section 6.4 Supplements to Schedules..................................................30
Section 6.5 Standstill................................................................30
Section 6.6 Discharge of Encumbrances.................................................30
Section 6.7 Resignations..............................................................30
ARTICLE VII. COVENANTS OF PURCHASER............................................................30
Section 7.1 Cooperation by Purchaser..................................................30
Section 7.2 Pre-Closing Access to Information.........................................31
ARTICLE VIII. MUTUAL COVENANTS.................................................................31
Section 8.1 Governmental Consents.....................................................31
Section 8.2 Consents to Assign Leases and Contracts...................................32
4
Section 8.3 Books and Records.........................................................32
Section 8.4 Further Assurances........................................................33
Section 8.5 Supplemental Agreements...................................................33
Section 8.6 Termination of Related Party Contracts....................................33
Section 8.7 Employee Plans............................................................33
ARTICLE IX. CONDITIONS PRECEDENT TO CLOSING....................................................34
Section 9.1 Conditions Precedent to Purchaser's Obligations...........................34
Section 9.2 Conditions Precedent to Seller's Obligations..............................35
Section 9.3 If Conditions Not Satisfied...............................................36
ARTICLE X. TERMINATION PRIOR TO CLOSING........................................................36
Section 10.1 Termination of Agreement.................................................36
Section 10.2 Procedure Upon Termination...............................................37
Section 10.3 Liquidated Damages.......................................................37
ARTICLE XI. TAXES..............................................................................38
Section 11.1 Section 338 Election.....................................................38
Section 11.3 Apportionment of Taxable Income..........................................39
Section 11.4 Preparation and Filing of Income Tax Returns.............................39
Section 11.5 Payment of Income Taxes..................................................39
Section 11.6 Section 338 Election - Payment of Taxes..................................39
Section 11.7 Audit....................................................................39
Section 11.8 Refunds..................................................................40
Section 11.9 Allocation Statement.....................................................40
ARTICLE XII. INDEMNIFICATION...................................................................40
Section 12.1 Survival of Representations and Warranties...............................40
Section 12.3 Indemnification of Seller................................................41
Section 12.5 Indemnification Procedure................................................42
Section 12.6 Sole and Exclusive Remedy................................................43
Section 12.7 Notice of Breach.........................................................43
Section 12.8 Discovery of Breach......................................................43
Section 12.9 Notification of Breach...................................................43
Section 12.10 Negligence and Strict Liability.........................................43
ARTICLE XIII. MEDIATION AND REMEDIES...........................................................43
Section 13.1 Mediation Meeting........................................................43
Section 13.2 Exclusive Jurisdiction...................................................44
Section 13.3 Expenses.................................................................44
ARTICLE XIV. MISCELLANEOUS.....................................................................44
5
Section 14.1 Amendment................................................................44
Section 14.2 Counterparts.............................................................44
Section 14.3 Entire Agreement.........................................................44
Section 14.4 Expenses.................................................................44
Section 14.5 Governing Law............................................................44
Section 14.6 No Assignment............................................................45
Section 14.7 No Third Party Beneficiaries.............................................45
Section 14.8 Notices..................................................................45
Section 14.9 Public Announcements.....................................................46
Section 14.10 Representation by Legal Counsel.........................................46
Section 14.11 Schedules...............................................................46
Section 14.12 Severability............................................................46
Section 14.13 Specific Performance....................................................46
Section 14.14 Successors..............................................................47
Section 14.15 Time of the Essence.....................................................47
Section 14.16 Waiver..................................................................47
6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of March 27,
1998 (the "SIGNING DATE"), is made by and between Suiza Foods Corporation, a
Delaware corporation ("SELLER"), and Packaged Ice, Inc., a Texas corporation
("PURCHASER"). Seller and Purchaser are sometimes together referred to as the
"PARTIES," and individually referred to as a "PARTY."
PRELIMINARY STATEMENTS
A. Seller owns 100 shares of the common stock, par value $.01 per share
(the "Common Stock") of Reddy Ice Corporation, a Delaware corporation (the
"Company").
B. Such shares of Common Stock (the "Shares") constitute all of the
outstanding shares of the Company's capital stock.
C. Seller desires to sell and assign the Shares to Purchaser, and
Purchaser desires to purchase the Shares on the terms and subject to the
conditions set forth in this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS AND RULES OF INTERPRETATION
Section 1.1 Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall have the meanings specified below for all
purposes of this Agreement:
(a) "ACCOUNTS RECEIVABLE" shall have the meaning set forth in
Section 4.9.
(b) "ACTION" means any action, arbitration proceeding, cause
of action, charge, counterclaim, cross claim, inquiry, investigation, legal
action, litigation, Order, proceeding, or suit.
(c) "AGREEMENT" shall have the meaning set forth in the first
paragraph.
(d) "ADJUSTMENT STATEMENT" shall have the meaning set forth in
Section 2.4(a).
(e) "ANNUAL FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.5(a).
7
(f) "AUDITED FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 6.2.
(g) "BALANCE SHEET DATE" shall have the meaning set forth in
Section 4.5(a).
(h) "BANK ACCOUNTS" shall have the meaning set forth in
Section 4.23.
(i) "BOOKS AND RECORDS" shall mean all the books and records
maintained by or for the Company, including all accounting records, minute
books, stock records, computerized records and storage media and the software
used in connection therewith.
(j) "CHARTER DOCUMENTS" shall mean (i) in the case of a
corporation, its articles or certificate of incorporation and its bylaws, (ii)
in the case of a partnership, its partnership certificate and its partnership
agreement, and (iii) in the case of any other Person, its organic and governing
documents; in each case as such document has been amended or supplemented from
time to time.
(k) "CLAIM" shall mean any claim, demand, assessment, fine,
penalty, Liability or Action.
(l) "CLOSING" shall have the meaning set forth in Section 3.1.
(m) "CLOSING BALANCE SHEET" shall have the meaning set forth
in Section 2.4(a).
(n) "CLOSING DATE" shall have the meaning set forth in Section
3.1.
(o) "CLOSING DATE CAPITAL LEASES" shall have the meaning set
forth on Schedule 2.2 hereto.
(p) "CLOSING DATE FUNDED INDEBTEDNESS" shall have the meaning
set forth on Schedule 2.2 hereto.
(q) "CLOSING DATE WORKING CAPITAL" shall have the meaning set
forth on Schedule 2.2 hereto.
(r) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(s) "COMPANY CONTROLLED GROUP MEMBER" shall mean a member of a
group of entities or trades or businesses that is aggregated with and includes
the Company under Code Section 414(b), (c), (m) or (o) and the Treasury
Regulations thereunder or under Section 4001 of ERISA.
(t) "COMPANY CONTROLLED GROUP PLAN" shall mean a Company Plan
and any other Plan maintained by or contributed to, at any time within six years
prior to the Closing Date, by any Company Controlled Group Member.
2
8
(u) "COMPANY PLANS" shall mean all Plans maintained by or
contributed to by the Company or which cover any employees, former employees,
retirees, directors or independent contractors of the Company.
(v) "CONFIDENTIALITY AGREEMENT" shall have the meaning set
forth in Section 6.2.
(w) "CONSENT" shall mean a consent, approval, order,
authorization or waiver from, notice to or declaration, registration or filing
with any Person.
(x) "CONTRACT" shall mean, with respect to a Person, any oral
or written agreement, arrangement, commitment, contract, deed of trust,
franchise (other than a franchise issued by a Governmental Authority),
indenture, instrument, lease, license, mortgage, promise, undertaking, or other
document or obligation to which such Person is a party, under which such Person
possesses any rights or owes any obligations, or by which any of such Person's
assets are bound.
(y) "DAMAGES" shall have the meaning set forth in Section
12.2.
(z) "ENCUMBERED INSTRUMENT" shall mean any Contract to which
the Company is a party, Real Property Lease, Personal Property Lease or Permit,
in each case, that is listed in Section 4.4(d) of Seller's Disclosure Letter and
any other Contract, lease or Permit with respect to which, to the knowledge of
Seller or the Company, the execution, delivery and performance by Seller or the
Company of this Agreement or any other Transaction Document to which Seller or
the Company is a party will result in a breach or require a Consent.
(aa) "ENCUMBRANCE" shall mean any title defect or objection,
mortgage, lien, deed of trust, equity, judgment, claim, restrictive covenant,
use restriction, charge, pledge, security interest or other encumbrance of any
nature whatsoever, including all leases, chattel mortgages, conditional sales
contracts, collateral security arrangements and other title or interest
retention arrangements.
(bb) ENVIRONMENTAL CLAIM" shall mean a Claim under any
Environmental Law or with respect to the presence, use, release, manufacture,
generation, storage, transportation or disposal of any Hazardous Materials.
(cc) "ENVIRONMENTAL LAW" shall mean (i) the Clean Air Act (42
U.S.C. Section 7401 et seq.), (ii) the Clean Water Act (33 U.S.C. Section 1251
et seq.), (iii) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act of
1986 (42 U.S.C. Section 9601 et seq.), (iv) the Federal Water Pollution Control
Act (33 U.S.C. Section 1251 et seq.), (v) the Hazardous Materials Transportation
Act (49 U.S.C. Section 5101 et seq.), (vi) the National Environmental Policy Act
(42 U.S.C. Section 4321 et seq.), (vii) the Oil Pollution Act of 1990 (33 U.S.C.
Section 2701 et seq.), (viii) the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. Section
6901 et seq.), (ix) the Safe Drinking Water Act (42 U.S.C. Section 300f et
seq.), (x) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.),
(xi) any state or local law, ordinance, regulation, or statute
3
9
regulating any
activity or substance regulated by any of the foregoing statutes, or (xii) any
other federal, state or local, law, ordinance, regulation, or statute
prohibiting, regulating, or restricting the disposal, generation, handling,
placement, recycling, release, storage, or treatment of any contaminant, liquid,
mass, material, matter, pollutant, solid, substance, or waste classified or
considered to be hazardous or toxic to human health or the environment or
otherwise related to environmental protection or health and safety.
(dd) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(ee) "FUNDED INDEBTEDNESS" shall have the meaning set forth on
Schedule 2.2 hereto.
(ff) "GAAP" shall mean generally accepted accounting
principles in effect in the United States of America as of the Signing Date.
(gg) "GOVERNMENTAL AUTHORITY" shall mean any federal, state,
local or other governmental agency, department, branch, commission, board,
bureau, court, instrumentality or body.
(hh) "HAZARDOUS MATERIAL" shall mean (i) any contaminant,
liquid, mass, material, matter, pollutant, solid, substance, or waste for which
any Environmental Law limits, prohibits, or regulates its disposal, generation,
handling, placement, recycling, release, storage, or treatment, (ii) any
carcinogenic, corrosive, explosive, flammable, infectious, mutagenic,
radioactive, or toxic substance, (iii) any diesel fuel, gasoline, or other
petroleum product in an unconfined manner, (iv) any substance that contains
polychlorinated biphenyls, (v) any substance that contains asbestos, (vi) any
substance that contains urea formaldehyde foam installation, (vii) any substance
that constitutes a nuisance upon any property, or (viii) any substance that
imposes a hazard to the health or safety of any individual.
(ii) "HSR ACT" shall have the meaning set forth in Section
4.4.
(jj) "INDEMNITEE" shall have the meaning set forth in Section
12.5(a).
(kk) "INDEMNITOR" shall have the meaning set forth in Section
12.5(a).
(ll) "INSURANCE POLICIES" shall have the meaning set forth in
Section 4.14.
(mm) "INTANGIBLE ASSET" shall mean any patent, trademark,
trademark license, computer software, trade name, masthead, brand name, slogan,
copyright, reprint right, license, process, invention, know-how, formula, trade
secret and other intangible asset that constitutes intellectual property,
together with any pending application, continuation-in-part or extension
therefor.
(nn) "INTERIM BALANCE SHEET" shall have the meaning set forth
in Section 4.5(b).
4
10
(oo) "INTERIM FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.5(b).
(pp) "INTERIM PERIOD CAPITAL CONTRIBUTION" shall have the
meaning set forth in Section 2.2(a).
(qq) "INVENTORY" shall have the meaning set forth in Section
4.10.
(rr) "IRS" shall have the meaning set forth in Section
4.22(e).
(ss) "KNOWLEDGE OF SELLER OR THE COMPANY" shall mean the
actual knowledge as of the date that a specific representation or warranty is
made or deemed made of Xxxxxxx Brick, Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxx,
Xxxx Xxxxxx, Xxxx Xxxxxx, Jr., Xxxx Xxxxx or Xxxxx Xxxxxx.
(tt) "LAW" shall mean any applicable code, statute, law,
common law, rule, regulation, order, ordinance, judgment, decree, order, writ or
injunction of any Governmental Authority.
(uu) "LAW AFFECTING CREDITORS' RIGHTS" shall mean any
bankruptcy, fraudulent conveyance or transfer, insolvency, moratorium,
reorganization, or other law affecting the enforcement of creditors' rights
generally, and any general principles of equity.
(vv) "LIABILITY" shall mean, with respect to any Person, any
liability or obligation of such Person of any kind, character or description,
whether known or unknown, absolute or contingent, direct or indirect, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due under a guarantee of another Person's liability, due or to become due,
vested or unvested, executory, determined or determinable and whether or not the
same is required to be accrued on such Person's financial statements.
(ww) "MATERIAL ADVERSE CHANGE" shall mean, with respect to a
Person, that such Person has (i) breached a Material Contract, (ii) incurred a
Claim or become a party to an Action that could reasonably be expected to have a
material and detrimental effect upon it, (iii) suffered a Material Adverse
Effect, or (iv) violated any Law or Order to which it or any of its assets is
subject or bound that could reasonably be expected to have a Material Adverse
Effect.
(xx) "MATERIAL ADVERSE EFFECT" shall mean, with respect to a
Person, the occurrence of an event or the existence of a circumstance that has a
material adverse effect on such Person's assets, business, results of
operations, financial condition or liabilities.
(yy) "MATERIAL CONTRACTS" shall have the meaning set forth in
Section 4.15.
(zz) "MATERIAL EMPLOYEES" shall have the meaning set forth in
Section 4.20(a).
(aaa) "MATERIAL INTANGIBLE ASSETS" shall mean any of the
following Intangible Assets owned or licensed for use by the Company: a
registered trademark, service xxxx or application therefor; an unregistered
trademark or service xxxx owned or used by the Company in
5
11
connection with the sale of more than 1,000,000 bags of ice in any 12 month
period; a patent or patent application; or any other Intangible Asset material
to the Company.
(bbb) "MATERIAL PERMITS" shall have the meaning set forth in
Section 4.18.
(ccc) "MEDIATION MEETING" shall have the meaning set forth in
Section 13.1.
(ddd) "OBJECTION NOTICE" shall have the meaning set forth in
Section 2.4(b).
(eee) "ORDER" shall mean any consent decree, decree,
determination, injunction, judgment, order, or writ of any arbitrator or
Governmental Authority.
(fff) "OWNED REAL PROPERTY" shall have the meaning set forth
in Section 4.11(a).
(ggg) "OUTSIDE DATE" shall have the meaning set forth in
Section 10.1(b).
(hhh) "PARTY" shall have the meaning set forth in the first
paragraph.
(iii) "PENSION BENEFIT PLAN" shall mean (i) an "employee
pension benefit plan" as defined in Section 3(2) of ERISA, and (ii) a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
(jjj) "PERMIT" shall mean any license, approval, certificate,
franchise, registration, permit or authorization issuable by any Governmental
Authority.
(kkk) "PERMITTED ENCUMBRANCE" shall mean any Encumbrance
directly related to (i) Taxes that are not yet due and payable or Taxes that are
being contested in good faith by an appropriate proceeding, and in each case as
to which adequate reserves have been established in accordance with GAAP, (ii)
Encumbrances shown on the Interim Balance Sheet as securing specified Claims
with respect to which no breach or default exists, (iii) workers', repairmen's
and similar Encumbrances imposed by Law that have been incurred in the ordinary
course of business, (iv) retention of title agreements with suppliers entered
into in the ordinary course of business, (v) the rights of others to customer
deposits and (vi) other Encumbrances, such as covenants, easements,
encroachments, restrictive covenants, rights-of-way and servitudes, that do not,
individually or in the aggregate, substantially impair or materially adversely
affect the use to which the applicable property is currently subject or
materially detract from the value of the applicable property excepting (i) any
liens which secure the payment of borrowed monies and (ii) any liens arising by,
through, or under Seller or the Company.
(lll) "PERSON" shall mean any association, bank, business
trust, corporation, estate, general partnership, Governmental Authority,
individual, joint stock company, joint venture, labor union, limited liability
company, limited partnership, non-profit corporation, professional association,
professional corporation, trust, or any other organization or entity.
(mmm) "PERSONAL PROPERTY LEASES" shall have the meaning set
forth in Section 4.12(b).
6
12
(nnn) "PLAN" shall mean any bonus, deferred compensation,
incentive compensation, stock purchase, restricted stock, stock option,
severance, hospitalization or other medical, life or other insurance, employee
welfare, supplemental unemployment benefit, profit-sharing, pension or
retirement plan, program, agreement or arrangement or any other employee benefit
plan, program, agreement or arrangement, including any such plan, program,
agreement or arrangement covering retirees or former employees and including
without limitation any "employee pension benefit plan" and any "employee welfare
benefit plan" as those terms are defined in Section 3 of ERISA.
(ooo) "PRELIMINARY PURCHASE PRICE" shall have the meaning set
forth in Section 2.2.
(ppp) "PURCHASE PRICE" shall have the meaning set forth in
Section 2.2(a).
(qqq) "PURCHASER" shall have the meaning set forth in the
first paragraph.
(rrr) "PURCHASER DEFAULT" shall have the meaning set forth in
Section 10.1(e).
(sss) "REAL PROPERTY" shall mean the Owned Real Property and
the Leased Real Property.
(ttt) "REAL PROPERTY LEASES" shall have the meaning set forth
in Section 4.11(b).
(uuu) "RELATED PARTY CONTRACT" means a Contract between the
Company and any officer, director, stockholder or affiliate of the Company other
than Plans.
(vvv) "REPRESENTATIVES" shall mean, with respect to a Person,
such Person's directors, employees, officers, agents, accountants, affiliates,
consultants, investment bankers, attorneys, lenders, and shareholders.
(www) "REQUIRED CONSENT" shall have the meaning set forth in
Section 8.2(b).
(xxx) "SECTION 338 ELECTION" shall have the meaning set forth
in Section 11.1.
(yyy) "SECTION 338 GROSS-UP AMOUNT" shall mean the amount that
causes the net after-Tax proceeds to Seller from the sale of the Shares, taking
into account all increases in Tax liabilities resulting from (i) the Section 338
Election (including, without limitation, federal income Taxes, all state and
local Taxes of any description, any motor vehicle or real property transfer
Taxes, and any sales and use Taxes resulting from the Section 338 Election) and
(ii) the increase in the Purchase Price resulting from the addition to it of the
Section 338 Gross-up Amount, to equal what the net after-Tax proceeds to Seller
from the sale of the Shares would have been if no Section 338 Election had been
made.
(zzz) "SELLER" shall have the meaning set forth in the first
paragraph.
(aaaa) "SELLER DEFAULT" shall have the meaning set forth in
Section 10.1(d).
7
13
(bbbb) "SELLER'S RELEASE" shall have the meaning set forth in
Section 3.2(b).
(cccc) "SIGNING DATE" shall have the meaning set forth in the
first paragraph.
(dddd) "TAX" shall mean any assessment, charge, duty, fee,
impost, levy, tariff, or tax of any nature whatsoever imposed by any
Governmental Authority or payable pursuant to any tax sharing agreement,
including any income, payroll, withholding, excise, gift, alternative minimum,
capital gain, added value, social security, sales, use, real and personal
property, use and occupancy, business and occupation, mercantile, real estate,
capital stock, and franchise tax or charge, together with any related interest,
penalties or additions thereon.
(eeee) "TAXING AUTHORITIES" shall have the meaning set forth
in Section 4.22(e).
(ffff) "TERMINATION AGREEMENTS" shall have the meaning set
forth in Section 8.6.
(gggg) "TERMINATION FEE" shall have the meaning set forth in
Section 10.3.
(hhhh) "TRANSACTION DOCUMENTS" shall have the meaning set
forth in Section 4.2.
(iiii) "YEAR-END BALANCE SHEET" shall have the meaning set
forth in Section 4.5(a).
Section 1.2 Accounting Terms. Except as otherwise provided in this
Agreement, all accounting terms defined in this Agreement, whether defined in
this Article or otherwise, shall be construed in accordance with GAAP on a
consolidated basis.
Section 1.3 Articles, Sections, Exhibits and Schedules. Except as
specifically stated otherwise, references to Articles, Sections, Exhibits and
Schedules refer to the Articles, Sections, Exhibits and Schedules of this
Agreement.
Section 1.4 Attorneys' Fees. Whenever this Agreement refers to a
Person's "attorneys' fees and expenses," such reference also shall include any
reasonable fees and expenses of accountants, experts, investigators, and other
professional advisors whose services such Person's attorney considered advisable
in connection with the prosecution or defense of the particular matter.
Section 1.5 Breach. The term "breach" with respect to any contract or
instrument means any breach or violation of, or default under, such contract or
instrument, any conflict with another contract or instrument or any emergence of
a right of another party to such contract or instrument to accelerate, cancel,
modify or terminate such contract or instrument, including any such breach,
violation, default, conflict, or right that will arise after notice or lapse of
time.
Section 1.6 Monetary Thresholds. The establishment of any monetary
thresholds shall not create a materiality standard under this Agreement
except as expressly provided.
8
14
Section 1.7 Drafting. Neither this Agreement nor any provision
contained in this Agreement shall be interpreted in favor of or against either
Party because such Party or its legal counsel drafted this Agreement or such
provision. No prior draft of this Agreement or any provision contained in this
Agreement shall be used when interpreting this Agreement or its provisions.
Section 1.8 Headings. Article and section headings are used in this
Agreement only as a matter of convenience and shall not have any effect upon the
construction or interpretation of this Agreement.
Section 1.9 Include. The term "include" or any derivative of such term
does not mean that the items following such term are the only types of such
items.
Section 1.10 Or. The term "or" shall not be interpreted as excluding
any of the items described. --
Section 1.11 Plural and Singular Words. Whenever the plural form of a
word is used in this Agreement, that word shall include the singular form of
that word. Whenever the singular form of a word is used in this Agreement, that
word shall include the plural form of that word.
Section 1.12 Predecessors. Any of Seller's representations and
warranties concerning any Claim against the Company, any Liability of the
Company, or any violation of Law by the Company shall include any Claims,
Liabilities and violations with respect to each predecessor of the Company.
Section 1.13 Pronouns. Whenever a pronoun of a particular gender is
used in this Agreement, if appropriate that pronoun also shall refer to the
other gender and the neuter. Whenever a neuter pronoun is used in this
Agreement, if appropriate that pronoun also shall refer to the masculine and
feminine gender.
ARTICLE II.
PURCHASE PRICE AND RELATED TERMS
Section 2.1 Purchase of the Shares. At the Closing, Purchaser shall
purchase the Shares from Seller, and Seller shall sell the Shares to Purchaser,
free and clear of any Encumbrance.
Section 2.2 Purchase Price.
(a) Purchase Price. The total consideration for the Shares
(the "PURCHASE PRICE") shall be (a) the sum of (i) $172,500,000, (ii) the
amount, if any, of cash contributed by Seller to the Company after the Signing
Date and prior to the Closing Date that is used by the Company prior to the
Closing Date to (x) pay the purchase price and related reasonable accounting,
legal and consulting expenses for the acquisitions described in Schedule 2.2,
(y) pay for the capital project described in Schedule 2.2, and (z) pay, as
reasonably requested by Purchaser, for up to $50,000 of costs facilitating the
integration of the operations of Purchaser and the Company (the "INTERIM PERIOD
CAPITAL CONTRIBUTION"), (iii) the amount, if any, by which Closing Date Working
9
15
Capital exceeds $0, and (iv) the amount of the Closing Date reserve established
consistent with past practice relating to Claims for which insurance coverage is
provided under the automobile bodily injury and property damage, general
liability, workers compensation indemnity and workers compensation medical
policies listed in Schedule 12.2(f), minus (b) the sum of (i) the amount, if
any, of Closing Date Funded Indebtedness, (ii) the amount, if any, of Closing
Date Capital Leases, and (iii) the amount, if any, by which Closing Date Working
Capital is less than $0.
(b) Estimate of Purchase Price. No later than two business
days prior to the Closing Date, Seller shall cause Deloitte & Touche, LLP to
prepare and deliver to Purchaser, based on the Company's books and records
maintained in accordance with past practices, an estimate of what each component
of the Purchase Price described in Section 2.2(a) will be on the Closing Date
and based thereon an estimate of the Purchase Price (the "PRELIMINARY PURCHASE
PRICE").
Section 2.3 Payment of Preliminary Purchase Price. At the Closing,
Purchaser shall pay to Seller an amount equal to the Preliminary Purchase Price
by wire transfer of immediately available funds to the bank account set forth on
a notice given by Seller to Purchaser not later than three business days prior
to the Closing Date.
Section 2.4 Purchase Price Adjustment.
(a) Closing Balance Sheet. As soon as reasonably practicable,
but not later than 90 days after the Closing Date, Purchaser shall prepare and
cause Deloitte & Touche, LLP to audit, and shall deliver to Seller a (i) balance
sheet of the Company prepared as of the close of business on the Closing Date
(the "CLOSING BALANCE SHEET") and (b) calculations of the components of the
Purchase Price described in Section 2.2(a) and the Purchase Price based thereon
(the work papers showing such calculation, the "ADJUSTMENT STATEMENT"). The
Closing Balance Sheet shall be prepared in accordance with GAAP; provided,
however, that the Closing Balance Sheet shall not be required to have notes to
the financial statements as required by GAAP.
(b) Review of Closing Date Balance Sheet and Adjustment
Statement. As soon as practicable, but not later than 120 days after the Closing
Date, Seller or Purchaser shall inform the other Party in writing of any
objection to the Adjustment Statement, which objection, if any, shall set forth
in reasonable detail the objecting Party's objections and the basis for those
objections (the "OBJECTION NOTICE"). If a Party so objects and the Parties do
not resolve such objections on a mutually agreeable basis within 150 days after
the Closing Date, then the disagreement shall be resolved as soon as practicable
thereafter, but not later than 180 after the Closing Date, by one of the largest
four national accounting firms, which accounting firm shall be jointly selected
by the Parties. The Parties acknowledge that the scope of such accounting firm's
work shall be limited to resolving the objections set forth in the Objection
Notice. The decision of such accounting firm shall be final and binding upon the
Parties. The Closing Balance Sheet, the Purchase Price components and the
Purchase Price based thereon (in each case, as adjusted, if applicable, by the
agreement of the Parties or the decision of the accounting firm), shall be
deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii)
the decision of the accounting firm, or (iii) the failure of either Party to
deliver an Objection Notice to the other Party within 120 days after the Closing
Date. Each Party shall bear the fees, costs and expenses of its own accountants
and shall permit each other and each other's accountants
10
16
reasonable access to the books and records necessary to perform the analysis
contemplated by this Section. The Parties shall share equally the fees, costs
and expenses of the accounting firm selected by the Parties to resolve any
disagreements regarding the Objection Notice, provided, however, that if only
one Party shall have objected and the decision of such accounting firm does not
result in an adjustment of more than $50,000 to the Purchase Price in favor of
the objecting Party, such Party shall pay all of the fees, costs and expenses of
such accounting firm.
(c) Purchase Price Adjustment; Procedure. The amount of
adjustment necessary to make the Preliminary Purchase Price paid by Purchaser to
Seller at the Closing equal to the Purchase Price as determined in accordance
with this Section 2.4, together with interest thereon from the Closing Date to
the date of payment calculated at a rate equal to the prime rate of The Chase
Manhattan Bank on the Closing Date shall be paid to the Party to whom it is owed
by wire transfer of immediately available funds within five business days after
the date on which the Purchase Price is deemed final in accordance with Section
2.4(b).
ARTICLE III.
CLOSING
Section 3.1 Closing. The consummation of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000, on the first business day following the date on which all of the
conditions contained in Article IX, to the extent not waived, are satisfied. The
Closing may be postponed to such other date as the Parties may mutually agree.
The date on which the Closing actually occurs is hereinafter referred to as the
"CLOSING DATE."
Section 3.2 Deliveries by Seller. At the Closing, Seller shall deliver
to Purchaser the following:
(a) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Purchaser;
(b) release in the form of Exhibit 3.2(b) executed by Seller
("SELLER'S RELEASE");
(c) noncompetition agreement in the form of Exhibit 3.2(c),
executed by Seller (the "NONCOMPETITION AGREEMENT"), in form and substance
satisfactory to Purchaser;
(d) [reserved];
(e) documents evidencing the release of all Encumbrances,
other than Permitted Encumbrances, on the Company's assets, and documents
evidencing the release of all Encumbrances on the Shares;
(f) documents evidencing the termination of all guarantees by
the Company of any indebtedness or obligations of Seller or any of Seller's
affiliates;
(g) the Termination Agreements for Related Party Contracts;
11
17
(h) the officers' certificates referred to in Sections 9.1(d),
9.1(e) and 9.1(f);
(i) an opinion of Xxxxxx & Xxxx, L.L.P., counsel to Seller, in
substantially the form of Exhibit 3.2(h) attached hereto, and the consent of
Xxxxxx & Xxxx, L.L.P. stating that Purchaser's lenders and equity investors
providing financing for the transactions contemplated by this Agreement may rely
on such opinion;
(j) executed counterparts of all Required Consents;
(k) possession of all Books and Records;
(l) resignations of all directors of the Company and those
officers of the Company specified in writing by Purchaser to Seller concurrently
with the execution of this Agreement;
(m) a receipt for the payment of the Preliminary Purchase
Price;
(n) an affidavit executed by an authorized officer of Seller
containing Seller's Employer Identification Number and stating that Seller is
not a "foreign person" under Sections 1445 and 7701 of the Code;
(o) each of the agreements referred to in Section 8.5, each
executed by the appropriate party; and
(p) all other previously undelivered documents, instruments
and writings required to be delivered by Seller to Purchaser at or prior to the
Closing pursuant to this Agreement.
Section 3.3 Deliveries by Purchaser. At the Closing, Purchaser shall
deliver to Seller the following:
(a) federal or other immediately available funds by wire
transfer to Seller in an amount equal to the Preliminary Purchase Price;
(b) the Noncompetition Agreement;
(c) the officer's certificates referred to in Sections 9.2(c)
and 9.2(d);
(d) an opinion of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.,
counsel to Purchaser, in substantially the form of Exhibit 3.3(d) attached
hereto;
(e) an affidavit executed by an authorized officer of
Purchaser containing Purchaser's Employer Identification Number and stating that
Purchaser is not a "foreign person" under Sections 1445 and 7701 of the Code;
and
(f) all other previously undelivered documents, instruments
and writings required to be delivered by Purchaser to Seller at or prior to the
Closing pursuant to this Agreement.
12
18
Section 3.4 Simultaneous Deliveries. The delivery of the documents
required to be delivered at the Closing pursuant to this Agreement shall be
deemed to occur simultaneously. No delivery shall be effective until each
Party has received or waived receipt of all the documents that this
Agreement entitles such Party to receive.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth with reasonable specificity in a corresponding
numbered section of the Disclosure Letter delivered by Seller to Purchaser prior
to the execution of this Agreement ("SELLER'S DISCLOSURE LETTER"), Seller
represents and warrants to Purchaser as follows:
Section 4.1 Organization; Good Standing; Delivery of Charter Documents.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified or licensed as a foreign corporation in each
jurisdiction where the Company conducts business or owns or leases property.
Section 4.1 of Seller's Disclosure Letter lists each jurisdiction where the
Company is qualified to transact business as a foreign corporation. Seller has
delivered to Purchaser true and complete copies of the Charter Documents of the
Company.
Section 4.2 Power and Authority. Seller has all corporate power and
authority necessary to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby,
including the execution, delivery and performance of all documents and
instruments to be delivered by Seller pursuant to the terms hereof (such
documents and instruments, together with this Agreement, the "TRANSACTION
DOCUMENTS"). The Company has all corporate power and authority necessary to
execute, deliver, and perform the Transaction Documents to which the Company is
a party. The Company also has all corporate power and authority necessary to own
or lease its assets, carry on its business as presently conducted, and perform
its obligations under the Material Contracts. Seller has duly authorized,
executed, and delivered this Agreement, and this Agreement constitutes a valid,
legal, and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to any Law Affecting Creditors' Rights. Each
of the other Transaction Documents, when executed by Seller and delivered to
Purchaser, will be duly authorized, executed and delivered, and will constitute
a valid, legal and binding obligation of Seller, enforceable against Seller in
accordance with the terms of such Transaction Document, subject to any Law
Affecting Creditors' Rights.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of 100 shares of common stock, par value $.01 per share, of which 100
shares are issued and outstanding and constitute the Shares. The Company does
not hold any shares of its capital stock as treasury shares and has no shares of
capital stock reserved for issuance. Seller is and will be on the Closing Date
the record and beneficial owner of the Shares, and on the Closing Date will own
and hold the Shares free and clear of all Encumbrances. There are no contractual
or statutory preemptive rights with respect to any securities of the Company.
The Shares have been validly authorized and issued, are fully paid and
nonassessable, and were not issued in breach or violation of any applicable Law,
Contract, or contractual or statutory preemptive rights. There
13
19
are no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into securities having the right to vote) on any
matters on which stockholders of the Company may vote. There are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or obligating the Company to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Neither Seller nor the
Company is a party to any voting agreement with respect to the voting of any of
the Shares. There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Shares. The Company has not agreed
to register any of the Shares under the Securities Act or otherwise. The Company
does not own any equity interest in any other Person in excess of $50,000, and
at Closing will not own any equity interest in any other Person.
Section 4.4 No Conflict; Seller Consents. Except as set forth in
Section 4.4 of Seller's Disclosure Letter, the execution and delivery of this
Agreement by Seller, the performance by Seller of this Agreement and the
execution, delivery and performance by Seller or the Company of each other
Transaction Document to which it is a party will not (a) violate any Law, (b)
violate any Charter Document of Seller or the Company, (c) violate any Order to
which Seller or the Company is a party or by which Seller or the Company or
their respective assets is bound, (d) breach any Material Contract to which the
Company is a party, Real Property Lease, Personal Property Lease or Material
Permit of the Company, (e) result in the creation of any Encumbrance on any of
the Company's assets, or (f) require any Consent from any Person, other than
filing the pre-merger notification report required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and obtaining
termination of the waiting period under the HSR Act.
Section 4.5 Financial Statements.
(a) Unaudited Annual Financial Statements. Section 4.5(a) of
Seller's Disclosure Letter are the unaudited balance sheets of the Company as of
December 31, 1997 (the "YEAR-END BALANCE SHEET" and such date the "BALANCE SHEET
DATE"), and December 31, 1995 and December 31, 1996, and the related statements
of operations and cash flows for the fiscal years ended on such dates
(collectively, the "ANNUAL FINANCIAL STATEMENTS"). The Annual Financial
Statements have been prepared in accordance with the Books and Records and with
GAAP (except as noted therein and the absence of detailed notes to such
statements), and present fairly, in all material respects, the financial
position of the Company as of the dates indicated and the results of its
operations and cash flows for the periods then ended.
(b) Unaudited Interim Financial Statements. Section 4.5(b) of
Seller's Disclosure Letter are the unaudited balance sheet of the Company as of
February 28, 1998 (the "INTERIM BALANCE SHEET") and the related statement of
operations and cash flows for the two-month period ended on such date
(collectively, the "INTERIM FINANCIAL STATEMENTS"). The Interim Financial
Statements have been prepared in accordance with the Books and Records and with
GAAP (except as noted therein and the absence of detailed notes to such
statements), and present fairly, in all material respects, the financial
position of the Company as of the date
14
20
indicated and the results of its operations and cash flows for the period then
ended, subject to normal year-end adjustments.
Section 4.6 No Funded Indebtedness or Undisclosed Liabilities. Except
as set forth in Section 4.6(a) of Seller's Disclosure Letter, the Company has no
Funded Indebtedness. Except for Liabilities set forth in Section 4.6(b) of
Seller's Disclosure Letter, the Company has no Liabilities except for (a)
Liabilities reflected or reserved against in the Interim Balance Sheet, (b)
current Liabilities incurred in the ordinary course of business since the date
thereof or (c) Liabilities incurred in the ordinary course of business under
Contracts to which the Company is a party, which Liabilities are not required by
GAAP to be reflected in the Interim Balance Sheet.
Section 4.7 Absence of Certain Changes. Except as disclosed in Section
4.7 of Seller's Disclosure Letter, since the Balance Sheet Date, the Company has
conducted its business only in the ordinary course of business consistent with
past practices and, without limiting the generality of the foregoing, there has
been no (a) event or occurrence that has caused or will cause a Material Adverse
Change, or (b) action that would have been prohibited under Section 6.3 had such
action been taken after the Signing Date.
Section 4.8 Sufficiency and Condition of and Title to Assets.
(a) Sufficiency and Condition of Assets. The buildings,
plants, structures, and equipment of the Company are structurally sound, are in
reasonable operating condition and repair, and are adequate for the uses to
which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs. The assets of the Company are sufficient, and
constitute all of the properties, assets and rights necessary, for the continued
conduct of the Company's business after the Closing in substantially the same
manner as conducted prior to the Closing.
(b) Title to Assets. At the Closing, the Company will hold
good, valid and marketable title to, or a valid leasehold interest in, each of
the Company's assets, free and clear of all Encumbrances, other than Permitted
Encumbrances.
Section 4.9 Accounts Receivable. All accounts receivable of the Company
reflected on the Interim Balance Sheet (the "ACCOUNTS RECEIVABLE") represent or
will represent valid obligations arising from sales made, commissions earned or
services performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts Receivable are current and collectible net of the
respective reserves shown on the Interim Balance Sheet (which reserves are
adequate and, except as set forth in Section 4.9 of Seller's Disclosure Letter,
calculated consistent with past practice). Subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
set-off, within 180 days after the day on which it first becomes due and
payable. Subject to such reserves, there is no contest, claim, or right of
set-off under any contract with any obligor of an Accounts Receivable relating
to the amount or validity of such Accounts Receivable.
Section 4.10 Inventory. The Company owns all of the inventory reflected
on the Year-End Balance Sheet and all inventory that it has acquired or created
after the Balance Sheet Date, other than inventory disposed of since then in the
ordinary course of the Company's business
15
21
consistent with past practices (the "INVENTORY"). The Inventory (a) is adequate
for the conduct of the business of the Company and (b) is not in excess of the
normal operating requirements of the business of the Company. Except as
disclosed in Section 4.10 of Seller's Disclosure Letter, the Company does not
hold any other Person's inventory on consignment or permit any other Person to
hold any of the Company's inventory on consignment.
Section 4.11 Real Property.
(a) Owned Real Property. Section 4.11(a) of Seller's
Disclosure Letter lists each parcel of real property owned by the Company,
including the street address and the complete legal description of each
property. Each parcel of real property listed on Schedule 4.11(a) and any parcel
of real property purchased after the Signing Date in accordance with Section 6.3
(collectively, the "OWNED REAL PROPERTY") is (i) in compliance with all material
Laws, including the Americans with Disabilities Act and any material building,
fire, land use, occupancy, safety, set-back, or zoning Law, and (ii) not
burdened by any covenant, easement, encroachment, restrictive covenant,
right-of-way, servitude or Encumbrance, other than Permitted Encumbrances.
Seller has delivered or made available to Purchaser a true and complete copy of
all surveys, title policies, title commitments, environmental reports, and
material correspondence within the past two years from Governmental Authorities,
in the possession of Seller or the Company with respect to each parcel of Owned
Real Property.
(b) Leased Real Property. Section 4.11(b) of Seller's
Disclosure Letter lists each lease of real property ("LEASED REAL PROPERTY") to
which the Company is a party which requires payments of more than $120,000 per
annum or is otherwise material to the Company. All of the leases on Section
4.11(b) of Seller's Disclosure Letter and any leases of real property entered
into after the Signing Date in accordance with Section 6.3 requiring payments of
more than $120,000 per annum (collectively, the "REAL PROPERTY LEASES") are
valid, binding and in full force and effect. Section 4.11(b) of Seller's
Disclosure Letter contains a copy of each Real Property Lease and whether the
consent of any other party to the lease (or their mortgage) is required to
consummate the transactions contemplated hereby. Except as disclosed in Section
4.11(b) of Seller's Disclosure Letter (i) each of the Real Property Leases is in
full force and effect and has not been amended or modified; (ii) 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; (iii) neither Seller nor the Company has received any 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.
True and complete copies of all the Real Property Leases, any amendments thereto
and the nondisturbance agreements have been provided to Purchaser.
(c) 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.
(d) At Closing, the Owned Real Property will be free and clear
of all Encumbrances, other than Permitted Encumbrances, and the Leased Real
Property will be free
16
22
and clear of any Encumbrance created by, through, or under Seller or the
Company. Neither Seller nor the Company has received notice that any of the Real
Property is subject to any governmental decree or order to be sold, or is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor has any such condemnation,
expropriation or taking been proposed.
Section 4.12 Personal Property.
(a) Owned Personal Property. Section 4.12(a) of Seller's
Disclosure Letter lists each item of personal property (including machinery,
equipment, vehicles, structures, fixtures and furniture) with a net book value
in excess of $5,000 owned by the Company, located on its premises or shown on
the Interim Balance Sheet or acquired after the date thereof (except for
inventory subsequently sold in the ordinary course of business and consistent
with past practice).
(b) Leased Personal Property. Section 4.12(b) of Seller's
Disclosure Letter lists each lease of personal property to which the Company is
a party that requires payments of more than $120,000 per annum. All of the
leases on Schedule 4.12(b) and any leases of personal property entered into
after the Signing Date in accordance with Section 6.3 requiring payments of more
than $120,000 per annum (collectively, the "PERSONAL PROPERTY LEASES") are
valid, binding and in full force and effect. Neither the Company nor any other
Person is in default under any Personal Property Lease, nor is there any event
which with notice or lapse of time, or both, would constitute a default
thereunder by the Company or any other Person. True and complete copies of all
the Personal Property Leases and any amendments thereto have been provided to
Purchaser.
Section 4.13 Compliance with Laws. The Company has been and is in
compliance with all Laws, except where the failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Neither Seller nor the Company has received any notice from any
Governmental Authority or other Person asserting that Seller or the Company has
violated any Law.
Section 4.14 Insurance. Section 4.14 of Seller's Disclosure Letter
lists all insurance policies which insure the Company or any of the Company's
assets against loss (collectively, the "INSURANCE POLICIES"), including each
insurer's name, coverage deductible and limit, expiration date and current
premium. Each Insurance Policy is in full force and effect, all premiums with
respect thereto have been paid to the extent due, and no notice of cancellation
or termination has been received with respect to any such policy, other than any
policy that will be replaced or is intended to be replaced prior to the
expiration thereof by policies providing substantially the same coverage from an
insurer that is reputable. The coverages provided by the Insurance Policies are
not less in amounts and types than the coverages customary in the Company's
industry and will not in any way be affected by or terminate or lapse by reason
of the consummation of the transactions contemplated by this Agreement. No
Insurance Policy provides for any retrospective premium adjustment or other
experience-based liability on the part of the Company. True and complete copies
of all Insurance Policies have been provided to Purchaser. Section 4.14 of
Seller's Disclosure Letter contains a complete and accurate
17
23
description of the worker's compensation and liability claims experience of the
Company for the two year period ending on the Signing Date.
Section 4.15 Contracts. Section 4.15 of Seller's Disclosure Letter
lists each Contract to which the Company is a party or by which it is bound
that: (a) is a Related Party Contract; (b) relates to the use or non-disclosure
of any Material Intangible Asset; (c) is a joint venture, partnership or other
Contract involving a sharing of profits, losses, costs or liabilities with
another Person; (d) contains any covenant that in any way purports to restrict
the business activity of the Company or any affiliate of the Company or limit
the freedom of the Company or any affiliate of the Company to engage in any line
of business or to compete with any Person; (e) provides for a term of one year
or longer to supply ice; (f) involves a merger, consolidation, reorganization,
acquisition or purchase or sale of assets or stock of another Person pursuant to
which the Company or any other party thereto has any continuing obligation; (g)
pursuant to which the obligations of any party thereto are, or are contemplated
to be, in excess of $120,000 during any twelve month period during the term
thereof or more than $250,000 over the remaining term of the Contract; (h) is a
material agreement with any supplier or customer with respect to discounts or
allowances or extended payment terms; (i) is an agreement for the borrowing or
lending of money; or (j) is otherwise material to the Company. All of the
Contracts listed in Section 4.15 of Seller's Disclosure Letter and any material
Contracts entered into after the Signing Date in accordance with Section 6.3
(collectively, the "MATERIAL CONTRACTS") are valid and binding and in full force
and effect, subject to Laws Affecting Creditors' Rights. Neither Seller, the
Company nor, to the knowledge of Seller or the Company, any other Person is in
default under any Material Contract, nor is there any event which with notice or
lapse of time, or both, would constitute a default thereunder by Seller, the
Company or, to the knowledge of Seller or the Company, any other Person. True
and complete copies of all Material Contracts have been provided to Purchaser.
Section 4.16 Litigation; Orders. Section 4.16 of Seller's Disclosure
Letter lists and describes all Actions pending (except for any Actions relating
to worker's compensation and personal injury or property damage liability claims
which are being defended by or otherwise under the control of the Company's
insurers, none of which individually or in the aggregate will have a Material
Adverse Effect on the Company) or to the Knowledge of Seller and the Company,
threatened against or affecting the Company. There is no Action pending or, to
the knowledge of Seller or the Company, threatened affecting Seller or the
Company which, if adversely determined, would have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the Company nor
Seller is subject to any Order relating to the Company or any of its business.
Section 4.17 Environmental Matters.
(a) Compliance with Environmental Laws. The Company has been
and is operated in compliance with all Environmental Laws and all Permits
related to Environmental Laws, except where the failure to be in compliance
would not have a Material Adverse Effect on the Company.
(b) Hazardous Materials. Except as disclosed in Section 4.17
of Seller's Disclosure Letter, the Company has neither caused nor allowed the
generation, treatment,
18
24
manufacture, processing, distribution, use, storage, discharge, release,
disposal, transport or handling of any Hazardous Materials at any of the
properties or facilities used in connection with the Company's business,
including the Owned Real Property and the property subject to the Real Property
Leases, except in compliance with all Environmental Laws. To the knowledge of
Seller or the Company, no generation, treatment, manufacture, processing,
distribution, use, storage, discharge, release, disposal, transport or handling
of any Hazardous Materials has occurred at any of the properties or facilities
used in connection with the Company's business, including the Owned Real
Property and the property subject to the Real Property Leases, except in
compliance with all Environmental Laws.
(c) Existence of an Action. Except as disclosed in Section
4.17 of Seller's Disclosure Letter, neither Seller nor the Company has received
any notice from any Governmental Authority or other Person alleging or
concerning any Claim against the Company under any Environmental Law, whether
for personal injuries or property damages, which Claims, individually or in the
aggregate, exceed $100,000. Except as disclosed in Section 4.17 of Seller's
Disclosure Letter, there is no Action pending or, to the Knowledge of Seller or
the Company, threatened affecting the Company alleging or concerning any Claim
under any Environmental Law, whether for personal injuries or property damages,
which Claims, individually or in the aggregate, exceed $100,000.
(d) Environmental Permits. The Company is in possession of and
in compliance with all material Permits required under the Environmental Laws
with respect to the operation of its business. There are no Actions pending or,
to the Knowledge of Seller and the Company, threatened which seek to modify,
revoke or deny renewal of any such Permit. Neither Seller nor the Company has
any knowledge of any fact or condition that is reasonably likely to give rise to
any Action to modify, revoke or deny renewal of any of such Permit. No Consent
from any Person is necessary for the transfer of any such Permit, and the
consummation of the transactions contemplated by this Agreement will not
violate, alter, impair or invalidate, in any respect, any such Permit.
(e) Miscellaneous. Without in any way limiting the generality
of the foregoing, except as disclosed in Section 4.17 of Seller's Disclosure
Letter, (i) to the knowledge of Seller and the Company, none of the off-site
locations where the Company has transported, released, discharged, stored,
disposed or arranged for the disposal of Hazardous Materials has been identified
as a facility that is subject to an existing Claim under any Environmental Law
or is the subject of any threatened Claim by any Person, (ii) no underground
improvement regulated by any Environmental Law, including any storage or
treatment tank, is located on the Owned Real Property or the property subject to
the Real Property Leases, (iii) to the Knowledge of Seller and the Company,
there is no asbestos contained in or forming part of the assets of the Company,
and (iv) no polychlorinated biphenyls or polychlorinated biphenyls-containing
items are used or stored at the Owned Real Property or the property subject to
the Real Property Leases.
Section 4.18 Permits. Section 4.18 of Seller's Disclosure Letter
describes each Permit issued to the Company or with respect to any of its assets
that is material to the Company (the "MATERIAL PERMITS"). Each Material Permit
is currently in effect, no violation of the terms of such Material Permit has
occurred, and the issuing Governmental Authority has not taken or, to the
knowledge of Seller and the Company, threatened to take any action to revoke or
limit such
19
25
Material Permit,. In addition, no issuing Governmental Authority has indicated
that it will not renew a Material Permit. The Material Permits constitute all of
the material Permits required for the Company to conduct its business in
compliance with all Laws. No Material Permit will terminate or require
re-issuance in connection with the change in control of the Company upon the
sale of the Shares to Purchaser.
Section 4.19 Intangible Assets.
(a) Owned Intangible Assets. Section 4.19(a) of Seller's
Disclosure Letter lists all Material Intangible Assets owned by the Company as
of the Signing Date. With respect to all Intangible Assets owned by the Company
and all Intangible Assets obtained or developed prior to the Closing, (i) the
Company owns all right, title and interest in and to such Intangible Assets free
and clear of all Encumbrances, (ii) the Company has not sold, transferred,
licensed, sub-licensed or conveyed any interest in any of such Intangible
Assets, and (iii) to the knowledge of Seller and the Company, no Person has
infringed upon or misappropriated any of such Intangible Assets.
(b) Licensed Intangible Assets. Section 4.19(b) of Seller's
Disclosure Letter lists all licenses and contracts related to any Material
Intangible Asset used by the Company as of the Signing Date. Each license or
contract listed on Section 4.19(b) of Seller's Disclosure Letter and each
license or contract related to an Intangible Asset which is entered into after
the Signing Date in accordance with Section 6.3 is valid, binding and in full
force and effect.
(c) No Infringement. The Company has not infringed upon or
misappropriated any Intangible Asset owned by another Person.
Section 4.20 Employees
(a) Employees. Section 4.20(a) of Seller's Disclosure Letter
lists the name, job title if an officer, date of employment and current annual
compensation (salary, bonus and all amounts paid pursuant to an Employee Benefit
Plan) for each salaried employee of the Company employed as of the Signing Date
whose total compensation for 1997 or expected total compensation for 1998 equals
or exceeds $40,000 (collectively, the "MATERIAL EMPLOYEES"). All employees of
the Company are either United States citizens or resident aliens specifically
authorized to engage in employment in the United States in accordance with all
Laws. All sums due for employee compensation and benefits and all vacation time
owing to any employee of the Company (including all persons whose employment by
the Company terminated prior to the Signing Date) have been duly and adequately
accrued on the accounting Books and Records of the Company.
(b) Contracts. Section 4.20(b) of Seller's Disclosure Letter
lists each (i) Contract between the Company and a Material Employee, and (ii)
collective bargaining agreement and other Contract to or with any labor union,
employee representative or group of employees. Other than the Contracts listed
on Schedule 4.20(b), (i) the Company's employment of each employee of the
Company is terminable at will without any penalty or severance obligation of any
kind on the part of the Company, subject to any requirements of applicable Law
and (ii) there are no employee Contracts pursuant to which any benefits will be
increased or
20
26
vest or pursuant to which any benefits are contingent upon, or the terms of
which are materially altered by, the occurrence of the transactions contemplated
by this Agreement or relating to an actual or potential change in control of the
Company.
(c) Compliance with Labor Laws. The Company has complied and
is presently complying in all material respects with all Laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practice or unlawful
employment practice.
(d) Labor Actions and Relations. There is no unfair labor
practice charge or complaint against the Company pending or threatened before
the National Labor Relations Board nor is there any grievance or any arbitration
proceeding arising out of or under any collective bargaining agreement pending.
There is no labor strike, slowdown or work stoppage pending or, to the knowledge
of Seller and the Company, threatened against the Company. The Company has
neither experienced any significant work stoppages nor been a party to any
Action before the National Labor Relations Board involving any issue for the
past three years nor been a party to any arbitration proceeding arising out of
or under any collective bargaining agreement for the past three years. There is
no charge or complaint pending or threatened against the Company before the
Equal Employment Opportunity Commission or the Department of Labor or any state
or local agency of similar jurisdiction.
Section 4.21 Employee Benefits.
(a) Each of the Company Plans is, and has been, adopted and
operated in material compliance with its terms and all applicable Law
(including, where applicable, ERISA and the Code).
(b) Section 4.21 of Seller's Disclosure letter contains an
accurate and complete list of (i) all Company Plans, including a complete and
accurate description of all Company Plans that are not in writing and (ii) all
Company Controlled Group Plans that are subject to Code Section 412 or Title IV
or Section 302 of ERISA or for which the Company has any Liability. The Company
has not made any commitment, whether formal or informal, and whether legally
binding or not, to create or have liability under any Plan which is not listed
in Section 4.21 of Seller's Disclosure Letter, or to modify any existing Company
Plan.
(c) With respect to each Company Plan, the Seller or Company
has heretofore delivered or made available to the Purchaser true, correct and
complete copies of (i) each such Plan, (including any amendments to any such
Plans, any related trusts, summary plan descriptions, written descriptions of
any such Plans that are not in writing, insurance policies, investment
management agreements or annuity contracts, and any rules or regulations created
for use with any such Plans); (ii) the most recent IRS determination letter, if
any, with respect to each of such Plans; (iii) the Form 5500 (including all
schedules and attachments), if any, filed with respect to each of such Plans for
the most recent two (2) years; (iv) the most recent actuarial reports, if any,
filed with respect to each of the Company Plans; and (v) each collective
bargaining agreement or other contract relating to each Company Plan.
21
27
(d) None of the Company Plans or any trusts relating thereto
have engaged in any transaction in connection with which Company or any
fiduciaries of any Company Plans or related trusts is or could be subject either
to a civil penalty or other liability under Sections 502(i), 406 or 409 of ERISA
or a tax imposed by Section 4975 of the Code, and no event has occurred and no
condition exists with respect to the Company Plans that could subject the
Company to any other tax or penalty under the Code or civil penalty or other
liability under ERISA or other laws.
(e) No litigation or administrative or other proceeding,
audit, claim, investigation or other matter (other than routine claims for
benefits) is pending or, to the knowledge of Seller or the Company, threatened
involving any Company Plan.
(f) As of the Closing Date all payments (including, without
limitation, contributions and premiums) required to have been made to or in
connection with Company Plans, by their terms or under ERISA or the Code, with
respect to any period prior to such date shall have been timely made in full,
determined by using the applicable actuarial and funding assumptions, if any.
(g) To the extent applicable, each Company Plan or related
trust which is intended to meet the requirements of Section 401(a) or 501(a) of
the Code meets such requirements. The Suiza Foods 401(k) Plan was adopted
effective as of January 1, 1998, and an application for a determination letter
to the Internal Revenue Service with respect thereto has not yet been made. The
Suiza Foods 401(k) Plan is the only Company Plan that is intended to be
qualified under Section 401(a) of the Code.
(h) No Company Plan is subject to Title IV of ERISA or is a
defined benefit plan.
(i) Except as provided by Section 4980B of the Code or Part 6
of Title I of ERISA, there are no health, medical or other welfare benefits or
insurance under the Company Plans for current or future retirees or other former
employees.
(j) With respect to each Company Controlled Group Plan, (i) no
liability arising under Title IV of ERISA is pending, has been incurred by or is
threatened against any Company Controlled Group Member, which liability has not
been satisfied; (iii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code, has been
incurred; and (iv) all contributions (including installments) to each said
Company Plan required by Section 302 of ERISA and Section 412 of the Code have
been timely made. The Company does not have any due but unpaid liability with
respect to any Company Controlled Group Plan. Except as disclosed in Schedule
4.21, no Company Controlled Group Plan is a multiemployer plan within the
meaning of Section 3(37) of ERISA or a multiemployer welfare plan. With respect
to each multiemployer pension or welfare Company Controlled Group Plan disclosed
in Schedule 4.21, no as yet unsatisfied liability has been or will be incurred
by Company for a withdrawal which occurs on or prior to the Closing Date or as a
result of the consummation of the transactions contemplated by this Agreement or
otherwise.
22
28
(k) The assets of the Company Plans do not, with the exception
of the assets of the Suiza Foods 401(k) Plan, include any "employer securities"
or "employer real property" as such terms are defined in Section 407 of ERISA.
No material debt has been incurred by any of the Company Plans, other than
liabilities for the payment of benefits or insurance premiums. The Suiza Foods
401(k) Plan permits participants to direct the investment of the accounts in
such employer securities, but not employer real property.
(l) Except as set forth on in Section 4.21 of Sellers
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee, officer, director
or independent contractor of Company to severance pay, unemployment compensation
or any other payment; (ii) accelerate the time of payment or vesting, or
increase the amount of payments or compensation due any such person; or (iii)
result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available.
Section 4.22 Taxes.
(a) Consolidated Income Tax Returns. The Company has been
included in Seller's combined, consolidated, and unitary income Tax reports and
returns for all periods for which the applicable statute of limitations has not
expired other than the federal income Tax periods ending on or prior to March
31, 1995, during which the Company filed its federal income Tax returns as an S
corporation. In addition, the Company will remain a member of Seller's
affiliated group with respect to the filing of such income Tax reports and
returns through the Closing Date.
(b) Tax Returns and Payments. Either Seller or the Company has
timely filed all Tax reports and returns required to be filed by Seller or the
Company in connection with the Company's assets, business, and employees and
either Seller or the Company has timely paid and discharged all Tax obligations
(including, without limitation, all income tax obligations of any affiliated
group of which the Company is or was a member) shown on such reports and
returns, including any withholding obligations. Such Tax reports and returns are
accurate and complete in all material respects and correctly compute the Tax
obligation to which each such report or return pertains.
(c) No Notices. Except as disclosed in Section 4.22 of
Seller's Disclosure Letter, neither Seller nor the Company has received any
determination letter, revenue agent report, or other notice of any proposed or
outstanding Tax deficiency against or allocable to the Company. In addition,
neither Seller, the Company, nor any other Person has executed any extension
agreement or waiver of any statute of limitations with respect to the assessment
or collection of any Tax against the Company.
(d) No Audits. Except as disclosed in Section 4.22 of Seller's
Disclosure Letter, neither the Internal Revenue Service ("IRS") nor any other
taxing authority (collectively with the IRS, the "TAXING AUTHORITIES") has
contacted Seller or the Company concerning a future audit or examination of any
Tax reports and returns that include the Company other than audits and
examinations which have previously been resolved and any Taxes due in connection
therewith have previously been paid. Except as disclosed in Section 4.22 of
Seller's Disclosure
23
29
Letter, no such audit or examination is in process or has occurred with respect
to any period for which the statute of limitations has not expired.
(e) No Tax Liens. No Tax liens exist with respect to any
assets of the Company, other than statutory Tax liens for Taxes not yet due.
(f) No Agreements. No Tax ruling from any Taxing Authority
addressed to the Company or closing agreement with any Taxing Authority has a
continuing effect upon the Company. In addition, no such Tax ruling or closing
agreement is pending.
(g) No Tax Opinions. Neither Seller nor the Company has
received any Tax opinion pertaining to the Company from any accountants,
lawyers, or other advisers during the five years immediately preceding the date
of this Agreement. In addition, no such opinion received prior to such five-year
period has any continuing effect upon the Company. For purposes of this section
(g), "Tax opinion" means a written document in which the preparer comes to a
conclusion as to their "opinion" as to certain tax consequences.
(h) NOL Carryforwards. The Company has no net operating loss
carryforwards.
(i) No Golden Parachutes. The Company does not have any
Contract that could require the Company to make any "excess parachute payment"
as defined under Section 280G of the Code, determined without considering any of
the exceptions contained in such section.
(j) No Partnerships. The Company is not a member of any joint
venture, partnership, or other arrangement or Contract that is treated as a
partnership for Income Tax purposes.
(k) No Property Treated as Owned by Another Person. No
property of the Company is property that the Company is required to treat as
owned by another Person pursuant to Section 168(f)(8) of the Code or any other
applicable Law. After the Closing, the Company will not be required to treat
Purchaser as the owner of any of the Company's property.
(l) No Tax Exempt Use Property. No property of the Company is
"tax exempt use property" as defined under Section 168(h)(1) of the Code.
(m) No Tax Exempt Bond Financed Property. No property of the
Company is "tax exempt bond financed property" under Section 168(g) of the Code.
(n) No Transfer Taxes. The sale of the Shares to Purchaser
will not impose or create any Tax obligations on Purchaser or the Company,
including any withholding Tax obligations on Purchaser.
(o) No Revaluation of Assets. The sale of the Shares to
Purchaser will not cause any reassessment or revaluation of the Company's assets
for any ad valorem or property Tax purposes for any period prior to the Closing
Date.
24
30
(p) No Foreign Seller. Seller is not a "foreign person" under
Sections 1445 and 7701 of the Code.
(q) S Election. The Company had a valid election to be taxed
as an S corporation in effect for all periods ending on or prior to March 31,
1995.
(r) No Tax Sharing Agreement. There is no contract to which
Seller and the Company are parties that relates to the liability of either for
the income taxes of the other.
Section 4.23 Bank Accounts; Powers of Attorney. Section 4.23 of
Seller's Disclosure Letter lists the names of (a) each bank, trust company and
stock or other broker with which the Company has an account, credit line or safe
deposit box or vault, or otherwise maintains relations (the "BANK ACCOUNTS"),
(b) all Persons authorized to draw on, or to have access to, each of the
Accounts, (c) all Persons authorized by proxies, powers of attorney or other
like instrument to act on behalf of the Company. Each of the Accounts has a zero
or positive cash balance. No proxies, powers of attorney or other like
instruments are irrevocable.
Section 4.24 Suppliers and Customers. The relationships of the Company
with its material suppliers and material customers are satisfactory. No such
material customer or supplier has canceled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship with the Company,
or to materially decrease its services to the Company or its usage of the
services of the Company, provided, however, that any such cancellation,
termination or threat by a supplier or customer shall not constitute a breach of
this representation and warranty made or deemed made as of a date after the
Signing Date if such supplier or customer shall have become a supplier or
customer of Purchaser prior to the Closing Date.
Section 4.25 Affiliated Transactions. Except as set forth in Section
4.25 of Seller's Disclosure Letter, since the Balance Sheet Date, the Company
has not paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (tangible or intangible) to, or entered into any
Contract with, any of the officers, directors or stockholders of Seller, the
Company or any of their respective affiliates, except for compensation to
officers at rates not exceeding the rates of compensation paid during the fiscal
year ended on the Balance Sheet Date and routine travel advances to officers and
employees. Except as set forth in Section 4.25 of Seller's Disclosure Letter,
since January 1, 1997, neither Seller nor any other affiliate of the Company
(other than executive officers and directors of the Company or Seller in their
capacities as executive officers and directors of the Company or Seller) has
provided any services to the Company, including, without limitation, accounting,
data processing, payroll, benefits or record management services.
Section 4.26 Books and Records. The Books and Records of the Company,
all of which have been made available to Purchaser, are complete and correct and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
Section 4.27 Capital Projects. Section 4.27 of Seller's Disclosure
Letter sets forth a description of all capital projects of the Company,
including construction projects and acquisitions of capital assets, which have
been commenced but not completed, or with respect to
25
31
which commitments have been entered into with third persons, as of February 28,
1998 ("CAPITAL PROJECTS"). Section 4.27 of Seller's Disclosure Letter also sets
forth with respect to each Capital Project (a) the amounts budgeted by the
Company, or the amounts contractually committed to be expended for such Capital
Project, and (b) the amounts remaining to be paid after February 28, 1998, for
completion of such Capital Project.
Section 4.28 Brokers. No Person is or will become entitled to receive
any brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of having been engaged by
or acting on behalf of Seller or the Company other than the fees of Bear Xxxxxxx
& Co. whose fees will be paid by Seller.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 5.1 Organization; Good Standing; Delivery of Charter Documents.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas. Purchaser is duly qualified or licensed as
a foreign corporation in each jurisdiction in which its assets are owned or
leased, or the nature of its business makes such qualification or licensing
necessary, except those jurisdictions wherein the failure to so qualify could
not have a Material Adverse Effect on Purchaser. Purchaser has delivered to
Seller true and complete copies of Purchaser's Charter Documents.
Section 5.2 Power and Authority. Purchaser has all requisite corporate
power and authority necessary to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, including the execution, delivery and performance of all the other
Transaction Documents to which Purchaser is a party. Purchaser has all requisite
corporate power and authority necessary to own, operate and lease its assets and
to carry on its business as and where conducted.
Section 5.3 Authorization; Execution and Validity. Purchaser has duly
authorized, executed and delivered this Agreement and this Agreement constitutes
a valid, legal and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to any Law Affecting Creditors'
Rights. Each of the other Transaction Documents to which Purchaser is a party,
when executed delivered by Purchaser to Seller, will be duly authorized,
executed and delivered, and will constitute a valid, legal and binding
obligation of Purchaser, enforceable against Purchaser in accordance with the
terms of such Transaction Document, subject to any Law Affecting Creditors'
Rights.
Section 5.4 No Conflict; Purchaser Consents. The execution and delivery
by Purchaser of this Agreement do not, the performance by Purchaser of this
Agreement will not, and the execution, delivery and performance by Purchaser of
each other Transaction Document to which it is a party will not (a) violate any
Law, (b) violate any Charter Document of Purchaser, (c) violate any Order to
which Purchaser is a party or by which Purchaser or its assets is bound, or (d)
require any Consent from any Person other than filing the pre-merger
notification
26
32
report required under the HSR Act and obtaining termination of the waiting
period under the HSR Act.
Section 5.5 Brokers. No Person is or will become entitled to receive any
brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of having been engaged by
or acting on behalf of Purchaser other than the fees of Xxxxxxxxx & Company,
Inc. and Xxxxxxxx Financial Group (Xxxxx X. Xxxxxx).
Section 5.6 Financing. Purchaser has previously delivered to Seller
true and correct copies of letters from its prospective lenders and equity
investors concerning Purchaser's anticipated financing for the transactions
contemplated by this Agreement.
ARTICLE VI.
COVENANTS OF SELLER
Section 6.1 Cooperation by Seller. From the Signing Date through the
Closing Date, Seller shall use, and shall cause the Company to use, all
reasonable efforts (a) to take all actions and to do all things necessary or
advisable to consummate the transactions contemplated by this Agreement, (b) to
cooperate with Purchaser in connection with the foregoing, including using
reasonable efforts to obtain all of the Consents set forth in Section 4.4 of
Seller's Disclosure Letter or otherwise required to consummate the transactions
contemplated hereby, and (c) subject to the other terms and conditions of this
Agreement, to cause all the conditions set forth in Section 9.1, the
satisfaction of which is in the reasonable control of Seller or the Company, to
be satisfied on or prior to Closing.
Section 6.2 Pre-Closing Access to Information.
(a) General. From the Signing Date through the Closing Date, to the
extent not prohibited by applicable Law, Seller shall, and shall cause the
Company, to (a) provide to Purchaser and its Representatives full access to the
personnel, properties, and Books and Records of the Company (and those books and
records of Seller relating to the Company), (b) furnish Purchaser and its
Representatives copies of all such Books and Records as Purchaser may reasonably
request, and (c) furnish Purchaser and its Representatives with such additional
financial, operating and other data information as Purchaser may reasonably
request. Subject to Section 6.2(b), Purchaser agrees to be bound by all the
terms of that certain Confidentiality Agreement, dated December 31, 1997,
between Seller and Purchaser, as amended by Amendment No. 1 thereto (the
"CONFIDENTIALITY AGREEMENT"), and the Parties agree that all information which
has been or is hereafter disclosed to Purchaser is and remains subject to the
terms of the Confidentiality Agreement except as provided in Section 6.2(b).
(b). Audit. Promptly following the Signing Date, Seller shall, and
shall cause the Company to, permit Deloitte & Touche, LLP to audit the Annual
Financial Statements and in connection therewith shall (i) provide Deloitte &
Touche, LLP full access to the personnel, properties, and Books and Records of
the Company (and those books and records of Seller relating to the Company) as
Deloitte & Touche, LLP may reasonably request, and (ii) otherwise cooperate
fully with the audit and furnish such additional information as Deloitte &
Touche, LLP may reasonably request. The cost of such audit shall be paid by
Purchaser. Seller hereby
27
33
consents to the inclusion and dissemination to prospective investors of such
audited Annual Financial Statements (the "AUDITED FINANCIAL STATEMENTS") and
general information concerning the Company's business in offering documents
prepared by Purchaser in connection with its financing of the transactions
contemplated by this Agreement.
Section 6.3 Conduct of Business.
From the Signing Date through the Closing Date, Seller shall, and shall
cause the Company to, use all reasonable efforts to (i) preserve substantially
the relationships with the Company's material Representatives, suppliers and
customers, (ii) perform its obligations under all material Contracts, leases and
Permits in all material respects, (iii) comply with all Laws, (iv) confer with
Purchaser regarding operational matters of a material nature, (v) report
periodically to Purchaser regarding the status of the business and the results
of operations of the Company, and (vi) except as set forth in Section 6.3 of
Seller's Disclosure Letter, conduct the Company's business in the ordinary
course and consistent with past practices. Without limiting the foregoing,
except as otherwise required or permitted by this Agreement or listed in Section
6.3 of Seller's Disclosure Letter, from the Signing Date through the Closing
Date, Seller shall not, without Purchaser's prior written consent, permit the
Company to:
(a) amend its Charter Documents;
(b) (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to the Company's
capital stock, (ii) redeem, purchase or otherwise acquire directly or indirectly
any shares of the capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities; (iii) authorize for issuance, issue, sell, pledge, deliver or agree
to commit to issue, sell, pledge or deliver (whether through the issuance or
granting of any options, warrants, calls, subscriptions, stock appreciation
rights or other rights or other agreements) or otherwise encumber any shares of
capital stock of any class of the Company or any securities convertible into or
exchangeable for shares of capital stock of any class of the Company; or (iv)
split, combine or reclassify the outstanding capital stock of the Company or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of the capital stock of the Company;
(c) [reserved];
(d) except as disclosed in Section 6.3(d) of Seller's
Disclosure Letter, sell, lease, license, transfer, mortgage or subject to any
Encumbrance (other than Permitted Encumbrances) or otherwise dispose of any
assets of the Company other than sales of inventory and equipment in the
ordinary course of business and consistent with past practice;
(e) except as disclosed in Section 4.27 of the Seller's
Disclosure Letter, make or agree to make any new capital expenditure or
expenditures;
(f) except as required to comply with applicable Law or with
Contracts or Plans existing on the Signing Date, (i) adopt, enter into,
terminate or amend in any material respect any employment contract, collective
bargaining agreement or Plan, (ii) increase in any
28
34
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee, except for increases in accordance with past
practices in salaries or wages of employees of the Company who are not officers
of the Company, (iii) pay any benefit not provided for under any Plan, (iv)
increase in any manner the severance or termination pay of any officer or
employee, (v) grant any awards under any Plan (including the grant of stock
options, stock appreciation rights, stock-based or stock-related awards,
performance units or restricted stock or the removal of existing restrictions in
any Plans or agreements or awards made thereunder), except for grants in
accordance with past practices to employees who neither are, nor would be
following such grant, Material Employees, or (vi) take any action to fund or in
any other way secure the payment of compensation or benefits under any employee
Contract or Plan;
(g) amend, terminate or enter into any Material Contract,
other than customer contracts in the ordinary course of business and consistent
with past practice;
(h) (i) incur or assume any debt, other than trade and
accounts payable incurred in the ordinary course of business in amounts
consistent with past practice, (ii) issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company; (iii)
enter into any "keep well" or other arrangement to maintain any financial
condition of another Person; (iv) guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person; or (v) make any loans, advances or capital contributions
to, or investments in, any other Person;
(i) make any material change in accounting methods, principles
or practices unless required by GAAP;
(j) compromise or settle any material Claim or Action other
than the matter listed as Item 2 in Section 4.16 of Seller's Disclosure Letter;
(k) take, or agree to commit to take, any action that would or
is reasonably likely to result in any of the conditions set forth in Article IX
not being satisfied, or would make any representation or warranty of Seller
contained herein inaccurate in any respect at, or as of any time prior to, the
Closing, or that would impair the ability of Seller to consummate the
transactions contemplated hereby in accordance with the terms hereof or delay
such consummation;
(l) make or rescind any Tax election or settle or compromise
any Tax liability or refund or change in any material respect any of the methods
of reporting income or deductions for federal income tax purposes;
(m) permit any material insurance policy naming the Company as
a beneficiary or a loss payable payee to be canceled or terminated, except in
the ordinary course of business and consistent with past practice;
(n) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company;
(o) enter into any Related Party Contract; or
29
35
(p) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or authorize, recommend, propose or
announce an intention to do any of the foregoing.
Section 6.4 Supplements to Schedules. If, between the Signing Date and
the Closing Date, Seller or the Company becomes aware that any of the
representations and warranties in this Agreement or the schedules to this
Agreement was inaccurate when made or if during such period any event occurs or
condition changes that would cause any such representation or warranty to be
inaccurate had such representation or warranty been made as of the time of such
occurrence or change, then Seller shall notify Purchaser thereof in writing and
supplement the schedules hereto to account for any such inaccuracy, event or
change. Any such supplement to the schedules shall not be deemed to have been
disclosed as of the Signing Date or to have cured any breach of a representation
or warranty made in this Agreement, unless so agreed to in writing by Purchaser.
Section 6.5 Standstill. Until the earlier to occur of the Closing or
the termination of this Agreement pursuant to Article X, Seller shall not, nor
shall Seller permit the Company or any Representative of Seller or the Company
to, (a) directly or indirectly, encourage, solicit, initiate or participate in
discussions or negotiations with, or provide any information or assistance to,
any Person (other than Purchaser and its Representatives) concerning any merger,
sale of securities, sale of substantial assets, investment proposals or similar
transaction involving the Company, (b) entertain or discuss any acquisition or
investment proposals whatsoever relating to the Company, or (c) disclose to any
third party any non-published information concerning the Company or its
financial condition
Section 6.6 Discharge of Encumbrances. Seller shall take all actions
and do all things necessary to cause all Encumbrances other than Permitted
Encumbrances on the assets of the Company to be terminated or otherwise
discharged at or prior to the Closing. Seller shall take all actions and do all
things necessary to cause the Company to have no Funded Indebtedness or Capital
Leases as of the Closing or to be the guarantor of any indebtedness or other
obligations of any other Person as of the Closing, other than Funded
Indebtedness, Capital Leases or guarantees to which Purchaser shall have
consented in writing prior to Closing.
Section 6.7 Resignations. Seller shall cause each of the directors of
the Company, and each officer or employee of the Company whose resignation
Purchaser has requested in writing to Seller concurrently with the execution of
this Agreement, to resign pursuant to a written resignation effective
immediately before the Closing.
ARTICLE VII.
COVENANTS OF PURCHASER
Section 7.1 Cooperation by Purchaser. From the Signing Date through the
Closing Date, Purchaser shall use all reasonable efforts (a) to take all actions
and to do all things necessary or advisable to consummate the transactions
contemplated by this Agreement, (b) to cooperate with Seller in connection with
the foregoing and (c) subject to the other terms and conditions of this
Agreement, to cause all the conditions set forth in Section 9.2, the
satisfaction of which is in the reasonable control of Purchaser, to be satisfied
on or prior to Closing.
30
36
Section 7.2 Pre-Closing Access to Information. Purchaser shall comply
with the limitations on the disclosure and use of information set forth in the
Confidentiality Agreement with respect to the information that Seller provides
to Purchaser in and pursuant to this Agreement.
Section 7.3 Employee Matters. As of the Closing Date the employees of
the Company shall continue employment with the Company in the same positions and
at the same level of wages and/or salary and without having incurred a
termination of employment or separation from service; provided, however, except
as may be specifically required by applicable Law or any Contract, neither
Purchaser nor the Company shall be obligated to continue any employment
relationship with any employee for any specific period of time or on any
specific terms, except as otherwise set forth in employment contracts listed in
Section 4.20(b) of Seller's Disclosure Letter that are not assumed by Seller
pursuant to Section 8.6 hereof. For the period beginning on the Closing Date and
ending on December 31, 1998, Purchaser shall provide to the employees of the
Company employee benefits (including without limitation, welfare plan and
pension plan benefits) which are substantially similar to either (i) those
benefits provided to similarly-situated employees of Purchaser and its
affiliates from time to time or (ii) those benefits which are provided to the
employees of the Company immediately prior to the Closing Date. In addition, any
employee of the Company immediately prior to the Closing Date (aside from
part-time employees, seasonal employees and employees employed for less than one
year) whose employment with the Company is terminated without cause during the
period beginning on the Closing Date and ending on the earlier of (a) the
expiration of six months after the Closing Date or (b) November 30, 1998, shall
receive severance pay of not less than two weeks' pay for every year of service
with the Company or with Sparkle Ice, but not for service with a predecessor of
the Company or Sparkle Ice, up to a maximum of sixteen weeks' pay. To the extent
any employee benefit plan, program or policy of Purchaser or its affiliates that
is substantially similar to the benefits described in items 1 - 7 of the Welfare
Benefit Plans section of Schedule 4.21 and items 2 - 6 of the Employee
Arrangement section of such Schedule is made available to any person who is an
employee of the Company as of the Closing Date: (i) continuous service with the
Company or any predecessor Company by any employee prior to the Closing Date
shall be credited for eligibility and vesting purposes and additional benefits
tied to periods of service under such plan, program or policy; and (ii) with
respect to any welfare benefit plans under which such employees may become
eligible, Purchaser shall cause such plans to provide credit for any co-payments
or deductibles by such employees during the current plan year of the Company and
waive all pre-existing condition exclusions and waiting periods, other than
limitations or waiting periods that have not been satisfied under any welfare
plains maintained by the Company for its employees prior to the Closing Date.
Each employee of the Company shall be a third party beneficiary with respect to
Purchaser's obligations under this Section 7.3 and shall have the right to
enforce such obligations in its own name and right.
ARTICLE VIII.
MUTUAL COVENANTS
Section 8.1 Governmental Consents. Promptly after the Signing Date,
each Party shall take all reasonable actions, do all reasonable things necessary
and cooperate with each other to
31
37
obtain all Consents required by any Governmental Authority to consummate the
transactions contemplated hereby, including the filing of any pre-merger
notification required under the HSR Act. The Parties shall use all reasonable
efforts to comply as promptly as practicable with any request made pursuant to
the HSR Act for additional information. Purchaser shall pay the statutory filing
fee required by the HSR Act.
Section 8.2 Consents to Assign Leases and Contracts.
(a) Cooperation and Reasonable Efforts. Each Party hereby
agrees to use reasonable efforts, to take reasonable actions (including
Purchaser's delivery to third parties of its audited financial statements) and
to cooperate with each other as may be reasonably necessary to obtain Consents
to transfer and assign the Encumbered Instruments, to obtain nondisturbance
agreements from lenders of lessors under the Real Property Leases and to obtain
estoppel certificates in recordable form with respect to the Real Property
Leases. Prior to sending any request for a Consent, Seller shall submit such
request to Purchaser for its approval, which shall not be unreasonably withheld.
Seller shall promptly deliver to Purchaser copies of all Consents received and
all correspondence and requests concerning the Consents. Purchaser shall have
the right to reasonably participate in any discussions between Seller and any
Person from whom Seller seeks a Consent. Except as expressly provided herein,
neither Party shall be required to pay any sum, to incur any obligation or to
agree to any amendment of any Encumbered Instrument in order to obtain any such
Consent to transfer and assign the Encumbered Instrument.
(b) Required Consents. Schedule 8.2(b) lists the Encumbered
Instruments to which a Consent to transfer and assign must be obtained from the
appropriate third party prior to Closing (collectively, the "REQUIRED
CONSENTS"). Except for the Required Consents, the obtaining of any Consents
related to the Encumbered Instruments shall not be a condition to Closing, and
Closing shall occur irrespective of whether any such Consent has been obtained.
(c) Post-Closing Efforts to Obtain Consents. In the event any
Consent required by any Encumbered Instrument is not obtained on or prior to
Closing, each Party will, for a period of one year following the Closing Date,
(i) abide by the requirements of Section 8.2(a), and (ii) cooperate with each
other in any lawful and reasonable arrangement to provide that Purchaser shall
receive the benefits under any Encumbered Instrument not assigned and
transferred at the Closing by reason of the failure to obtain such Consent;
provided that, to the extent the Parties are successful in providing the
material benefits of any such instrument to the Company, the Company shall pay,
honor and discharge when due all liabilities of the Company related thereto to
the extent the liabilities were incurred after the Closing Date.
Section 8.3 Books and Records.
(a) Access. For a period of six years after Closing, each
Party shall provide the other Party with reasonable access during normal
business hours to its Books and Records relating to the Company (other than
books and records protected by the attorney-client privilege) to the extent that
they relate to the condition or operation of the Company prior to Closing and
are requested by such Party to prepare its tax returns, to respond to third
party Claims or for any
32
38
other legitimate purpose specified in writing. Each Party shall have the right,
at its own expense, to make copies of any such Books and Records.
(b) Destruction. No Party shall dispose of or destroy any
Books and Records relating to the Company to the extent that they relate to the
condition or operation of the Company prior to the Closing without first
offering to turn over possession thereof to the other Party by written notice at
least 30 days prior to the proposed date of disposition or destruction.
(c) Confidentiality. Each Party may take such action as it
deems reasonably appropriate to separate or redact information unrelated to the
Company from documents and other materials requested and made available pursuant
to this Section and may condition the other Party's access to documents and
other materials that it deems confidential to the execution and delivery of an
agreement by the other Party not to disclose or misuse such information.
(d) Assistance. Each Party shall, upon written request and at
the requesting Party's expense, make personnel available to assist in locating
and obtaining any Books and Records relating to the Company to the extent that
they relate to the condition or operation of the Company prior to Closing and
make personnel available whose assistance, participation or testimony is
reasonably required in anticipation of, preparation for or the prosecution or
defense of any third party Claim in which the other Party does not have any
adverse interest.
Section 8.4 Further Assurances. Subject to the other terms and
conditions of this Agreement, at any time and from time to time, whether before
or after Closing, each Party shall execute and deliver all instruments and
documents and take all other action that the other Party may reasonably request
to consummate or to evidence the consummation of the transactions contemplated
by this Agreement.
Section 8.5 Supplemental Agreements. At the Closing, Seller shall
execute and deliver the Seller's Release and the Parties shall execute and
deliver the Non-Competition Agreement.
Section 8.6 Termination of Related Party Contracts. Immediately prior
to the Closing, Seller shall cause to be terminated all Related Party Contracts
(other than employee contracts listed in Section 4.20(b) and the contracts
listed in Section 4.15(a) of Seller's Disclosure Letter) without any Liability
or payment by the Company pursuant to agreements in form and substance
satisfactory to Purchaser (the "TERMINATION Agreements"). With respect to each
employee contract listed on Schedule 8.6(a) hereto, Seller shall cause the
parties thereto to enter into prior to the Closing a novation agreement, in form
and substance satisfactory to Purchaser, pursuant to which Seller shall assume
all obligations of the Company under such contract without any Liability or
payment by the Company. The Parties also agree to the matters set forth in
Schedule 8.6(b) hereto.
Section 8.7 Employee Plans. At or prior to the Closing, the Company
shall withdraw as a participating employer in the Suiza Foods 401(k) Plan.
Purchaser agrees that the qualified plan in which the employees of the Company
will participate after the Closing will accept rollover contributions from
participants who have received a distribution from the Suiza Foods 401(k) Plan
after the Closing Date; provided, however, that such rollover contributions (i)
will
33
39
be accepted only after a favorable determination letter is received regarding
the Suiza Foods 401(k) Plan, (ii) will be accepted only upon the receipt by the
plan administrator of Purchaser's qualified plan of reasonably satisfactory
assurances that the Suiza Foods 401(k) Plan is a qualified plan under section
401(a) of the Code, and (iii) qualify as valid rollover contributions (including
direct rollover contributions) that were distributed from the Suiza Foods 401(k)
Plan and have not been first deposited in an XXX or other qualified plan. The
Company shall not have any obligation to terminate its participation in any
Company Plan (other than the Suiza Foods 401(k) Plan) on or prior to the
Closing, although Purchaser or the Company may terminate the Company's
participation in all or any such plans after Closing, provided that the
covenants set forth in Section 7.3 hereof are satisfied. Certain of the Company
Plans may be insured plans, and the consent of the relevant insurer may be
necessary in order for such plans to cover Company employees after the Closing.
Seller shall use its best efforts to cooperate with the Company and Purchaser,
both before and after the Closing, in giving any notices regarding Company Plans
and in terminating the Company's participation in any and all Company Plans
designated by Purchaser.
ARTICLE IX.
CONDITIONS PRECEDENT TO CLOSING
Section 9.1 Conditions Precedent to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following conditions, any
of which may be waived in writing by Purchaser.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Seller in this Agreement shall be true
and correct, in each case as of the Signing Date and as of the Closing Date as
though made as of the Closing Date, except to the extent such representations or
warranties made as of a specific date shall have been true and correct as of the
specified date; provided, however, that this Section 9.1(a) shall be deemed
satisfied if the failures of the representations and warranties to be true and
correct as set forth in this Section 9.1(a) would not, individually or in the
aggregate, be reasonably likely to result in damages to the Company of more than
$2.0 million.
(b) Performance of Covenants. Seller shall have performed and
complied in all material respects with all agreements, covenants and obligations
required by this Agreement to be performed by Seller prior to or at the Closing.
(c) Consents. Seller shall have received and delivered to
Purchaser all the Required Consents, each in form and substance reasonably
satisfactory to Purchaser, and all such Required Consents shall be in full force
and effect.
(d) Closing Certificate. An executive officer of Seller shall
have delivered to Purchaser a certificate confirming (i) the satisfaction of the
conditions set forth in Sections 9.1(a) and 9.1(b), and (ii) the continuing
force and effect of the Required Consents.
(e) Seller Secretary's Certificate. Seller shall have
delivered to Purchaser a certificate executed by the Secretary or an Assistant
Secretary of Seller certifying as to (i)
34
40
Seller's Charter Documents, (ii) Seller's good standing, (iii) the resolutions
in which Seller's board of directors approved this Agreement and the
transactions contemplated hereby, and (iv) the incumbency of Seller's officers
who execute any documents on behalf of Seller in connection with this Agreement.
(f) Company Secretary's Certificate. Seller shall have
delivered to Purchaser a certificate executed by the Secretary of the Company
certifying as to (i) the Company's Charter Documents and (ii) the Company's good
standing.
(g) Legal Opinion. Seller shall have delivered to Purchaser
the legal opinion referred to in Section 3.2(h).
(h) Deliveries. Seller shall have delivered to Purchaser the
documents required by Section 3.2 and such other documents and certificates as
Purchaser may reasonably require.
(i) Compliance with HSR Act. All applicable waiting periods
under the HSR Act shall have expired or been terminated.
(j) No Order or Action. No Order shall be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No Action
shall be pending before any court or other Governmental Authority seeking to
enjoin the Closing, or challenging or seeking damages or other relief against
Purchaser as a result of any of the transactions contemplated by this Agreement.
(k) Financing. Purchaser shall have obtained the financing
referenced in Section 5.6 or other adequate financing on terms satisfactory to
Purchaser to consummate the transactions contemplated hereby.
Section 9.2 Conditions Precedent to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following conditions, any
of which may be waived in writing by Seller.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement shall be true
and correct, in each case as of the Signing Date and as of the Closing Date as
though made as of the Closing Date, except to the extent such representations or
warranties made as of a specific date shall have been true and correct as of the
specified date; provided, however, that this Section 9.2(a) shall be deemed
satisfied if the failures of the representations and warranties to be true and
correct as set forth in this Section 9.2(a) would not, individually or in the
aggregate, be reasonably likely to result in damages to Seller of more than $2.0
million.
(b) Performance of Covenants. Purchaser shall have performed
and complied in all material respects with all agreements, covenants and
obligations required by this Agreement to be performed by Purchaser prior to or
at the Closing.
35
41
(c) Closing Certificate. An executive officer of Purchaser
shall have delivered to Seller a certificate confirming the satisfaction of the
conditions set forth in Sections 9.2(a) and 9.2(b).
(d) Secretary's Certificate. Purchaser shall have delivered to
Seller a certificate executed by the Secretary or an Assistant Secretary of
Purchaser certifying as to (i) Purchaser's Charter Documents, (ii) Purchaser's
good standing, (iii) the resolutions in which Purchaser's board of directors
approved this Agreement and the transactions contemplated hereby, and (iv) the
incumbency of Purchaser's officers who execute any documents on behalf of
Purchaser in connection with this Agreement.
(e) Legal Opinion. Purchaser shall have delivered to Seller
the legal opinion referred to in Section 3.3(d).
(f) Deliveries. Purchaser shall have delivered to Seller the
documents required by Section 3.3.
(g) Compliance with HSR Act. All applicable waiting periods
under the HSR Act shall have expired or been terminated.
(h) No Order or Action. No Order shall be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No Action
shall be pending before any court or other Governmental Authority seeking to
enjoin the Closing or challenging or seeking damages or other relief against
Seller as a result of any of the transactions contemplated by this Agreement.
Section 9.3 If Conditions Not Satisfied. In the event that any of the
conditions set forth in this Article IX are not satisfied, and the Parties
nevertheless consummate the transactions contemplated by this Agreement to take
place at the Closing, the Parties shall not be deemed to have waived any Claim
for damages or other relief arising from or in connection with such
non-satisfaction.
ARTICLE X.
TERMINATION PRIOR TO CLOSING
Section 10.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of the Parties;
(b) by Purchaser or Seller, if any of the conditions provided
for in Section 9.1 or 9.2, respectively, shall not have been met or waived by
the later to occur of (i) May 31, 1998 or (ii) the 42nd day after Purchaser's
receipt of the Audited Financial Statements (the "OUTSIDE DATE"); provided,
however, that if a Party shall have received a second request from a
Governmental Authority relating to its HSR filing and the HSR waiting period
applicable to the transactions contemplated by this Agreement shall have expired
or been terminated less than 30 days prior to the Outside Date as determined
above, then the Outside Date shall be extended to
36
42
be the 30th day following expiration or termination of the HSR waiting period,
but in no event later than June 30, 1998.
(c) by Purchaser by giving written notice to Seller at any
time prior to the Closing in the event that Seller is in breach of any
representation, warranty, covenant or agreement hereunder, which breach or
breaches, individually or in the aggregate, would be reasonably likely to result
in damages of the Company of more than $2.0 million (a "SELLER DEFAULT"), and
the Seller Default has continued without cure for a period of twenty (20) days
after the notice of such Seller Default, provided that no Purchaser Default or
event which, with notice or lapse of time or both, would constitute a Purchaser
Default shall have occurred and be continuing; or
(d) by Seller by giving written notice to Purchaser at any
time prior to the Closing in the event that Purchaser is in breach of any
representation, warranty, covenant or agreement hereunder, which breach or
breaches, individually or in the aggregate, would be reasonably likely to result
in damages of more than $2.0 million (a "Purchaser Default"), and the Default
has continued without cure for a period of twenty (20) days after the notice of
such Default, provided that no Seller Default or event which, with notice or
lapse of time or both, would constitute a Seller Default shall have occurred and
be continuing; provided, however, that nothing contained in this Section 10.1(d)
shall be construed so as to permit Purchaser to reduce the Preliminary Purchase
Price as determined pursuant to Article II hereof.
Section 10.2 Procedure Upon Termination. In the event of termination
pursuant to Section 10.1, written notice thereof shall be immediately given to
the other Party and the transactions contemplated by this Agreement shall be
terminated, without any further action by either Party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) each Party shall return all documents, work papers and
other materials of the other party, whether obtained before or after the
execution hereof, to the Party furnishing the same; and
(b) such termination shall not in any way limit, restrict or
relieve any Party of liability for any breach of this Agreement.
Section 10.3 Liquidated Damages. In the event (a) Purchaser shall
terminate this Agreement due to the condition set forth in Section 9.1(k) not
being satisfied or (b) either Party shall terminate this Agreement pursuant to
Section 10.1(b) and at the time of such termination the condition set forth in
Section 9.1(k) shall be the sole condition set forth in Section 9.1 that has not
been satisfied, then Purchaser shall promptly, but in any event not later than
the second business day after the date of such termination, pay Seller a fee
equal to $5.0 million (the "TERMINATION FEE"), payable by wire transfer of same
day funds; provided, however, that no Termination Fee shall be payable if such
condition shall not be satisfied due to (i) a declaration of a banking
moratorium or suspension of payments in respect of banks in the United States,
(ii) any material limitation by any Governmental Entity on, or other similar
event that materially adversely affects, the extension of credit in the United
States by banks or other lending institutions, or (iii) commencement of a war or
armed hostilities or other national or international
37
43
calamity directly or indirectly involving the United States which materially
adversely affects the extension of credit. Purchaser acknowledges that the
agreement contained in this Section 10.3 is an integral part of the transactions
contemplated by this Agreement and constitutes liquidated damages and not a
penalty, and that without such agreement, Seller would not enter into this
Agreement.
ARTICLE XI.
TAXES
Section 11.1 Section 338 Election. If Purchaser so elects by notifying
Seller in writing no later than September 30, 1998, the Parties shall elect to
treat the purchase of the Shares as a purchase of assets for federal income Tax
purposes pursuant to Section 338(h)(10) of the Code and any similar provisions
under state and other income Tax laws (collectively, the "SECTION 338
ELECTION"); provided, however, if the Section 338 Election is made, the Purchase
Price shall be increased by the Section 338 Gross-up Amount. For purposes of the
Section 338 Election, the Parties shall allocate the aggregate of the Purchase
Price and the Company's liabilities to the Company's assets and the Non-Compete
Covenant as set forth in an Allocation Statement prepared by Purchaser.
Xxxxxxx 00.0 Xxxxxxx 000 Xxxxx-Xx Xxxxxx.
(x) As soon as reasonably practicable, but not later than 10 days after
the date Purchaser makes the Section 338 Election, Purchaser shall prepare and
deliver to Seller a calculation of the Section 338 Gross-Up Amount prepared by
Deloitte & Touche, LLP (the workpapers showing such calculation, the "SECTION
338 STATEMENT").
(b) Review of Section 338 Statement. As soon as practicable, but not
later than 20 days after receipt of the Section 338 Statement, Seller shall
inform the Purchaser in writing of any objection to the Section 338 Statement,
which objection, if any, shall set forth in reasonable detail Seller's
objections and the basis for those objections (the "SECTION 338 OBJECTION
NOTICE"). If Seller so objects and the Parties do not resolve such objections on
a mutually agreeable basis within 50 days after the date Purchaser makes the
Section 338 Election, then the disagreement shall be resolved as soon as
practicable thereafter, but not later than 85 days after the date Purchaser
makes the Section 338 Election, by one of the largest four national accounting
firms, which accounting firm shall be jointly selected by the Parties. The
Parties acknowledge that the scope of such accounting firm's work shall be
limited to resolving the objections set forth in the Section 338 Objection
Notice. The decision of such accounting firm shall be final and binding upon the
Parties. The Section 338 Gross-up Amount (as adjusted, if applicable, by the
agreement of the Parties or the decision of the accounting firm), shall be
deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii)
the decision of the accounting firm, or (iii) the failure of Seller to deliver a
Section 338 Objection Notice to Purchaser within 20 days after Seller's receipt
of the Section 338 Statement. Each Party shall bear the fees, costs and expenses
of its own accountants and shall permit each other and each other's accountants
reasonable access to the books and records necessary to perform the analysis
contemplated by this Section. The Parties shall share equally the fees, costs
and expenses of the accounting firm selected by the Parties to resolve any
disagreements regarding the Section 338 Objection Notice, provided, however,
that if Seller shall have objected and the decision of such accounting firm
38
44
does not result in an adjustment of more than $50,000 to the Section 338
Gross-up Amount in favor of Seller, Seller shall pay all of the fees, costs and
expenses of such accounting firm. If the decision of the accounting firm results
in an increase of more than $50,000 to the Section 338 Gross-up Amount,
Purchaser may rescind the Section 338 Election by delivering notice of such
rescission to Seller within 10 days after the Section 338 Gross-up Amount is
deemed final, but in no event later than December 30, 1998.
(c) Purchase Price Adjustment; Procedure. The amount of the Section 338
Gross-up Amount shall be paid by Purchaser to Seller by wire transfer of
immediately available funds within two business days after the date on which the
Section 338 Gross-up Amount is deemed final in accordance with Section 11.2(b),
without payment of any interest thereon.
Section 11.3 Apportionment of Taxable Income. With respect to any
combined, consolidated, or unitary income Tax reports or returns that Seller
files with the Company, the Parties shall elect to treat the Closing Date as the
last day of a taxable period of the Company (a "PRE-CLOSING TAX PERIOD").
Notwithstanding the foregoing, Purchaser or the Company shall be responsible for
preparing and filing all income Tax reports and returns covering the Company for
Tax periods ending after the Closing Date, even if such reports and returns
cover periods prior to the Closing Date.
Section 11.4 Preparation and Filing of Income Tax Returns. When
preparing the income Tax reports and returns for any Pre-Closing Tax Period,
Seller shall prepare such reports and returns in a manner consistent with prior
years and determine the income, gain, expenses, losses, deductions, and credits
of the Company consistently with prior practices. With respect to any such
income Tax report or return, the Company shall provide to Seller the information
necessary to prepare such reports and returns no later than 60 days after the
Closing Date. Seller shall submit such reports and returns to Purchaser a
reasonable period before filing them with the respective Taxing Authorities and
Seller shall comply with any reasonable request of Purchaser to change such
reports and returns so long as the Tax liability of Seller is not increased,
except for any Tax liability contemplated by the Section 338 Election.
Section 11.5 Payment of Income Taxes. Any taxable income or loss of the
Company for any Pre-Closing Tax Period shall be included in Seller's
consolidated federal income Tax return and any consolidated, combined, or
unitary income Tax reports and returns that Seller files after the Closing Date.
Seller shall pay all Taxes owed with respect to such reports and returns when
due.
Section 11.6 Section 338 Election - Payment of Taxes. Notwithstanding
anything to the contrary in this Agreement, Seller shall bear any income Taxes
owed in connection with the Section 338 Election and the Company shall not
reimburse Seller (other than by payment of the Section 338 Gross-up Amount) for
any such income Taxes.
Section 11.7 Audit. If after the Closing either Party or the Company
receives a notice of deficiency or a proposed adjustment in connection with any
audit or other proceeding concerning any income Tax report or return covering
the operations of the Company on or before the Closing Date, the Party receiving
such item shall notify the other Party, or if the Company received such notice
the Company shall notify Seller, of its receipt. Seller shall have the sole and
39
45
exclusive right to settle or contest any such notice of deficiency or proposed
adjustment and to represent the Company in connection with any audit or other
proceeding relating to any income Tax reports or returns including the
operations of the Company for any Tax periods ending on or before the Closing
Date. Seller, however, shall not settle any issue without the prior consent of
Purchaser if such settlement would adversely affect any past, present, or future
income Taxes of Purchaser or the Company or the Company's future operations.
Purchaser shall have the sole and exclusive right to settle or contest any
notice of deficiency or proposed adjustment, and to represent the Company in
connection with any audit or other proceeding relating to any income Tax report
or return including the operations of the Company for any Tax period ending
after the Closing Date. Purchaser, however, shall not settle any issue without
Seller's prior consent if such report or return includes the operations of the
Company for a period before the Closing Date and increases the Tax liability of
Seller.
Section 11.8 Refunds. If the Company or Purchaser receives any Tax
refunds relating to or resulting from the business or assets of the Company for
any Pre-Closing Tax Period, the Company or Purchaser, as the case may be, shall
immediately forward the Tax refund to Seller.
Section 11.9 Allocation Statement. If the Section 338 Election is made,
for purposes of Section 1060 of the Code and any Tax election requiring an
allocation of the Purchase Price, the aggregate of the Purchase Price and the
Company's liabilities shall be allocated to Company's assets and the
Noncompetition Agreement (the "ALLOCATION STATEMENT"). The Parties shall
allocate any adjustment to the Purchase Price proportionately to such assets and
the Noncompetition Agreement unless the adjustment specifically relates to a
particular asset. In such a case, the Parties shall allocate such adjustment to
such asset.
ARTICLE XII.
INDEMNIFICATION
Section 12.1 Survival of Representations and Warranties. All
representations and warranties made by any Party in this Agreement shall survive
the Closing for a period of one year from the Closing Date, provided that the
representations and warranties set forth in (a) Section 4.3 shall survive
indefinitely, and (b) Sections 4.17 and 4.22 shall survive until expiration of
the applicable statute of limitations, as such statutory period may be expanded
from time to time. If a Party receives notice of a Claim for indemnification
before the expiration of the applicable representation or warranty, the Party
shall remain responsible for any Damages relating thereto notwithstanding the
subsequent expiration of such representation or warranty.
Section 12.2 Indemnification of Purchaser. From and after the Closing,
Seller shall indemnify and hold harmless Purchaser, the Company and their
respective directors, officers, employees, stockholders, controlling persons,
and affiliates (collectively, the "INDEMNIFIED PERSONS") from, and will pay to
the Indemnified Persons the amount of any loss, Liability, Claim, Action,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees), penalty, fine, or diminution of value, whether or not
involving a third-party claim (collectively, "DAMAGES"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by
Seller in this Agreement (without giving effect to any supplement to Seller's
Disclosure Letter), Seller's
40
46
Disclosure Letter, the supplements to Seller's Disclosure Letter, or any other
certificate or document delivered by or on behalf of Seller pursuant to this
Agreement;
(b) any breach of any representation or warranty made by
Seller in this Agreement as if such representation or warranty were made on and
as of the Closing Date without giving effect to any supplement to Seller's
Disclosure Letter;
(c) any breach by Seller of any covenant or obligation of
Seller in this Agreement;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller or the Company
(or any Person acting on their behalf) in connection with this Agreement or any
of the transactions contemplated hereby;
(e) any Taxes attributable to taxable years or periods ending
on or prior to the Closing Date, that are attributable to any affiliated group
or member thereof (as defined under Code section 1504(a)) of which the Company
was a member on or prior to the Closing Date.
(f) any Claims and any insurance deductibles with respect
thereto (regardless of whether made before or after Closing) that arise from any
facts or circumstances occurring prior to the Closing Date for which insurance
coverage is provided under the automobile, bodily injury and property damage,
general liability and workers compensation indemnity and workers compensation
medical insurance policies listed in Schedule 12.2(f), which indemnified Claims
shall include, without limitation, the Claims described in such Schedule;
(g) any employee contract listed on Schedule 8.6 hereto and
any breach of any of Seller's obligations under Section 8.6 hereof; and
(h) any Claim made before Closing or within 9 months after
Closing relating to or arising out of the product recall occurring at the
Company's Tampa plant on October 29, 1997.
Section 12.3 Indemnification of Seller. From and after the Closing,
Purchaser shall indemnify and hold harmless Seller from and will pay to Seller
the amount of any Damages arising, directly or indirectly, from or in connection
with:
(a) any breach of any representation or warranty made by
Purchaser in this Agreement or any other certificate or document delivered by or
on behalf of Purchaser pursuant to this Agreement;
(b) any breach of any representation or warranty made by
Purchaser in this Agreement as if such representation or warranty were made on
and as of the Closing Date.
(c) any breach by Purchaser of any covenant or obligation of
Purchaser in this Agreement; or
41
47
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Purchaser (or any Person
acting on its behalf) in connection with this Agreement or any of the
transactions contemplated hereby.
Section 12.4 Limitations on Amount. Seller will have no liability for
indemnification under Section 12.2 with respect to the matters described in
Sections 12.2(a), 12.2(b), or 12.2(c) (to the extent relating to any failure to
perform or comply prior to the Closing Date) until the total of all Damages with
respect to such matters exceeds $2,000,000, and then only for the amount by
which such Damages exceed $2,000,000. The maximum liability for which Seller
shall be liable for indemnification pursuant to Section 12.2 with respect to the
matters referred to in the immediately preceding sentence shall be $20,000,000.
However, this Section 12.4 will not apply to any intentional breach by Seller of
any representation, warranty, covenant or obligation.
Section 12.5 Indemnification Procedure. The indemnification
obligations under this Agreement shall be subject to the following
procedures:
(a) Third Party Claims. Promptly after receipt by an
indemnified party (an "INDEMNITEE") under Section 12.2 or 12.3 of notice of the
commencement of any Action against it, such Indemnitee will, if a claim is to be
made against an indemnifying party (an "INDEMNITOR") under such Section, give
notice to the Indemnitor of the commencement of such Action, but the failure to
notify the Indemnitor will not relieve the Indemnitor of any liability that it
may have to any Indemnitee, except to the extent that the Indemnitor
demonstrates that the defense of such action is prejudiced by the Indemnitee's
failure to give such notice. With respect to any such Action, the Indemnitor
will be entitled to participate in such Action and, to the extent that it wishes
(unless (i) the Indemnitor is also a party to such Action and the Indemnitee
determines in good faith that joint representation would be inappropriate, or
(ii) the Indemnitor fails to provide reasonable assurance to the Indemnitee of
its financial capacity to defend such Action and provide indemnification with
respect to such Action), to assume the defense of such Action with counsel
satisfactory to the Indemnitee and, after notice from the Indemnitor to the
Indemnitee of its election to assume the defense of such Action, the Indemnitor
will not, as long as it diligently conducts such defense, be liable to the
Indemnitee under this Article 12 for any fees of other counsel or any other
expenses with respect to the defense of such Action, in each case subsequently
incurred by the Indemnitee in connection with the defense of such Action, other
than reasonable costs of investigation. If the Indemnitor assumes the defense of
an Action, (i) no compromise or settlement of such claims may be effected by the
Indemnitor without the Indemnitee's consent unless (A) there is no finding or
admission of any violation of Law or any violation of the rights of any Person
and no effect on any other claims that may be made against the Indemnitor, and
(B) the sole relief provided is monetary damages that are paid in full by the
Indemnitor; and (ii) the Indemnitee will have no liability with respect to any
compromise or settlement of such claims effected without its consent (which may
not be unreasonably withheld). If notice is given to an Indemnitor of the
commencement of any Action and the Indemnitor does not, within ten days after
the Indemnitee's notice is given, give notice to the Indemnitee of its election
to assume the defense of such Action, the Indemnitor will be bound by any
determination made in such Action or any reasonable compromise or settlement
effected by the Indemnitee. Notwithstanding the foregoing, if an Indemnitee
determines in good faith that there
42
48
is a reasonable probability that an Action may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnitee may, by notice
to the Indemnitor, assume the exclusive right to defend, compromise, or settle
such Action, but the Indemnitor will not be bound by any determination of an
Action so defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(b) Other Claims. A claim for indemnification for any matter
not involving a third-party claim may be asserted by notice to the party from
whom indemnification is sought.
Section 12.6 Sole and Exclusive Remedy. The Parties agree that except
as otherwise provided in this Agreement, to the extent permitted by applicable
Law, the indemnification provided in this Article XII shall be the sole and
exclusive relief and remedy available to the parties hereto with respect to a
breach of a representation, warranty, covenant or agreement contained in this
Agreement if the Closing occurs. Notwithstanding the foregoing, no provision in
this Agreement shall in any manner limit the right of a Party to seek judicial
or other relief for fraud.
Section 12.7 Notice of Breach. If before the Closing a Party notifies
another Party of its breach of this Agreement, such notification shall neither
prevent such other Party from seeking damages for such breach nor decrease or
mitigate such damages if such other Party still closes the transactions
contemplated by this Agreement.
Section 12.8 Discovery of Breach. If before the Closing a Party
discovers that another Party has breached this Agreement, such discovery shall
neither prevent such Party from seeking damages for such breach nor decrease or
mitigate such damages if such Party still closes the transactions contemplated
by this Agreement.
Section 12.9 Notification of Breach. If, to the knowledge of Seller or
the Company prior to Closing, the Purchaser has breached a representation,
warranty, covenant or agreement contained in this Agreement, Seller shall notify
Purchaser of such breach prior to Closing. If, to the actual knowledge of an
executive officer of Purchaser prior to Closing, Seller has breached a
representation, warranty, covenant or agreement contained in this Agreement,
Purchaser shall notify Seller of such breach prior to Closing.
Section 12.10 Negligence and Strict Liability. THE PROVISIONS OF THIS
AGREEMENT CONCERNING CLAIMS FOR DAMAGES AND INDEMNIFICATION SHALL APPLY WHETHER
OR NOT THE PARTY OR OTHER PERSON CLAIMING SUCH DAMAGES OR INDEMNIFICATION WAS
NEGLIGENT, OR STRICTLY LIABLE IN CONNECTION WITH THE EVENTS GIVING RISE TO SUCH
CLAIM.
ARTICLE XIII.
MEDIATION AND REMEDIES
Section 13.1 Mediation Meeting The Parties shall attempt in good faith
to resolve promptly through negotiations any Claim or dispute under this
Agreement. If any Claim or dispute should arise that the Parties are unable to
resolve, the Parties shall meet at least once to attempt to resolve the matter
by mediation with a mediator mutually selected by the Parties (the
43
49
"MEDIATION MEETING"). Either Party may request the other Party to attend a
Mediation Meeting at a mutually agreed time and place within ten days after
delivery of a notice of a Claim or dispute. The occurrence of a Mediation
Meeting with respect to a Claim or dispute shall be a condition precedent to
seeking any judicial remedy, provided that if a Party refuses to attend a
Mediation Meeting or the Parties are unable to agree on a mediator, the Parties
may pursue judicial remedies. No decision reached at a Mediation Meeting shall
be binding on a Party without its written consent.
Section 13.2 Exclusive Jurisdiction. The Parties agree that any action
brought by one party against the other party shall be instituted in a federal or
state court sitting in Dallas, Texas, which courts and their respective
appellate courts shall be the exclusive venue for any such claim. Each Party
waives any objection that it may have to the laying of such venue, and
irrevocably submits to the jurisdiction of any such court with respect to any
such claim. Any service of process and other notice in any such case shall be
effective against a Party when transmitted in accordance with Section 14.8,
provided that a Party also may serve process in any manner permitted by Law.
Section 13.3 Expenses. If any Party commences an Action with respect to
this Agreement, the prevailing Party in such Action may receive as part of any
award or judgment reimbursement of such Party's reasonable attorneys' fees and
expenses.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1 Amendment. No amendment of this Agreement shall be
effective unless in a writing signed by the Parties.
Section 14.2 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original agreement, but
all of which shall constitute one and the same agreement. Any Party may execute
and deliver this Agreement by an executed signature page transmitted by a
facsimile machine. If a Party transmits its signature page by a facsimile
machine, such Party shall promptly thereafter deliver an originally executed
signature page to the other Party, provided that any failure to deliver such an
originally executed signature page shall not affect the validity, legality, or
enforceability of this Agreement.
Section 14.3 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.
Section 14.4 Expenses. Each Party shall bear its own expenses with
respect to the negotiation and preparation of this Agreement and the Closing,
including any fees and expenses of its Representatives, provided that if a Party
terminates this Agreement because of another Party's breach of this Agreement,
the non-breaching Party shall be entitled to seek reimbursement of its expenses
as part of its damages with respect to such breach.
Section 14.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE LAWS THAT MIGHT
44
50
OTHERWISE GOVERN UNDER THE CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE.
Section 14.6 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of the other
Party. Any attempted assignment or delegation without such prior consent shall
be void. Notwithstanding this prohibition against assignment and delegation,
Purchaser may assign its rights and delegate its duties under this Agreement to
a wholly-owned subsidiary of Purchaser without Seller's consent but such
assignment and delegation shall not release Purchaser from any liability under
this Agreement. In addition, after the Closing, Purchaser may assign its rights
under this Agreement to a purchaser of all of the assets or equity of Purchaser
without Seller's consent, and any such purchaser and any subsequent purchasers
of all of the assets or equity of Purchaser may similarly assign such rights.
Section 14.7 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the Parties and no other Person shall have any right, interest,
or claim under this Agreement, except as provided in Section 7.3 hereof.
Section 14.8 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal, (b)
on the next business day following actual transmittal when transmitted by a
nationally recognized overnight courier, or (c) on the third business day
following actual transmittal when transmitted by certified mail, postage
prepaid, return receipt requested; in each case when transmitted to a Party at
its address set forth below (or to such other address to which such Party has
notified the other Parties in accordance with this Section to send such claims,
consents, designations, notices, waivers, and other communications):
Purchaser: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx, Chief Executive Officer
phone: (000) 000-0000
fax: (000) 000-0000
Copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxxx
phone: (000) 000-0000
fax: (000) 000-0000
45
51
Seller: Suiza Foods Corporation
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx, Chief Executive Officer
phone: (000) 000-0000
fax: (000) 000-0000
Copy to: Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx XxXxxxxxx
phone: (000) 000-0000
fax: (000) 000-0000
Section 14.9 Public Announcements. The Parties shall agree on the terms
of any press releases or other public announcements related to this Agreement,
and shall consult with each other before issuing any press releases or other
public announcements related to this Agreement; provided, however, that any
Party may make a public disclosure if in the opinion of such Party's counsel it
is required by Law or the rules of the New York Stock Exchange or the NASDAQ
National Market to make such disclosure. The Parties agree, to the extent
practicable, to consult with each other regarding any such public announcement
in advance thereof.
Section 14.10 Representation by Legal Counsel. Each Party is a
sophisticated Person that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 14.11 Schedules. All references in this Agreement to schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of this Agreement for all
purposes. Each Section of this Agreement that refers to a schedule shall have a
separate schedule. In addition, any disclosure under a particular section's
schedule shall be made under the heading of any relevant subsection of such
section. A disclosure of an item in a schedule for a particular section shall
not be a disclosure under any other section's schedule, unless so noted
specifically on such schedule.
Section 14.12 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable provision shall be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
Section 14.13 Specific Performance. The Parties agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
breach of this Agreement and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by law to
an injunction or other equitable relief requiring specific performance of this
Agreement.
46
52
Section 14.14 Successors. This Agreement shall be binding upon and
shall inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this Section shall not permit
the assignment or other transfer of this Agreement, whether by operation of law
or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 14.15 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 14.16 Waiver. No provision of this Agreement shall be
considered waived unless such waiver is in writing and signed by the Party that
benefits from the enforcement of such provision. No waiver of any provision in
this Agreement, however, shall be deemed a waiver of a subsequent breach of such
provision or a waiver of a similar provision. In addition, a waiver of any
breach or a failure to enforce any term or condition of this Agreement shall not
in any way affect, limit, or waive a Party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term and condition of
this Agreement.
[SIGNATURE PAGE FOLLOWS]
47
53
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by a duly authorized officer as of the Signing Date.
SELLER: SUIZA FOODS CORPORATION
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
PURCHASER: PACKAGED ICE, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
48
