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EXHIBIT 10.43
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of September 4, 1997 ("Effective Date"), by and between Southwestern Ice,
Inc., a Texas corporation (the "Buyer"), a wholly-owned subsidiary of Packaged
Ice, Inc., a Texas corporation, or Buyer's nominee, and CMC Ice, Inc., a
California corporation (the "Seller"), Xxxxxx Xxxxxxx, individually
("Xxxxxxx"), and the persons identified on the signature pages hereof as
shareholders of the Seller, who agree to be jointly and severally obligated
hereunder with Seller (the "Shareholders"), with respect to the following
facts:
RECITALS
A. Seller is in the business of producing, storing and distributing
ice to customer accounts located in San Diego County, California (the
"Business").
B. Seller desires to sell substantially all of the assets of the
Business to Buyer, upon the conditions set forth in this Agreement.
C. Buyer desires to purchase and acquire substantially all of the
assets of the Business, upon the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter contained, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Purchase and Sell Assets. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, Seller
will sell, transfer, convey, assign and deliver to the Buyer, and the Buyer
will purchase or acquire from the Seller, all right, title and interest of the
Seller in and to all of the assets of the Business owned by Seller (other than
the Excluded Assets) used in or in connection with, or arising out of, the
Business (the "Assets"), including, but not limited to:
(a) Property and Equipment. All of Seller's right, title and
interest in and to all personal property and equipment (the "Property and
Equipment") used by Seller in the Business including, but not be limited to,
ice making equipment, merchandisers, bagging equipment, rolling stock including
vehicles, forklifts, etc., spare parts and repair equipment, supporting
equipment including pipes, electrical, condensers, compressors, bins, etc.,
furniture and fixtures, supplies, inventory, materials and computers used
exclusively in the Business (both hardware and software) which are located at
0000 00xx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Main Facility") and at 0000
00xx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Ancillary Facility"),
respectively. The Main Facility and the Ancillary Facility are sometimes
referred to herein as the "Facilities". Such Property and Equipment shall
include, but not be limited to, the list of property and equipment set forth on
Exhibit A. Certain components of the Property and Equipment set forth (and
indicated as such) are owned by Xxxxxxx, a principal shareholder of Seller, and
have been and are being used in the Business.
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(b) Claims. Any and all claims and rights against third
parties, if and to the extent they relate to the condition of the Assets
including, without limitation, all rights under manufacturers' and vendors'
warranties;
(c) Goodwill. All of Seller's goodwill in, and the going
concern value of, the Business and the name "CMC Ice";
(d) Accounts Receivable. All accounts receivable of the
Business as of the Closing Date (the "Accounts Receivable") which Accounts
Receivable shall be listed on Exhibit A-1 and updated as of the Closing Date.
(e) Other Property. All telephone numbers and directory
listings, telephone and mobile communications equipment, service contracts,
sales records, transferable licenses and permits, and normal business records
associated with the Business.
1.2 Excluded Assets. The Assets shall not include, and Seller shall
not sell to Buyer, any of the following items (collectively, the "Excluded
Assets"):
(a) Cash. All cash on hand or in bank accounts, and any other
cash equivalents, including without limitation certificates of deposit,
commercial paper, treasury bills, asset or money market accounts, marketable
securities and all such similar accounts or investments.
(b) Benefit Plan Assets. Pension, profit sharing and savings
plans and trusts and any assets thereof or any assets resulting from the
rollover by Seller's employees of any of the assets out of such plans.
(c) Personal Property Consumed. All tangible personal
property consumed by Seller in the ordinary course of business between the date
hereof and the Closing Date.
(d) Tax Refunds. All amounts due the Seller in connection
with any tax refunds, prepaid taxes, rights under any tax-sharing agreement, or
similar payments.
(e) Corporate Records. The corporate minute book, corporate
seals, tax return work papers, and similar corporate records of Seller.
(f) Licenses and Permits. All governmental licenses and
permits, or similar rights that cannot by their terms be assigned to Buyer.
(g) Rights Under Non Compete Agreement. Any rights associated
with the Permitted Activities described in Exhibit B hereof.
1.3 No Assumption of Liabilities by Buyer. Buyer shall not be deemed
to assume and shall not assume and shall not be responsible for, any
liabilities, debts or obligations of Seller or of the Business, of any kind or
nature whatsoever. Seller, Xxxxxxx and Shareholders shall be responsible for
and shall pay, discharge and satisfy all of the liabilities, debts and
obligations of
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Seller and the Business. Seller, Xxxxxxx and Shareholders shall indemnify,
defend and hold Buyer completely free and harmless from the same including but
not limited to attorneys' fees and litigation costs incurred in resisting and
defending against the assertion of any of the same against Buyer.
1.4 Purchase Price and Method of Payment. The total purchase price
to be paid by Buyer for the Assets (the "Purchase Price") shall consist of a
cash payment at the Closing (a) to Seller of (i) $415,000 and (ii) the net
amount of the Accounts Receivable as set forth on Exhibit A-1 and agreed to by
Buyer and Seller at Closing and (b) to Xxxxxxx the sum of $20,000.
1.5 Additional Consideration. At Closing, as additional consideration
hereunder, Buyer shall pay to Seller (i) an amount equal to 40% of the net
income shown on the Income Statements of Seller for the period ended July 31,
1997 but not to exceed $14,000 and (ii) the amount, if any, necessary to
purchase a right to lease termination for the Main Facility but not to exceed
$20,000. Seller shall use its best efforts to sublet all or a portion of the
Main Facility to Xxxxx Xxxxxx for the purposes of establishing a wholesale
customer for Buyer. Except as provided herein, or under the terms of the
Subleases, Buyer shall have no responsibility, liability or obligation under
any leases for the Facilities.
1.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Seller, Xxxxxxx and the Assets as provided in Exhibit A-2.
Each Party agrees that it shall not take any position that varies from or is
inconsistent with such allocation in any filing made by such party with the
United States Internal Revenue Service or with any other local, state or
federal regulatory authority.
1.7 Disbursement of Purchase Price. At the Closing, as an
accommodation to Seller and Xxxxxxx, the cash to be paid to Seller and Xxxxxxx
by Buyer pursuant to Section 1.4 shall be disbursed by check, wire transfer or
such other method as Buyer may elect to effect the Authorized Third Party
Payments and Section 1.9 Deposit set forth on and as provided in Exhibit A-3
hereof. Exhibit A-3 sets forth presently estimated amount(s) due to the
creditors of Seller and Xxxxxxx listed in said Exhibit.
1.8 Covenant Not to Compete. At the Closing, the Seller, the
principals of Seller and Xxxxxxx shall enter into Covenants Not to Compete with
Buyer (the "Non-Compete Agreement") substantially in the forms set forth in
Exhibits B and C.
1.9 Escrow Deposit. At the Closing, (i) the Seller, and the
Shareholders shall enter into a pledge and escrow agreement substantially in
the form attached as Exhibit D (the "Escrow Agreement") with Buyer, as escrow
agent (the "Escrow Agent"); (ii) Seller and Xxxxxxx shall deposit with Buyer
the total sum of the amounts paid by Buyer under Section 1.4 but less the
Authorized Third Party Payments set forth on and provided for in Exhibit A-3
(the "Escrow Fund"); (iii) Buyer', as Escrow Agent shall hold the Escrow Fund
pursuant to the terms of the Escrow Agreement.
1.10 Closing. The date of Closing (herein referred to as the "Closing
Date") shall be on or before September 3, 1997 with the actual day of Closing
on or before such date as mutually agreed
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to by the parties in writing; provided, Buyer may elect to postpone the Closing
to not later than September 15, 1997. Unless otherwise agreed, the Closing
shall take place at the offices of Xxxx, Forward, Xxxxxxxx & Scripps LLP, 000
Xxxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, at the hour of 4:00 p.m.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as specifically disclosed by Seller to Buyer in this Agreement or
in Seller's Disclosure Memorandum (which disclosures shall be deemed to modify
and qualify each of the following representations and warranties of Seller),
Seller, Xxxxxxx and Shareholders, jointly and severally, each represents and
warrants to Buyer as follows:
2.1 Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. Seller only conducts its business in Southern California and is
not required to be qualified to do business in any other jurisdiction. Seller
has all necessary corporate powers to carry on the Business as it is now being
conducted. Seller has full right, power and authority to execute and deliver
this Agreement and consummate the transactions contemplated hereby.
2.2 Corporate Actions. All actions and proceedings necessary to be
taken by or on the part of the Seller and Shareholders in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement, including, to the extent required
by its Articles of Incorporation, Bylaws and by law, the obtaining of votes,
and consents and approvals by the Shareholders and board of directors of
Seller, have been duly and validly taken and obtained, and this Agreement has
been duly and validly authorized, executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with and subject to its terms.
2.3 Capitalization; No Subsidiaries. The authorized number of shares
of Seller is 100,000, all of one class, of which 100,000 are issued and
outstanding, and all of which are owned beneficially and of record by the
Shareholders. Seller has no subsidiaries.
2.4 No Defaults. Neither the execution, delivery or performance by
Seller of this Agreement nor the consummation by Seller of the transactions
contemplated hereby, itself or with the giving of notice or the passage of time
or both, will:
(a) Violate or conflict with the provisions of the Articles of
Incorporation or the Bylaws of Seller;
(b) Violate or conflict with or result in any breach or in any
default under, result in any termination or modification of, or cause any
acceleration of any obligation of the Business under any contract, mortgage,
indenture, agreement, lease or other instrument to which Seller is a party or
by which it, the Business or any of the Assets is bound, or result in the
creation of any
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encumbrance upon any of the Assets such as would have a material adverse effect
on the Business or Assets taken as a whole; or
(c) Violate any judgment, decree, order, statute, law, rule or
regulation applicable to Seller.
2.5 Breach. Seller is not in violation or breach of any of the
terms, conditions or provisions of its Articles of Incorporation, as amended,
or Bylaws, or any indenture, mortgage or deed of trust or other contracts,
lease, instrument, court order, judgment, arbitration award, or decree
affecting the Business or the Assets, to which Seller is a party or by which it
is bound, and has received no notices of same, where the effect thereof would
have a material adverse effect on the Business or the Assets, taken as a whole.
Further, Seller is current on all rent obligations owing under the real
property leases of the Facilities and with regard to all maintenance and repair
expenses relating to equipment of the Business.
2.6 Approvals and Consents. No approvals or consents of persons or
entities not a party to this Agreement are legally or contractually required to
be obtained by Seller in connection with the consummation of the transactions
contemplated by this Agreement. No permit, license, consent, order, decree,
approval or authorization of, or filing with, any court, governmental
regulatory authority or agency is required in connection with the execution,
delivery and performance of this Agreement, or the consummation of the
transactions contemplated hereby.
2.7 Title to and Condition of Assets; Leases.
(a) Seller has good, valid and marketable title to all of the
Assets, free and clear of all liens, encumbrances and security interests of
every kind or character.
(b) Seller owns or leases all tangible assets necessary for
the conduct of its Business. Each such tangible asset is free from defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used.
(c) Seller is not in breach of the lease for the Facility and
has the right to grant Buyer the right of occupancy under the subleases
referred to in Section 9.1g.
2.8 Balance Sheet of Seller. The Balance Sheets and Income
Statements of Seller for the end of its most recent fiscal year (the "Balance
Sheet") and for the period ended July 31, 1997, copies of which are contained
in Seller's Disclosure Memorandum:
(a) Present fairly in all material respects the financial
position of the Business as of the dates shown thereon;
(b) Have been prepared for use in the ordinary course of the
Business and in accordance with the books and records of Seller; and
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(c) Exhibit A-1 is a complete and accurate schedule of the
Accounts Receivable together with an accurate aging of the Accounts Receivable.
The Accounts Receivable set forth on Exhibit A-1, as the same is updated to the
Closing Date arose from valid sales in the ordinary course of business of
Seller, are not subject to any offset, and other than those which have been
collected as of the Closing Date shall be 100% collectible in their full amount
within one hundred twenty (120) days following the Closing Date.
(d) Exhibit A-3 is a complete and accurate schedule and
listing of all significant creditors of Seller, Xxxxxxx and the Shareholders,
related to the Business, and represents Seller's and Shannon's closest best
estimate of the amount due each such creditor.
2.9 Events Since Balance Sheet Date. Except as set forth in the
Balance Sheet, and except as disclosed in this Agreement or in Seller's
Disclosure Memorandum, there has not been since the Balance Sheet Date:
(a) Any material adverse change in the assets or liabilities
of the Business, other than changes in the ordinary course of business;
(b) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets; or
(c) Any material transactions entered into or any material
liabilities or obligations incurred by the Business, other than in the ordinary
course of Business.
2.10 Liabilities. Except for those liabilities (i) reflected or
reserved against in the Balance Sheet, (ii) not yet due and payable or
obligations to be performed or satisfied after the date hereof under contracts
and agreements set forth in Seller's Disclosure Memorandum, (iii) disclosed in
this Agreement or Seller's Disclosure Memorandum, and (iv) incurred in the
ordinary course of business of the Business between the Balance Sheet Date and
the Closing, there are no liabilities or obligations of Seller relating to the
Business, known or unknown, due or not yet due, liquidated or unliquidated,
fixed, contingent or otherwise, where the effect thereof would have a material
adverse effect on the Business or the Assets taken as a whole.
2.11 Taxes. Seller has filed all applicable federal, state, local and
foreign tax returns required to be filed to date, in accordance with provisions
of law pertaining thereto, and has paid all taxes, interest, penalties and
assessments lawfully due (including without limitation income, withholding,
excise, unemployment, social security, occupation, transfer, franchise,
property, sales and use taxes, import, duties or charges, and all penalties and
interest in respect thereof) except where the failure to file such returns or
pay such taxes has no material adverse effect on the Business and the Assets
taken as a whole.
2.12 Compliance With Law and Regulations. Seller is in compliance
with all requirements of law, federal, state and local, and all requirements of
all governmental bodies or agencies having jurisdiction over it, the operation
of the Business and the use of the Assets. Seller and the Facility are in full
compliance with applicable environmental laws. Seller is not aware of any past
or current
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tenant of the Facility violating any law, including, but not limited to, any
environmental laws. Seller has properly filed all reports and other documents
required to be filed with federal, state, local, or foreign governments or
subdivisions or agencies thereof. Seller has not received any notice, not
heretofore complied with, from any federal, state or municipal authority or any
insurance or inspection body that any of its properties, facilities, equipment
or business procedures or practices fails to comply with any applicable law,
ordinance, regulation, or requirement of any public authority or body.
2.13 Employees: Labor Problems. Seller has not suffered or sustained
any labor disputes resulting in any work stoppage, and no such work stoppage is
threatened. Seller is not a party to a collective bargaining agreement. There
do not currently exist any written or oral contracts for long-term employment,
consulting agreements or agreements containing provisions for significant
severance or parachute payments. Seller is current in all of its salary
obligations to its employees who are employed in connection with the Business,
and each of such employees has been provided with an address and telephone
number of Seller.
2.14 Litigation. There are no suits, judgments, arbitrations,
administrative charges or other legal proceedings, claims or governmental
investigations pending against, or to Seller's, Shannon's and the Shareholders'
knowledge, threatened against the Seller or the Business which will have a
material adverse effect on the Business or the Assets taken as a whole after
the Closing. There are no lawsuits, legal proceedings or investigations of any
nature pending or, to Seller's, Shannon's and Shareholders' knowledge,
threatened against or affecting it which would materially impair Seller's
ability to carry out the transactions contemplated by this Agreement.
2.15 No Broker or Finder. Seller has not employed or used the
services of any broker or finder in connection with this transaction and shall
hold Buyer completely free and harmless from the claims of any person claiming
to have so acted on behalf of Seller.
2.16 Operation in Ordinary Course. Since the Balance Sheet Date:
(a) Seller has operated the Business in the ordinary course of
business, consistent with past practice, except as related to the transactions
contemplated hereby; and
(b) Seller has maintained its books, accounts and records in
the usual, customary and ordinary manner.
2.17 Disclosure. Neither this Agreement nor Seller's Disclosure
Memorandum contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as specifically disclosed by Buyer to Seller in this Agreement or
in Buyer's Disclosure Memorandum (which disclosures shall be deemed to modify
and qualify each of the following representations and warranties of Buyer),
Buyer represents and warrants to Seller as follows:
3.1 Corporate Status. Buyer is a corporation which is duly
organized, validly existing, and in good standing under the laws of the State
of Texas. Buyer is duly qualified to do business in each jurisdiction in which
the character of and location of its assets or operations makes qualification
to do business as a foreign corporation necessary. Buyer has full corporate
power to carry on its business as it is now being conducted and as proposed to
be conducted and to own and operate its assets. Buyer has full corporate power
and authority to execute and deliver this Agreement and perform the
transactions contemplated hereby.
3.2 Corporate Actions. All corporate or other actions and
proceedings necessary to be taken by or on the part of Buyer in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly and validly taken,
and this Agreement has been duly and validly authorized, executed and delivered
by Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with and subject to its terms.
3.3 No Defaults. Neither the execution, delivery or performance by
Buyer of this Agreement nor the consummation by Buyer of the transactions
contemplated hereby is an event that, of itself or with the giving of notice or
the passage of time or both, will:
(a) Violate or conflict with the provisions of the Articles of
Incorporation or Bylaws of Buyer;
(b) Violate or conflict with or result in any breach of or any
default under, result in any termination or modification of, or cause any
acceleration of any obligation under, any contract, mortgage, indenture,
agreement, lease or other instrument to which Buyer is a party or by which it
is bound, or by which it may be affected, or result in the creation of any lien
or encumbrance upon any of Buyer's assets, except for agreements, indentures
and instruments related to the financing of the transactions contemplated by
this Agreement; or
(c) Violate any judgment, decree, order, statute, rule or
regulation applicable to Buyer.
3.4 Breach. Buyer is not in violation or breach of any of the terms,
conditions or provisions of its Articles of Incorporation, as amended, its
Bylaws, or any indenture, mortgage or deed of trust or other contracts, lease,
instrument, court order, judgment, arbitration award, or decree materially
affecting the business of the Buyer, to which Buyer is a party or by which it
is otherwise bound, where the effect thereof would have a material adverse
effect on the Buyer.
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3.5 Approvals and Consents. No approvals or consents of persons or
entities not a party to this Agreement are legally or contractually required to
be obtained by Buyer in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
3.6 Litigation. There are no lawsuits, judgments, arbitrations,
administrative charges or other legal proceedings, claims or governmental
investigations pending against, or to Buyer's knowledge, threatened against the
Buyer relating to or affecting the execution, delivery or performance of this
Agreement or the ability of Buyer to perform its obligations under this
Agreement.
3.7 No Broker or Finder. There is no broker or finder or other
person who would have any valid claim against any of the parties for a
commission or brokerage fee or payment in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement of or action
taken by Buyer. Buyer shall hold Seller completely free and harmless from the
claims of any person claiming to have so acted on behalf of Buyer.
3.8 Disclosure. Neither this Agreement nor Buyer's Disclosure
Memorandum contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
ARTICLE IV
DISCLOSURE MEMORANDUM
Seller's Disclosure Memorandum (the "Seller's Disclosure Memorandum"),
is attached to this Agreement as Attachment I, shall be executed on behalf of
Seller, and shall contain accurate, true and correct information and data and,
to the extent expressly set forth herein, shall be accompanied by a copy of
each document referred to therein or otherwise identified as to its location to
the reasonable satisfaction of Buyer. Buyer's Disclosure Memorandum (the
"Buyer's Disclosure Memorandum") shall be executed on behalf of Buyer, and
shall contain accurate, true and correct information and data in all material
respects. Terms used and defined in this Agreement shall have the same
definition when used in the Seller's Disclosure Memorandum or Buyer's
Disclosure Memorandum, as the case may be, and any schedules or exhibits
attached thereto.
ARTICLE V
COVENANTS OF SELLER
5.1 Representations and Warranties. Seller shall give detailed
written notice to Buyer promptly upon learning of any fact which (i) would
render untrue in any material respect any of Seller's or Buyer's
representations or warranties contained in this Agreement or the information
contained in Seller's Disclosure Memorandum or Buyer's Disclosure Memorandum,
or (ii) would cause Seller or Buyer to fail to comply with its obligations
hereunder in any material respect between the Effective Date and the Closing
Date.
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5.2 Notice of Proceeding. Seller will promptly notify Buyer in
writing upon:
(a) Becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereby; or
(b) Receiving any notice from any governmental department,
court, agency or commission of its intention (i) to institute an investigation
into, or institute a suit or proceeding to restrain or enjoin, the consummation
of this Agreement or such transactions, or (ii) to nullify or render
ineffective this Agreement or such transactions if consummated.
5.3 Consummation of Agreement. Seller shall use its best efforts to
fulfill and perform all conditions and obligations on its part to be fulfilled
and performed under this Agreement, and cause the transactions contemplated by
this Agreement to be fully consummated.
5.4 Confidentiality. Seller agrees to keep confidential any
information obtained from Buyer concerning Buyer or the business of Buyer,
unless readily ascertainable from public or published information, or trade
sources.
5.5 Operations. Seller agrees, through the Closing Date, at Seller's
sole cost and expense to (i) keep all existing insurance policies affecting the
Assets in full force and effect; (ii) continue to provide all services and
maintain all of the fixed Assets in good working order in a responsible manner
consistent with past practice; and (iii) upon Closing, terminate all employees
and settle all employment contracts.
5.6 Operations Pending Closing. Subsequent to the date of this
Agreement and prior to the Closing Date, Seller shall cause the Business to be
operated in the ordinary course, consistent with past practice. Until and
including the Closing Date, Seller shall use its best efforts to cause the
Business to maintain its insurance coverage and its books, accounts and records
in the usual manner in a basis consistent with current practice and to comply
in all material respects with all laws, ordinances and regulations of
governmental authorities applicable to the Business.
5.7 Restrictions. Except as disclosed in this Agreement or in
Seller's Disclosure Memorandum, prior to the Closing Date, and without the
prior written consent of Buyer, Seller shall not:
(a) Encumber or grant any security interest in any Asset other
than in the ordinary course of business; or
(b) In the ordinary course of business, enter into any
Contract which obligates the Business to expend more than Ten Thousand Dollars
($10,000.00) following the Closing Date.
5.8 Consents. Notwithstanding any other provision of this Agreement,
to the extent that the consent or approval of any third person is required
under any Contract in order to assign any such Contract from Seller to Buyer or
otherwise by reason of the transactions provided for in this
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Agreement, except as set forth in the Seller's Disclosure Memorandum, Seller
shall use its reasonable efforts to obtain such consents and approvals. If any
such consent or approval is not obtained, then such Contract shall not be
assigned until such consent or approval is obtained and Seller will use
reasonable efforts to establish a mutually satisfactory arrangement to provide
to Buyer the benefits of such Contract after the Closing.
5.9 Access to Properties and Information. Following the Effective
Date, Buyer and its representatives shall be afforded full access to all of the
assets, properties, books, records, agreements, other documents and employees
of Seller relating to the Business, in all cases during normal business hours
and upon reasonable prior notice. Buyer and its representatives shall have the
right to make abstracts from or copies of any such books, records, agreements,
and commitments, and such Business shall furnish Buyer's representatives with
such information concerning such affairs and copies of such documents,
contacts, agreements and records as Buyer may reasonably request. All such
information provided to Buyer in written form by Seller to the knowledge of
Seller shall be true, complete and correct and shall be deemed represented as
such by Seller to Buyer. Any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operation of the Business.
Buyer shall not contact any of Seller's employees or visit any portion of
Seller's properties without Seller's prior knowledge. Buyer shall be
responsible for ensuring that its employees or representatives maintain the
confidentiality of any information learned during the investigation subject to
the terms of Section 6.4 hereto.
5.10 Termination of Employees. On the Closing Date, Seller will
terminate its employees, deliver final paychecks to them for unpaid wages,
accrued vacation, unused sick days and any other amounts owing to them. Seller
shall cooperate with Buyer in hiring and transitioning of those employees that
Buyer desires to hire. The Seller shall be solely responsible for all notices
required by federal or state law. Seller shall be solely responsible for and
shall pay any severance, termination payments, COBRA benefit, accrued vacation
pay and similar accrued benefit, or liabilities relating to any of the
employees or to which any employee is entitled, including claims related in any
way to the employment of an employee by Seller based upon events occurring
prior to the Closing Date, regardless of when any such claim or demand therefor
may be made. On and after the Closing Date, Seller shall have the sole
responsibility and obligation for complying with the health care continuation
coverage requirements of Internal Revenue Code ("Code") Section 4980B and
Section 601 et seq. of ERISA ("COBRA") that are applicable to the employees and
the spouses and dependents of said employees not hired by Buyer and retained in
Buyer's employ for at least six months. Seller shall be solely responsible for
providing COBRA continuation coverage to any person entitled to such coverage
in connection with any health plan sponsored by Seller. Seller shall
indemnify, defend and hold harmless Buyer and its employees, officers,
directors, successors, assigns, subsidiaries, shareholders, agents, attorneys,
representatives and affiliates from and against any and all losses,
liabilities, demands, claims, expenses, judgments, costs, attorneys' fees,
taxes and penalties arising under Code Section 4980B or ERISA Section 601 et
seq. with respect to any individual who was an employee (or a spouse or
dependent of such employee) of Seller prior to the Closing and who had or has a
"qualifying event" (within the meaning of Code Section 4980(B)(f)(3)) before,
on or after the Closing.
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5.11 No Solicitation of Other Offers. The Seller, Xxxxxxx and the
Shareholders agree that neither they nor any of their respective officers,
directors, employees, representatives, investment bankers, attorneys,
accountants or other agents or affiliates, shall, directly or indirectly, take
any action to encourage, solicit, initiate or participate in any way in
discussions or negotiations with or furnish any information to, or afford any
access to the properties, books or records of the Seller or any of its
subsidiaries to, or otherwise assist, facilitate or encourage, any person or
entity (other than Buyer, its officers, directors, representatives, agents,
affiliates or associates) in connection with any possible or proposed merger,
consolidation, business combination, liquidation, reorganization, sale or other
disposition of assets, sale of shares of capital stock or similar transactions
involving the Seller or any subsidiary or division of the Seller. The Seller
and the Shareholders will promptly communicate to Buyer the terms of any
proposal or inquiry that they (or any of them) may receive, and the identity of
the person(s) making the proposal or inquiry, in respect of any such
transaction, or of any such information requested from any of them or of any
such negotiations or discussions being sought to be initiated with any of them.
The Seller will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any other parties conducted
heretofore with respect to any of the foregoing.
ARTICLE VI
COVENANTS OF BUYER
Buyer covenants and agrees that from the date hereof until the
completion of the Closing:
6.1 Representations and Warranties. Buyer shall give detailed
written notice to Seller promptly upon learning of any fact which (i) would
render untrue in any material respect any of Buyer's or Seller's
representations or warranties contained in this Agreement or the information
contained in Buyer's Disclosure Memorandum or Seller's Disclosure Memorandum or
(ii) would cause Buyer or Seller to fail to comply with its obligations
hereunder in any material respect between the Effective Date and the Closing
Date.
6.2 Notice of Proceeding. Buyer will promptly notify Seller in
writing upon:
(a) Becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereunder; or
(b) Receiving any notice from any governmental department,
court, agency or commission of its intention (i) to institute an investigation
into, or institute a suit or proceeding to restrain or enjoin, the consummation
of this Agreement or such transactions, or (ii) to nullify or render
ineffective this Agreement or such transactions if consummated.
6.3 Consummation of Agreement. Buyer shall fulfill and perform all
conditions and obligations on its part to be fulfilled and performed under this
Agreement, and cause the transactions contemplated by this Agreement to be
fully carried out.
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6.4 Confidentiality. Upon the termination of this Agreement prior to
Closing, Buyer shall keep confidential and shall not use in any manner any
information obtained from Seller concerning Seller or the Business which is not
in the public domain.
6.5 Offer of Employment. Buyer shall offer employment to certain
employees of the Business to who Buyer decides, in its sole discretion, to
offer employment. Seller shall offer employment to Xxxxxx Xxxxxxx (without
relocation from the Business) on the terms and conditions set forth in the form
of agreement attached as Exhibit E. Any and all costs, expenses and
liabilities arising from or relating to the failure of Buyer to hire existing
employees of the Business shall be the sole responsibility of Seller.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
7.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall have been true and correct as of the
Effective Date and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent changes are permitted or contemplated pursuant to this
Agreement; and
(b) Buyer shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
7.2 Officer's Certificate. Buyer shall have furnished Seller with a
certificate, dated the Closing Date and duly executed by a duly authorized
manager of Buyer, in form and substance satisfactory to the Seller, certifying
that the conditions set forth in Sections 7.1(a) and (b) have been satisfied.
7.3 Deliveries. Buyer shall have complied with each and every one of
its obligations set forth in Section 9.2.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
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8.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Seller,
Xxxxxxx and Shareholders contained in this Agreement shall have been true and
correct as of the Effective Date and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date, except to the extent changes are permitted or contemplated
pursuant to this Agreement;
(b) Seller, Xxxxxxx and Shareholders shall have performed and
complied with each and every covenant and agreement required by this Agreement
to be performed or complied with by it prior to or on the Closing Date; and
8.2 Officer's Certificate. Seller shall have furnished Buyer with a
certificate, dated the Closing Date and duly executed by a duly authorized
executive officer of Seller, to the effect that the conditions set forth in
Sections 8.1 (a) and (b) have been satisfied.
8.3 Deliveries. Seller shall have complied with each and every one
of its obligations set forth in Section 9.1.
8.4 Consents. All of the consents required to be obtained and the
estoppel certificate referenced in Sections 5.8 shall have been obtained.
8.5 Legal Requirements. Buyer and its counsel shall be satisfied (i)
that the consummation of the transactions contemplated herein comply with
applicable state and federal legal requirements, laws, and procedures
applicable to Buyer, Seller, Xxxxxxx and the Shareholders pursuant to which any
of them may be subject or bound and (ii) that by following the procedures and
making the Authorized Third Party Payments, Buyer will not succeed to any
liability of Seller, Xxxxxxx or the Shareholders.
ARTICLE IX
ITEMS TO BE DELIVERED AT THE CLOSING
9.1 Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer duly executed by Seller or such other signatory as may be required by the
nature of the document:
(a) Such deeds, bills of sale, certificates of title,
endorsements, assignments and other good and sufficient instruments of sale,
conveyance and transfer and assignment in form and substance reasonably
satisfactory to Buyer sufficient to sell, convey, transfer and assign to Buyer
all right, title and interest of Seller in and to the Assets;
(b) Certified copies of resolutions, duly adopted by the
shareholders and board of directors of Seller which shall be in full force and
effect at the time of the Closing, authorizing the execution, delivery and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby;
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(c) The certificate referred to in Section 8.2;
(d) The Non-Compete Agreements executed respectively by
Seller, Xxxxxxx and the principals of Seller;
(e) Certificates of Title to motor vehicles, if any, and
titles to titled equipment and a xxxx of sale;
(f) The employment agreement between Buyer and Xxxxxx Xxxxxxx
in the form attached as Exhibit E;
(g) The subleases ("Subleases") in substantially the forms
attached as Exhibit F-1 and F-2;
(h) Uniform Commercial Code ("UCC") termination statements
terminating all UCC financing statements which cover any of the Assets or
portions thereof;
(i) Evidence that all liabilities of Seller to governmental
creditors have been released, paid, discharged or provided for to the
satisfaction of any governmental entity, agency or authority which claims
monies due from Seller or any affiliate of Seller;
(j) The Escrow Agreement; and
9.2 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller, duly executed by Buyer or other signatory as required by the nature of
the document:
(a) The Purchase Price;
(b) Certified copies of resolutions, duly adopted by the
directors of Buyer, which shall be in full force and effect at the time of the
Closing, authorizing the execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby;
(c) The certificate referred to in Section 7.2;
(d) The employment agreement between Buyer and Xxxxxx Xxxxxxx
in the form attached as Exhibit E;
(e) The Subleases; and
(f) The Escrow Agreement.
9.3 Transfer Sales and Use Tax. The Seller shall pay all sales, use,
transfer, recording or similar taxes (other than income taxes) arising out of
the sale and transfer of the Assets to Buyer.
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ARTICLE X
POST-CLOSING MATTERS
10.1 Collections. Seller will promptly remit to Buyer any payments
received by it on any of the Accounts Receivable. Buyer shall use reasonable
efforts to collect the Accounts Receivable. Buyer may endorse checks for
deposit, payable to Seller, received in payment of Accounts Receivable. Buyer
shall apply payments received by it on any Accounts Receivable which do not
specify an invoice number to the oldest, non-disputed invoice.
10.2 Name Change and Dissolution. Promptly after the Closing, Seller
shall change its corporate name and Xxxxxxx and Seller shall release and
transfer any fictitious business names containing the words "CMC Ice" or names
similar thereto to Buyer. The name change shall be coordinated with Buyer to
enable Buyer to secure such corporate name by name reservation or otherwise.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller, Xxxxxxx and Shareholders. Seller,
Xxxxxxx and Shareholders jointly and severally, shall indemnify, defend and
hold Buyer harmless from and against any and all liabilities or obligations
arising with respect to the Assets or the Business up to the Closing. Further,
Seller shall indemnify, defend and hold harmless Buyer from and against any and
all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including reasonable attorney's fees and
costs (the "Losses") that Buyer may incur or suffer, which arise, result from,
or relate to: (i) any inaccuracy of Seller's, Shannon's or Shareholders'
representations and warranties contained in this Agreement or in any agreement,
instrument or document entered into pursuant hereto or in connection with the
Closing, (ii) any breach of or failure by Seller, Xxxxxxx or Shareholders to
perform any of its or their covenants or agreements contained in this Agreement
or in any agreement, instrument or document pursuant hereto or in connection
with the Closing, (iii) any violation of environmental or health and safety or
other laws (as in effect at the Closing) arising out of the ownership or
operation of the Business, including the real estate upon which the Facility is
located, based on conditions existing prior to the Closing, regardless of when
such claim, liability or loss is asserted, claimed or sustained, (iv) any
liability or obligation of Seller presently existing or determined to be due
after the Closing Date regardless of when any such liability actually arose or
accrued, or (v) any Account Receivable remains uncollected or uncollectible one
hundred twenty (120) days following the Closing Date. The liability of Seller,
Xxxxxxx and Shareholders hereunder is joint and several. Seller, Xxxxxxx and
Shareholders shall not have any liability under this Section 11.1(a) unless
Buyer gives written notice to Seller, Xxxxxxx and Shareholders asserting a
claim for such Losses, including reasonably detailed facts and circumstances
pertaining thereto, before the expiration of two (2) years from the Closing
Date, except for claims arising from breach of: (i) representations and
warranties as to taxes and environmental matters, which shall survive until the
expiration of the applicable statute of limitations.
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11.2 Indemnification by Buyer. Buyer shall indemnify, defend and hold
Seller, Xxxxxxx and Shareholders harmless from and against any and all
liabilities or obligations arising with respect to the Assets or the Business,
as conducted by Buyer, after the Closing Date, excepting claims asserted after
the Closing Date which relate to products sold or actions taken by Seller prior
to the Closing Date. Further, Buyer shall indemnify, defend and hold harmless
Seller, Xxxxxxx and Shareholders from and against any and all Losses that
Seller may incur or suffer, which arise, result from, or relate to: (i) any
inaccuracy of Buyer's representations and warranties contained in this
Agreement or in any agreement, instrument or document pursuant hereto or in
connection with the Closing, (ii) any breach of or failure by Buyer to perform
any of its covenants or agreements contained in this Agreement or in any
agreement, instrument or document pursuant hereto or in connection with the
Closing, (iii) or any act, omission or breach by Buyer relating to any of the
Assumed Liabilities. Buyer shall not have any liability under this Section
11.2 unless Seller gives written notice to Buyer asserting a claim for such
Losses, including reasonably detailed facts and circumstances pertaining
thereto, before the expiration of two (2) years from the Closing Date.
Notwithstanding the foregoing, nothing in this Section 11.2 shall limit
Seller's right to enforce Buyer's obligations pursuant to Section 1.4 at any
time after the Closing Date.
11.3 Defense of Third Party Actions.
(a) Promptly after receipt of notice of any written assertion
of a claim, or the commencement of any action, suit, or proceeding, by a third
party against a party to this Agreement ("Third Party Action"), the party in
receipt of such notice who believes that it is entitled to indemnification
under this Article XII (the "Indemnified Party") shall give notice to the other
party hereto (the "Indemnifying Party") of such action. The failure of the
Indemnified Party to give such notice to the Indemnifying Party will not
relieve the Indemnifying Party of any liability hereunder unless it was
prejudiced thereby, nor will it relieve it of any Liability which it may have
other than under this Article XI.
(b) Upon receipt of a notice of a Third Party Action, the
Indemnifying Party shall have the right, at its option and at its own expense,
to participate in and be present at the defense of such Third Party Action, but
not to control the defense, negotiation or settlement thereof, which control
shall remain with the Indemnified Party, unless the Indemnifying Party makes
the election provided in paragraph (c) below.
(c) By written notice within 20 days after receipt of a notice
of a Third Party Action, an Indemnifying Party may elect to assume control of
the defense, negotiation and settlement thereof, with counsel reasonably
satisfactory to the Indemnified Party; provided, however, that the Indemnifying
Party agrees (a) to promptly indemnify the Indemnified Party for its expenses
to date, and (b) to hold the Indemnified Party harmless from and against any
and all Losses caused by or arising out of any settlement of the Third Party
Action approved by the Indemnifying Party or any judgment in connection with
that Third Party Action. The Indemnifying Party shall not in the defense of
the Third Party Action enter into any settlement which does not include as a
term thereof the giving by the third party claimant of an unconditional release
of the Indemnified Party, or consent to entry of any judgment except with the
consent of the Indemnified Party.
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(d) Upon assumption of control of the defense of a Third Party
Action under paragraph (iii) above, the Indemnifying Party will not be liable
to the Indemnified Party hereunder for any legal or other expenses subsequently
incurred in connection with the defense of the Third Party Action, other than
reasonable expenses of investigation.
(e) If the Indemnifying Party does not elect to control the
defense of a Third Party Action under paragraph (c), the Indemnifying Party
shall promptly reimburse the Indemnified Party for expenses incurred by the
Indemnified Party in connection with defense of such Third Party Action, as and
when the same shall be incurred by the Indemnified Party.
(f) Any party who has not assumed control of the defense of
any Third Party Action shall have the duty to cooperate with the party which
assumed such defense.
11.4 Miscellaneous.
(a) Either party hereto shall be entitled to indemnification
hereunder notwithstanding the fact that the matter giving rise to the
applicable liability, payment, obligation or expense was previously disclosed
in writing to the Indemnified Party prior to the Closing Date.
(b) If any Loss is recoverable under more than one provision
hereof, the Indemnified Party shall be entitled to assert a claim for such Loss
until the expiration of the longest period of time within which to assert a
claim for Loss under any of the provisions which are applicable.
(c) Seller, Xxxxxxx and the shareholders shall have no
liability to Buyer under Section 11.1 until Losses exceed $25,000 in the
aggregate, at which xxxx Xxxxxx, Xxxxxxx and the Shareholders shall be liable
and responsible for any and all Losses in excess of $25,000 in the aggregate.
ARTICLE XII
MISCELLANEOUS
12.1 Termination of Agreement. This Agreement may be terminated at
any time on or prior to the Closing Date: (a) by the mutual consent of Seller
and Buyer; (b) by either Buyer or Seller if the Closing has not occurred on or
before September 3, 1997, unless such date is extended by Buyer, in which case
the Closing shall not have occurred on or before September 15, 1997; or (c) by
Buyer at any time prior to five (5) days after Seller has supplied all of the
requested due diligence materials to Buyer if Buyer, prior to such date,
determines in its sole discretion that the results of its due diligence
investigation of Seller is in any way unsatisfactory. A termination pursuant
to this Section 12.1 shall not relieve any Party of any liability it otherwise
has for a breach of this Agreement. As a condition to any termination by Buyer
hereunder, all information and materials relating to the Business and to which
Buyer obtained access during the negotiations leading to, or following,
execution of this Agreement, and any other writings containing excerpts of such
materials or information, and any or all copies thereof, shall be delivered to
Seller.
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12.2 Expenses. Each party hereto shall bear all of its expenses
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith.
12.3 Preservation of Records. Buyer shall preserve and make available
(including the right to inspect and copy) to Seller, its attorneys and
accountants, for a reasonable period of time from and after the Closing Date
(but in any event at least until all applicable statutes of limitation with
respect to audits by taxing authorities have expired) and during normal
business hours, such of the books, records, files, correspondence, memoranda
and other documents transferred pursuant to this Agreement as Seller may
reasonably require in connection with any legitimate purpose, including, but
not limited to, the preparation of tax reports and returns and the preparation
of financial statements and Buyer shall at its own expense cause its employees
to fully cooperate and to provide such reasonable assistance as may be
requested by Seller. Buyer shall notify Seller prior to the destruction of
such records and shall offer to return such records to the Seller.
12.4 Non-Assignable Contracts. Nothing contained in this Agreement
shall be construed as an assignment or an attempted assignment of any Contract
which is by law nonassignable without the consent of the other party or parties
thereto, unless such consent shall be given.
12.5 Further Assurances. From time to time prior to, on and after the
Closing Date, each party hereto will execute all such instruments and take all
such actions as any other party, being advised by counsel, shall reasonably
request, without payment of further consideration, in connection with carrying
out and effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including without limitation the
execution and delivery of any and all confirmatory and other instruments in
addition to those to be delivered on the Closing Date, and any and all actions
which may reasonably be necessary or desirable to complete the transactions
contemplated hereby. The parties shall cooperate fully with each other and
with their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this
Agreement.
12.6 Risk of Loss. The risk of loss, damage or destruction to any of
the Assets to be transferred to Buyer hereunder from fire or other casualty or
cause shall be borne by Seller at all times up to the time of the Closing, and,
subject to the provisions of this Section 12.6, it shall be the responsibility
of Seller to repair or cause to be repaired and to restore the property to its
condition prior to any such loss, damage, or destruction. In the event of any
such loss, damage or destruction in excess of $250,000, then Seller may elect
to terminate this Agreement without any liability to it, unless Buyer elects to
take the damaged property "as is" and an assignment of any insurance proceeds.
In the event of any such loss, damage, or destruction, the proceeds of any
claim for any loss, payable under any insurance policy with respect thereto,
shall be used to repair, replace, or restore any such property to its former
condition, subject to the conditions stated below. It is expressly understood
and agreed that, in the event of any loss or damage to any of the Assets to be
sold hereunder from fire, casualty or other causes prior to the close of
business on the day before the Closing Date, Seller shall notify Buyer of same
in writing immediately. Such notice shall specify with particularity the loss
or damage incurred, the cause thereof (if known or reasonably ascertainable),
and the insurance coverage. In the event that the property is damaged in an
amount
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estimated by the parties in good faith to exceed $250,000, and is not
completely repaired, replaced or restored on or before the Closing Date, the
Buyer at its sole option and with no other recourse against Seller in respect
of such loss, damage or destruction: (a) may elect, subject to Seller's right
to terminate as referred to above, to postpone Closing until such time as the
property has been completely repaired, replaced or restored to the reasonable
satisfaction of Buyer, (b) may elect to consummate the Closing and accept the
property in its then condition, in which event Seller shall pay to Buyer all
proceeds of insurance and assign to Buyer the right to any unpaid proceeds; or
(c) terminate this Agreement without liability to either party.
12.7 Survival of Representations and Warranties and Indemnities. All
covenants, agreements, representations and warranties of the parties under this
Agreement, in any Disclosure Memorandum, and any schedule or certificate or
other document delivered pursuant hereto shall survive the Closing.
ARTICLE XIII
DISPUTE RESOLUTION
13.1 Direct Discussion. In the event of any dispute, claim, question,
or disagreement arising out of or relating to this Agreement (a "Dispute"), the
parties involved in such Dispute shall use their best efforts to settle such
Dispute. To this effect, senior management of the parties involved shall
consult and negotiate with each other in good faith to attempt to reach a just
and equitable solution satisfactory to both parties.
13.2 Arbitration. In the event that the Dispute cannot be settled
under Section 13.1 above, the Dispute shall be submitted to binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and the procedures set forth below. In the event of any
inconsistency between the Rules of the American Arbitration Association and the
procedures set forth below, the procedures set forth below shall control.
Judgment upon the award rendered by the arbitrators may be enforced in any
court having jurisdiction thereof.
(a) Location. The location of the arbitration shall be in San
Diego County, California.
(b) Selection of Arbitrators. The arbitration shall be
conducted by a panel of three neutral arbitrators who are independent and
disinterested with respect to the parties, this Agreement, and the outcome of
the arbitration. Each party shall appoint one neutral arbitrator, and these
two arbitrators so selected by the parties shall then select the third
arbitrator. If one party has given written notice to the other party as to the
identity of the arbitrator appointed by the party, and the party thereafter
makes a written demand on the other party to appoint its designated arbitrator
within the next thirty days, and the other party fails to appoint its
designated arbitrator within thirty-one days after receiving said written
demand, then the arbitrator who has already been designated shall appoint the
other two arbitrators.
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(c) Discovery. Unless the parties mutually agree in writing
to some additional and specific pre-hearing discovery, the only pre-hearing
discovery shall be (a) reasonably limited production of relevant and non-
privileged documents, and (b) the identification of witnesses to be called at
the hearing, which identification shall give the witness's name, general
qualifications and position, and a brief statement as to the general scope of
the testimony to be given by the witness. The arbitrators shall decide any
disputes and shall control the process concerning these pre-hearing discovery
matters. Pursuant to the Rules of the American Arbitration Association, the
parties may request the arbitrator or other person authorized by law to
subpoena witnesses and documents for presentation at the hearing.
(d) Case Management. Prompt resolution of any dispute is
important to the parties; and the parties hereto agree that the arbitration of
any dispute shall be conducted expeditiously. The arbitrators are instructed
and directed to assume case management initiative and control over the
arbitration process (including scheduling of events, pre-hearing discovery and
activities, and the conduct of the hearing), in order to complete the
arbitration as expeditiously as is reasonably practical for obtaining a just
resolution of the Dispute.
(e) Legal Representation. Counsel to the parties in
connection with the negotiation of and consummation of the transactions under
this Agreement shall be entitled to represent their respective party in any and
all proceedings under this Section 13.2 or in any other proceeding. Seller and
Buyer, respectively, waive the right and agree they shall not seek to
disqualify any such counsel in any such proceeding for any reason, including
but not limited to the fact such counsel or any member thereof may be a witness
in any such proceeding or possess or have learned of information of a
confidential or financial nature of the party whose interests are adverse to
the party represented by such counsel in any such proceeding.
(f) Remedies. The arbitrators may grant any legal or
equitable remedy or relief that the arbitrators deem just and equitable, to the
same extent that remedies or relief could be granted by a state or federal
court, provided however, that no punitive damages may be awarded. The decision
of any two of the three arbitrators appointed shall be binding upon the
parties.
(g) Expenses. The expenses of the arbitration, including the
arbitrators' fees, expert witness fees, and attorney's fees, may be awarded to
the prevailing party, in the discretion of the arbitrators, or may be
apportioned between the parties in any manner deemed appropriate by the
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses, both parties shall share equally in the
payment of the arbitrators' fees as and when billed by the arbitrators.
(h) Confidentiality. Except as set forth below, the parties
shall keep confidential the fact of the arbitration, the dispute being
arbitrated, the decision of the arbitrators, and any documents produced by the
parties in the course of the arbitration. Notwithstanding the foregoing, the
parties may disclose information about the arbitration to persons who have a
need to know, such as directors, trustees, management employees, witnesses,
experts, investors, attorneys, lenders, insurers, and others who may be
directly affected. Once the arbitration award has become final, if the
arbitration award is not promptly satisfied, then the prevailing party may,
notwithstanding the
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foregoing, disclose information about the arbitration only to the extent
necessary to obtain judicial enforcement of the award.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective representative, successors and assigns.
No party hereto may assign any of its rights or delegate any of its duties
hereunder without the prior written consent of the other party, and any such
attempted assignment or delegation without such consent shall be void. Seller
agrees not to unreasonably withhold its consent to any assignment by Buyer of
its rights hereunder prior to Closing to a corporation or other entity
controlled by Buyer, provided that (a) such assignee will assume all
obligations of Buyer hereunder, without Buyer being released, and (b) such
assignment will not, in Seller's reasonable judgment, delay in any material way
or make more doubtful the Closing.
14.2 Amendments; Waivers. The terms, covenants, representations,
warranties and conditions of this Agreement may be changed, amended, modified,
waived, discharged or terminated only by a written instrument executed by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision of this Agreement shall in no manner
affect the right of such party at a later date to enforce the same. No waiver
by any party of any condition or the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any
other provision, term, covenant, representation or warranty of this Agreement.
14.3 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by
Federal Express or a similar overnight courier service, expenses prepaid, or,
if sent by telex, graphic scanning or other facsimile communications equipment,
delivered by such equipment, addressed as set forth below:
(a) If to Buyer, then to:
Southwestern Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X. X. Xxxxx, III, President
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
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and to:
Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(b) If to Seller, then to:
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (___) _____________
(c) If to Xxxxxxx, then to:
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (___) _____________
(d) With a copy to:
Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Any party may alter the address to which communications are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section 14.3 providing for the giving of notice.
14.4 Announcements. Neither party shall make any written or other
announcement regarding this Agreement or any of its terms without the prior
written consent of the other party.
14.5 Non-Disclosure of Purchase Price. Seller and Buyer shall keep
confidential the amount of and payment terms of the Purchase Price.
Notwithstanding the foregoing, either party may disclose the terms of the
Purchase Price to persons who have a need to know, such as directors, trustees,
management, investors, attorneys, lenders, accountants or insurers.
23
24
14.6 Captions. The captions of Articles and Sections of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any of the provisions of this Agreement.
14.7 Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of California.
14.8 Entire Agreement. This Agreement and the other documents
delivered hereunder constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof, and supersedes
all prior agreements, understandings, inducements or conditions, express or
implied, oral or written, relating to the subject matter hereof, except as
herein contained. The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
14.9 Execution; Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized signatories, all as of the day and year first
above written.
SHAREHOLDERS: SOUTHWESTERN ICE, INC., a Texas corporation
/s/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx By: /s/ X. X. Xxxxx, III
---------------------------------------
X. X. Xxxxx, III, President
/s/ Xxxxx Xxxxxxx
----------------------------
Xxxxx Xxxxxxx CMC ICE, INC., a California corporation
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Xxxxxx Xxxxxxx, President
/s/ Xxxxxx Xxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxx
24
25
EXHIBIT A
Property and Equipment
(Separately Identifying that of Xxxxxx Xxxxxxx)
EXHIBIT A
26
EXHIBIT A-1
Accounts Receivable
EXHIBIT X-0
00
XXXXXXX X-0
Xxxxxxxx Price Allocation
CMC ICE, INC.
-------------
All Assets, Property and Equipment other than
Goodwill and the name "CMC Ice" $103,920
Goodwill and name "CMC Ice" $311,080
A/R $269,040.26
XXXXXX XXXXXXX
--------------
Property and Equipment $20,000
EXHIBIT A-2
28
EXHIBIT A-3
Authorized Third Party Payments and Section 1.9 Deposit
(Procedures and Payees)
This Exhibit sets forth the creditors of Seller, Xxxxxxx and the
Shareholders, related to the Business ("Payees"), to whom direct payment of
funds (payable to Seller and Xxxxxxx as part of the Purchase Price) shall be
made at the Closing by Buyer. Buyer shall receive dollar for dollar credit on
the Purchase Price for every dollar disbursed to a Payee pursuant to the
Agreement and this Exhibit. Unless waived in writing by Buyer, it shall be a
condition of payment to any Payee by Buyer at Closing (other than the Section
1.9 Deposit) that such Payee release its claims and liens against the Business,
the Property and Equipment, and Seller, and acknowledge in writing payment
represents payment in full of all sums due it from Seller or Xxxxxxx. Nothing
contained in the Agreement or in this Exhibit is intended by a party to the
Agreement to create or confer a benefit on any person other than a party to the
Agreement, no such benefit shall be deemed to have been conferred on any person
other than a party to the Agreement and the Agreement and this Exhibit A-3
shall be so interpreted.
The amounts show due to Payees herein are Seller's and Shannon's
closest, best estimates of the amounts due said Payees as of the date hereof.
The actual amount to be directly disbursed by Buyer to a Payee shall be agreed
to by Buyer and Seller at the Closing and prior to disbursement. Disbursements
to Payees shall be an express condition to Buyer's obligation to close unless
waived in writing by Buyer.
-----------------------------------------------------------------------------------------
PAYEE AMOUNT METHOD OF PAYMENT
----- ------ -----------------
-----------------------------------------------------------------------------------------
IRS DEMAND 209,740.49 CASHIERS CHECK
-----------------------------------------------------------------------------------------
IRS JULY 1997 941 9,354.90 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
IRS AUGUST 1997 (EST) 941 9,400.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
IRS FUTA 940 1ST QTR 1997 914.78 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
IRS FUTA 940 2ND QTR 1997 593.64 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
IRS FUTA 940 AUGUST 1997 (EST) 81.61 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
IRS 1996 INDIVIDUAL TAX 21,424.50 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
IRS 1997 IND. ESTIMATE 12,000.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EXHIBIT A-3
Page 1 of 3
29
-----------------------------------------------------------------------------------------
PAYEE AMOUNT METHOD OF PAYMENT
----- ------ -----------------
-----------------------------------------------------------------------------------------
FRANCHISE TAX BOARD 1996 2,212.80 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
FRANCHISE TAX BOARD 1997 845.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
FRANCHISE TAX BOARD INV 1996 8,448.16 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
FRANCHISE TAX BOARD INV 1997 4,000.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EDD STATEMENT DATED 8/15/97 65,631.59 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EDD 1996 DE7 22,862.50 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EDD 1997 1ST QTR 8,066.85 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EDD 1997 2ND QTR 5,820.65 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EDD JULY 1997 884.46 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
EDD AUGUST 1997 (EST) 875.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
ACCOUNTS PAYABLE (1) 164,764.34 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
RYDER 6,500.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
PAYROLL NET SEPT 4TH (2) 13,000.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
XXXX XXXXX (3) 20,714.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
CCC (4) 15,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
ICE LEASE 50,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
LEGAL
-----------------------------------------------------------------------------------------
XXXXX XXXXXXX (5) 15,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
XXXXX XXXXX 9,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
EXHIBIT A-3
Page 2 of 3
30
-----------------------------------------------------------------------------------------
PAYEE AMOUNT METHOD OF PAYMENT
----- ------ -----------------
-----------------------------------------------------------------------------------------
UNION ICE (6) 5,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
PALOMAR ICE 58,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
XXXX XXXXXX (7) 11,500.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
DRAKCO (7) 1,850.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
INDEX WEST (7) 3,923.24 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
XXX XXXXXX (7) 10.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
SALES TAX DUE (8) 33,000.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
SALES TAX AUGUST 4,265.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
USE TAX ON SALE 15,425.00 CASHIERS CHECK
-----------------------------------------------------------------------------------------
A ALASKA (9) 10,508.00 CLIENT TRUST CHECK
-----------------------------------------------------------------------------------------
SECTION 1.9 DEPOSIT ANY BALANCE CLIENT TRUST CHECK
TO PACKAGED ICE, INC. AS "ESCROW AGENT"
-----------------------------------------------------------------------------------------
Notes:
1. Listing to be Provided.
2. Listing to be Provided.
3. Requires UCC-3 and Release.
4. Requires Release.
5. Requires Satisfaction of Judgment and Release.
6. Requires Release.
7. Requires Release.
8. Final Amount Open.
9. Listing to be Provided.
EXHIBIT A-3
Page 3 of 3
31
EXHIBIT B
COVENANT NOT TO COMPETE
This COVENANT NOT TO COMPETE ("Covenant") is made and effective on
___________, 1997, by and between Southwestern Ice, Inc., a Texas corporation
("Company"), and CMC Ice, Inc., a California corporation ("CMC") and is made
with reference to the following facts:
A. The Company and CMC have entered into an Asset Purchase Agreement
(the "Agreement"), providing for the Company to purchase substantially all of
the assets relating to the ice business of CMC.
B. The Company is unwilling to enter into the Agreement unless CMC
agrees to execute this Covenant.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
representations and warranties contained herein and in the Agreement, the
parties agree as follows:
1. NON-COMPETITION.
(a) Covenant Not To Compete. CMC shall not at any time within
the five (5) year period immediately following the date of this Covenant
("Restricted Period), directly or indirectly, in any territory in the United
States or any foreign country in which the Company (collectively, the "Company
Entities") are doing business or have actually investigated doing business or
where their products are sold as of the date hereof:
(i) engage in, or have any interest in any person,
firm, corporation, or business (whether as a shareholder, creditor, partner,
consultant, holder of any beneficial interest or otherwise other than as a
beneficial holder of not more than 5 percent of the outstanding voting stock of
a company having at least 500 holders of voting stock) that engages in the
business of producing, selling or distributing ice, which on the date hereof is
conducted by the Company Entities (the "Business"), as long as the Company
Entities, or any transferee of all or substantially all of the assets or stock
of any of the Company Entities ("Transferee"), shall engage in the Business or
similar activity during such Restricted Period;
(ii) attempt to hire any person who is employed
by the Company Entities, assist in the hiring by any other entity or person of
any person who is at the time employed by the Company Entities or encourage any
such employee to terminate his or her relationship with the Company Entities;
or
(iii) solicit or encourage any customer of the
Company Entities to terminate its relationship with the Company Entities or to
conduct with any other person any business that such customer conducts with the
Company Entities.
EXHIBIT B
Page 1 of 4
32
(b) Rights and Remedies Upon Breach. If CMC commits a breach
of, or threatens to commit a breach of, Section 1(a) the Company shall have the
following rights and remedies, each of which shall be independent of the other
and severally enforceable, and all of which shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company under law or in
equity:
(c) Specific Performance. CMC recognizes and agrees that any
violation of Section 1(a) may not be reasonably or adequately compensated in
damages and that, in addition to any other relief to which the Company may be
entitled by reason of such violation, the Company shall also be entitled to
permanent and temporary injunctive and equitable relief and, pending
determination of any dispute with respect to such violation, no bond or
security shall be required in connection therewith. Without limiting the
generality of the foregoing, CMC specifically acknowledges that a showing by
the Company of any breach of any provision of Section 1(a) shall constitute,
for the purposes of all judicial determinations of the issue of injunctive
relief, conclusive proof of all of the elements necessary to entitle the
Company to interim and permanent injunctive relief against CMC with respect to
such breach. If any dispute arises with respect to Section 1(a) without
limiting in any way any other rights or remedies to which the Company may be
entitled, CMC agrees that Section 1(a) shall be enforceable by a decree of
specific performance.
(d) Severability of Covenants. If any part of this Section 1
is held by a court of competent jurisdiction or any other governmental
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of such provision shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and such court or
authority shall be empowered to substitute, to the extent enforceable,
provisions similar thereto or other provisions so as to provide to the Company
the benefits intended by such provisions, to the fullest extent permitted by
applicable law.
2. PERMITTED ACTIVITIES. Provided one hundred percent (100%) of
his requirements for block ice are purchased from Company Entities at their
standard prices for block ice, CMC may engage in the following activities only
within the territories in which such activities are otherwise forbidden to CMC
under the introductory clause to Section 1(a) above:
(a) The fulfillment of supply contracts for block ice related
to pier construction at U.S. government facilities; and
(b) The manufacture of artificial snow utilizing block ice for
snowboarding ramps.
3. TERM. The term of this Covenant is to be five (5) years from the
date of this Covenant.
4. ASSIGNMENT. No rights under this Covenant shall be assignable
nor duties delegable by either party, except that the Company may assign and
delegate any of its rights and duties hereunder to a Transferee. Nothing
contained in this Covenant is intended to confer upon any person
EXHIBIT B
Page 2 of 4
33
or entity, other than the parties hereto, their successors in interest and
Transferees, any rights or remedies under or by reason of this Covenant unless
expressly so stated to the contrary.
5. CONSTRUCTION. This Covenant shall be construed and enforced in
accordance with the laws of the State of California.
6. SUCCESSORS AND ASSIGNEES. All covenants, representations,
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of their respective heirs, executors, administrators,
personal representatives, successors, and Transferees.
7. UNENFORCEABILITY. It is the intention of the parties hereto that
the provisions of this Covenant shall be enforced to the fullest extent
permissible under all applicable laws and public policies, but that the
unenforceability or the modification to conform with such laws or public
policies of any provision hereof shall not render unenforceable or impair the
remainder of the Covenant. Accordingly, if any provision shall be determined
to be invalid or unenforceable either in whole or in part, this Covenant shall
be deemed amended to delete or modify, as necessary, the invalid or
unenforceable provisions to alter the balance of this Covenant in order to
render the same valid and enforceable.
8. COUNTERPARTS. This Covenant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
9. ATTORNEYS' FEES. If an action is instituted to enforce any of
the provisions of this Covenant, the prevailing party in such action shall be
entitled to recover from the losing party its or his reasonable attorneys' fees
and costs as set by the court.
10. NOTICES. Any notice required or permitted to be given under this
Covenant shall be sufficient if such notice is in writing, delivered personally
or sent by registered or certified mail, return receipt requested, addressed as
follows:
To CMC : CMC Ice Co.
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
With a copy to:
Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
EXHIBIT B
Page 3 of 4
34
To the Company:
Southwestern Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx, III, President
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
and to: Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Notice shall be deemed given on the date of personal delivery or the
date it is placed, postage prepaid, in a depository for United States Mail
located within the State of California.
11. ENTIRE AGREEMENT. This Covenant contains the entire agreement of
the parties with respect to CMC's non-competition. This Covenant supersedes
all other agreements whether oral or in writing, hereto before made or existing
between the Company and CMC relating to CMC's non-competition. This Covenant
may not be changed orally, but may be changed only by an agreement in writing
signed by the party against whom enforcement of any change, modification,
extension, waiver or discharge is sought.
12. WAIVER. The waiver by either party of a breach of any provision
of this Covenant shall not operate or be construed as a waiver of any
subsequent breach.
CMC:: COMPANY:
CMC ICE, INC., a California corporation SOUTHWESTERN ICE, INC., a Texas
corporation
By: By:
------------------------------------- ------------------------------
Xxxxxx Xxxxxxx, President X. X. Xxxxx, III, President
EXHIBIT B
Page 4 of 4
35
EXHIBIT C
COVENANT NOT TO COMPETE
This COVENANT NOT TO COMPETE ("Covenant") is made and effective on
_________, 1997, by and between Southwestern Ice, Inc., a Texas corporation
("Company"), and Xxxxxx Xxxxxxx ("Xxxxxxx") and is made with reference to the
following facts:
A. The Company and CMC Ice, Inc. ("CMC") have entered into an Asset
Purchase Agreement (the "Agreement") providing for the Company to purchase
substantially all of the assets of CMC which are used to produce, store and
distribute ice in San Diego County, California.
X. Xxxxxxx is the principal shareholder of CMC.
C. The Company is unwilling to enter into the Agreement unless
Xxxxxxx agrees to execute this Covenant.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
representations and warranties contained herein and in the Asset Purchase
Agreement, the parties agree as follows:
1. NON-COMPETITION.
(a) Covenant Not To Compete. Except as an employee or consultant
of the Company, Xxxxxxx agrees that he will not at any time within the five (5)
year period immediately following the date of this Covenant ("Restricted
Period), directly or indirectly, in the California counties of San Diego, Los
Angeles, Orange, Riverside and Imperial:
(i) engage in, or have any interest in any person,
firm, corporation, or business (whether individually or as an employee,
officer, director, agent, shareholder of a corporation, creditor, partner,
consultant, holder of any beneficial interest or otherwise other than as a
beneficial holder of not more than 5 percent of the outstanding voting stock of
a company having at least 500 holders of voting stock) that engages in the
business of producing, selling or distributing ice, which on the date hereof is
conducted by the Company (the "Business"), as long as the Company, or any
transferee of all or substantially all of the assets or stock of the Company
("Transferee"), shall engage in the Business or similar activity during such
Restricted Period;
(ii) attempt to hire any person who is employed
by the Company, assist in the hiring by any other entity or person of any
person who is at the time employed by the Company or encourage any such
employee to terminate his or her relationship with the Company; or
EXHIBIT C
Page 1 of 4
36
(iii) solicit or encourage any customer of the
Company to terminate its relationship with the Company or to conduct with any
other person any business that such customer conducts with the Company.
(b) Rights and Remedies Upon Breach. If Xxxxxxx commits a
breach of, or threatens to commit a breach of, Section 1(a) the Company shall
have the following rights and remedies, each of which shall be independent of
the other and severally enforceable, and all of which shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company
under law or in equity:
(c) Specific Performance. Xxxxxxx recognizes and agrees that
any violation of Section 1(a) may not be reasonably or adequately compensated
in damages and that, in addition to any other relief to which the Company may
be entitled by reason of such violation, the Company shall also be entitled to
permanent and temporary injunctive and equitable relief and, pending
determination of any dispute with respect to such violation, no bond or
security shall be required in connection therewith. Without limiting the
generality of the foregoing, Xxxxxxx specifically acknowledges that a showing
by the Company of any breach of any provision of Section 1(a) shall constitute,
for the purposes of all judicial determinations of the issue of injunctive
relief, conclusive proof of all of the elements necessary to entitle the
Company to interim and permanent injunctive relief against Xxxxxxx with respect
to such breach. If any dispute arises with respect to Section 1(a) without
limiting in any way any other rights or remedies to which the Company may be
entitled, Xxxxxxx agrees that Section 1(a) shall be enforceable by a decree of
specific performance.
(d) Severability of Covenants. If any part of this Section 1
is held by a court of competent jurisdiction or any other governmental
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of such provision shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and such court or
authority shall be empowered to substitute, to the extent enforceable,
provisions similar thereto or other provisions so as to provide to the Company
the benefits intended by such provisions, to the fullest extent permitted by
applicable law.
2. PERMITTED ACTIVITIES. Provided one hundred percent (100%) of
his requirements for block ice are purchased from Company Entities at their
standard prices for block ice, Xxxxxxx xxx engage in the following activities
only within the territories in which such activities are otherwise forbidden to
Xxxxxxx under the introductory clause to Section 1(a) above:
(a) The fulfillment of supply contracts for block ice related
to pier construction at U.S. government facilities; and
(b) The manufacture of artificial snow utilizing block ice for
snowboarding ramps.
3. TERM. The term of this Covenant is to be five (5) years from the
date of this Covenant.
EXHIBIT C
Page 2 of 4
37
4. ASSIGNMENT. No rights under this Covenant shall be assignable
nor duties delegable by either party, except that the Company may assign and
delegate any of its rights and duties hereunder to a Transferee. Nothing
contained in this Covenant is intended to confer upon any person or entity,
other than the parties hereto, their successors in interest and Transferees, any
rights or remedies under or by reason of this Covenant unless expressly so
stated to the contrary.
5. CONSTRUCTION. This Covenant shall be construed and enforced in
accordance with the laws of the State of California.
6. SUCCESSORS AND ASSIGNEES. All covenants, representations,
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of their respective heirs, executors, administrators,
personal representatives, successors, and Transferees.
7. UNENFORCEABILITY. It is the intention of the parties hereto that
the provisions of this Covenant shall be enforced to the fullest extent
permissible under all applicable laws and public policies, but that the
unenforceability or the modification to conform with such laws or public
policies of any provision hereof shall not render unenforceable or impair the
remainder of the Covenant. Accordingly, if any provision shall be determined to
be invalid or unenforceable either in whole or in part, this Covenant shall be
deemed amended to delete or modify, as necessary, the invalid or unenforceable
provisions to alter the balance of this Covenant in order to render the same
valid and enforceable.
8. COUNTERPARTS. This Covenant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
9. ATTORNEYS' FEES. If an action is instituted to enforce any of
the provisions of this Covenant, the prevailing party in such action shall be
entitled to recover from the losing party its or his reasonable attorneys' fees
and costs as set by the court.
10. NOTICES. Any notice required or permitted to be given under this
Covenant shall be sufficient if such notice is in writing, delivered personally
or sent by registered or certified mail, return receipt requested, addressed as
follows:
To Xxxxxxx:
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
EXHIBIT C
Page 3 of 4
38
With a copy to:
Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
To the Company: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx, III, President
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
and to: Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Notice shall be deemed given on the date of personal delivery or the
date it is placed, postage prepaid, in a depository for United States Mail
located within the State of California.
11. ENTIRE AGREEMENT. This Covenant contains the entire agreement
of the parties with respect to Shannon's non-competition. This Covenant
supersedes all other agreements whether oral or in writing, hereto before made
or existing between the Company and Xxxxxxx relating to Shannon's
non-competition. This Covenant may not be changed orally, but may be changed
only by an agreement in writing signed by the party against whom enforcement of
any change, modification, extension, waiver or discharge is sought.
12. WAIVER. The waiver by either party of a breach of any provision
of this Covenant shall not operate or be construed as a waiver of any subsequent
breach.
XXXXXXX: COMPANY:
SOUTHWESTERN ICE, INC., a Texas
corporation
------------------------------
Xxxxxx Xxxxxxx
By:
-----------------------------------
X. X. Xxxxx, III, President
EXHIBIT C
Page 1 of 4
39
EXHIBIT D
PLEDGE AND ESCROW AGREEMENT
This Pledge and Escrow Agreement (this "Escrow Agreement"), dated as of
_____________, 1997, is entered into by and among Packaged Ice, Inc., a Texas
corporation ("PI") and Southwestern Ice, Inc., a Texas corporation ("SWI"),
Xxxxxx Xxxxxxx, an individual ("Xxxxxxx"), A-Alaska Ice, Inc., a California
corporation ("Alaska")and CMC Ice, Inc., a California corporation ("CMC") and
PI, as escrow agent and pledgeholder (the 'Escrow Agent'). PI and SWI are
respectively parent and wholly own subsidiary and are sometimes herein referred
to as the "Texas Parties". Xxxxxxx, Alaska and CMC are related parties and are
sometimes herein referred to as the "California Parties".
RECITALS:
A. PI and Alaska have entered into that certain Agreement and Plan
of Reorganization dated ___________, 1997 (the "Reorganization Agreement").
Pursuant to the Reorganization Agreement, PI will purchase substantially all of
the assets of Alaska and Alaska will receive shares of PI Common Stock, $0.01
par value per share (the "Shares").
B. SWI, CMC and Xxxxxxx have entered into that certain Asset
Purchase Agreement dated ____________, 1997, (the "Asset Agreement"). Pursuant
to the Asset Agreement, SWI will purchase the ice business assets of CMC
including assets owned by Xxxxxxx individually and used in the ice business of
CMC. Xxxxxxx and CMC will receive cash in such sales ("Asset Cash").
C. Pursuant to each of the Agreements referenced in Recitals A and
B, the California Parties and the Texas Parties, as the case may be, have
agreed that, at the closings held under each of such Agreements, which are
required to be concurrent under the terms of each of said Agreements,
(collectively the "Closing"), certain of the California Parties will cause to
be deposited into escrow a portion of the consideration received (Shares and
Asset Cash) to be received by said California Parties. The Shares and Asset
Cash shall be pledged to PI to secure the indemnification of PI, as Buyer under
the Reorganization Agreement and SWI, as Buyer under the Asset Agreement, which
is provided for in Articles XI of the Reorganization Agreement and Asset
Agreement.
D. It is a condition to the consummation of the transactions
contemplated by the Reorganization and Asset Agreements that at or prior to the
Closing, this Escrow Agreement be entered into by the parties hereto.
E. It is understood and agreed that the Shares and Asset Cash
pledged hereunder (the "Escrow Fund") to PI shall constitute security for the
payment, liquidation or direct satisfaction of indemnity claims ("Claims") for
which any of the Texas Parties is entitled to indemnity from and against any of
the California Parties under any of the Reorganization Agreement and Asset
Agreement, without regard to whether or not the source of the Escrow Fund was
received under or pursuant the Agreement under which a Claim is being asserted.
40
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth and of other good and valuable
consideration, the parties hereto agree as follows:
1. Escrow and Pledge of Shares and Asset Cash; Legend.
a. Alaska has caused to be delivered to the Escrow Agent a
certificate representing 20,000 of Shares in accordance with the
Reorganization Agreement. Each Share has been deposited in
escrow (the "Escrow") with the Escrow Agent by Alaska and is
hereby pledged by Alaska to the Texas Parties. Alaska hereby
grants a security interest in such Shares to the Texas Parties
(the "Pledge"). On the date hereof Alaska also has delivered to
the Escrow Agent stock powers endorsed in blank with respect to
the Shares deposited with Escrow Agent. Alaska hereby grants to
the Texas Parties a security interest in any Proceeds as defined
in Section 2a (iii) below, any additional Shares of which Alaska
may acquire ownership by reason of a stock split, subdivision,
dividend or other recapitalization with respect to the Shares or
any securities which are issued in exchange for or in replacement
of the Shares, any and all of which shall be deposited in the
Escrow (together with stock powers with respect thereto endorsed
in blank), and which shall be subject to the terms hereof and
shall become part of the Escrow Fund hereunder.
b. Each certificate representing any Shares shall have the following
legend noted conspicuously thereon:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
LIEN IN FAVOR OF THE ISSUER PURSUANT TO THAT CERTAIN PLEDGE AND
ESCROW AGREEMENT DATED ______________________, 1997 BY AND AMONG
THE ISSUER, A ALASKA ICE, INC., THE SHAREHOLDERS OF A ALASKA ICE,
INC. AND THE ISSUER AS ESCROW AGENT AND PLEDGEHOLDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER IMPOSED BY THE ISSUER UNTIL RELEASED
FROM SUCH LIEN IN ACCORDANCE WITH THE TERMS OF SUCH PLEDGE AND
ESCROW AGREEMENT.
c. If blank stock powers with respect to Shares registered to Alaska
are delivered by the Escrow Agent to PI pursuant to Section 4.a
below, Alaska shall promptly deliver or cause to be delivered to
the Escrow Agent stock powers endorsed in blank with respect to
the remaining Shares pledged hereunder by Alaska (together with
stock powers with respect thereto endorsed in blank).
EXHIBIT D
Page 2 of 10
41
d. CMC and Xxxxxxx have caused to be delivered to Escrow Agent the
Section 1.9 Deposit in accordance with the Asset Agreement
including Exhibit A-3 thereof. The aforesaid sum has been
deposited in the Escrow with the Escrow Agent and is hereby
pledged by CMC and Shannonto the Texas Parties. CMC and Xxxxxxx
hereby grant as security interest in said cash to the Texas
parties.
e. The deposit and Pledge of the Shares by Alaska and the Asset Cash
by CMC shall be referred to as the Escrow Fund. The Escrow Agent
shall hold the Escrow Fund not as the agent of any of the
California Parties, but as pledgeholder with respect to the
pledge of same pursuant to this Escrow Agreement. The Escrow
Fund shall include the property referred to in Section 1a above
and Proceeds as defined in Section 2a(iii) below. The Escrow
Fund shall serve to secure the indemnification obligations of the
California Parties to the Texas Parties under Article XI
respectively of the Reorganization Agreement and the Asset
Agreement and Recital E above with respect to a notice of claim
(a "Notice of Claim") delivered to any of the California Parties
under the Reorganization Agreement and Asset Agreement within one
(1) year from the date of the Closing. Any Notice of Claim shall
be deemed effective when delivered to the California parties and
the Escrow Agent within one (1) year from the date of the
Closing.
f. The deposit hereunder by the California Parties shall in no way
limit the indemnification obligations of said parties under the
Reorganization Agreement or Asset Agreement.
g. The Escrow Fund shall be available and used to satisfy Claims
arising under any of the Reorganization Agreement and Asset
Agreement notwithstanding the fact that any portion of the Escrow
Fund so used shall have been deposited by one of the California
Parties under one of said Agreements under which no
indemnification Claim has arisen or is then pending. The
California Parties hereby agree that with respect to the use and
application of the Escrow Fund, their liabilities and obligations
are joint and several and acknowledge that the deposit and Pledge
hereunder by them is made on that basis. The California Parties
shall have the right of contribution among themselves; however,
in pursuing any such right, the California Parties shall not
involve or join in any action any of the Texas Parties or seek in
any manner, through judicial action or otherwise, to attach, levy
or otherwise restrain the disbursement or application of the
Escrow Fund.
EXHIBIT D
Page 3 of 10
42
2. Restriction on Transferability; Release From Pledge and Escrow;
Proceeds.
a. No part of the Escrow Fund shall be released from Escrow and the
Pledge except as follows:
(i) Upon the later of (a) 120 days from the date of the Closing or
(b) the date upon which all claims in respect of which a Texas Party has
submitted Notices of Claim prior to the end of the above-referenced 120 days
shall have been disposed of, the Escrow Agent shall release from the Escrow and
shall deliver to the order of the California Parties the balance of the Asset
Cash, if any, remaining in the Escrow and the Asset Cash shall thereupon cease
to be subject to the Pledge and this Escrow Agreement.
(ii) Upon the later of (a) the first annual anniversary of the date of
the Closing or (b) the date upon which all claims in respect of which a Texas
Party has submitted Notices of Claim shall have been disposed of, the Escrow
Agent shall release from the Escrow and shall deliver to the order of the
California Parties the balance of the Shares and Proceeds, if any, remaining in
the Escrow, and such Shares and Proceeds shall thereupon cease to be subject to
the Pledge and this Escrow Agreement.
(iii) Any Shares may at any time be released from Escrow and the
Pledge, and sold in accordance with applicable laws and subject to applicable
legal and contractual transfer restrictions in respect of such Shares if Alaska
delivers to the Escrow Agent a Notice to Sell (the "Notice to Sell"), addressed
to the Escrow Agent and executed by Alaska, instructing the Escrow Agent to
deliver such Shares to a designated broker-dealer with the Notice to Sell which
Notice to Sell shall be irrevocable, and a written instruction instructing the
designated broker-dealer to dispose of such Shares for the account of Alaska
and to return the net proceeds of such disposition ("Proceeds") to the Escrow
Agent to be held as part of the Escrow Fund under this Escrow Agreement. Such
Proceeds shall be subject to the Pledge and the Escrow Agent shall retain such
Proceeds, and if requested by Alaska, shall invest such Proceeds, net of any
transaction costs, in any "Cash Equivalent Investment" (as defined below)
identified and directed in writing by Alaska for the account of Alaska and all
interest or dividends earned thereon shall be paid quarterly to Alaska. The
Escrow Agent shall apply such Proceeds to the satisfaction of claims in
accordance with Section 4 for so long as the Shares from which such Proceeds
derived would have been a part of the Escrow Fund and subject to this Escrow
Agreement and, at the time that such Shares would have ceased to be subject to
the Pledge and this Escrow Agreement, the Escrow Agent shall disburse such
Proceeds to the order of the Alaska. "Cash Equivalent Investment" shall mean
(a) United States dollars; (b) any evidence of indebtedness, maturing in not
more than one year, insured or guaranteed by the government of the United
States; (c) commercial paper, maturing not more than nine months from the date
of issue and rated at least A-1 by the Standard & Poor's Corporation or P-1 by
Xxxxx'x Investor Services, Inc., issued by a corporation organized under the
laws of any State of the United States of America or the District of Columbia;
and (d) any certificate of deposit or acceptance, maturing in not more than one
year, issued by a commercial banking institution which is a member of the
Federal Reserve System and which has a combined capital and surplus and
undivided profits of not less than $100,000,000.
EXHIBIT D
Page 4 of 10
43
(iv) With the prior approval of the Texas Parties, upon the written
request of the California Parties, the Escrow Fund may be disbursed to pay
claims, debts and obligations of any of the California Parties.
b. With respect to all Shares released from the Pledge and Escrow,
PI shall promptly (or shall cause the transfer agent for its
common stock to) issue replacement certificates representing such
released Shares, not bearing the legend set forth in Section 1.b
above, in exchange for the legended certificates representing
such released Shares.
3. Requirements for Notice of Claim.
a. Details of Claim. Any Notice of Claim filed by a Texas Party
shall specify in reasonable detail the facts and circumstances of
the claim; the basis on which a California Party is believed to
have liability therefor; and the estimated amount of loss alleged
to have been suffered or liability incurred by the Texas Party as
a result thereof. Such estimates of loss or liability (while not
binding on the Texas Party) shall be prepared by the Texas Party
on a reasoned basis consistent with the facts and circumstances
out of which the claim arose.
b. Holding of Dividends on Certain Shares. From the date of receipt
of a Notice of Claim until resolution thereof pursuant to Section
4.7, all cash dividends declared and paid on the Shares shall be
deposited in Escrow and shall be retained in the Escrow until
resolution of such Claim.
4. Satisfaction of Claims.
a. Claims for Indemnification. The following procedures shall
prevail as to satisfaction of a Claim for indemnification in
favor of the Texas Parties:
(i) Uncontested Claims. If the Escrow Agent is furnished by the
Texas Party with a Notice of Claim, and no notice of objection to such claim (a
"Notice of Objection") is furnished by the California Parties to the Escrow
Agent within 30 days of the date of receipt of the Notice of Claim by the
Escrow Agent (which the Escrow Agent may assume to be the same as the date of
receipt of the Notice of Claim by the California Parties); or
(ii) Agreed Claims. If the Escrow Agent shall have been furnished by
the California Parties with a timely Notice of Objection, upon receipt by the
Escrow Agent of a notice (a "Notice of Resolution") that the parties have
subsequently agreed upon, resolved or compromised the claim specified in the
Notice of Claim (which Notice of Resolution shall be executed by the Texas
Parties and acknowledged by the California Parties); or
EXHIBIT D
Page 5 of 10
44
(iii) Judicial Awards. If the Escrow Agent shall have been furnished
by the California Parties with a timely Notice of Objection and shall
subsequently be furnished with a copy of an award (an "Award") made by an
arbitrator or court of competent jurisdiction with respect to the Claim
specified in the Notice of Claim, and upon receipt by the Escrow Agent of an
opinion of counsel for Texas Parties to the effect that the time for filing an
appeal, an application for correction of the Award or a petition to vacate or
correct the Award has passed, and that no such appeal, application or petition
has been filed, or that the parties have waived such rights;
thereupon, unless instructed to the contrary by Alaska pursuant to Section 4.b
below, the Escrow Agent shall deliver to the Texas Parties that amount of the
Escrow Fund which is equal to the amount specified in (i) the Notice of Claim,
(ii) the Notice of Resolution or (iii) the Award, as the case may be.
The Escrow Agent may deliver cash and/or Shares to the Texas Parties in
satisfaction of a Claim. If Shares are to be used to satisfy a Claim, the
number of Shares to be delivered shall be that number of Shares, valued at
$10.00 per share, which are equal in value to the amount specified in (i) the
Notice of Claim, (ii) the Notice of Resolution or (iii) the Award as the case
may be.
b. Alternate Cash Satisfaction of Claim. Alaska may, in its sole
discretion, (i) furnish to the Escrow Agent an amount of cash to
be applied in partial or full satisfaction of a Claim in respect
of which the Escrow Agent is otherwise prepared to satisfy in
whole or in part using Shares.
c. Government Creditor. Notwithstanding Section 4a and b hereof,
Escrow Agent is irrevocably authorized and instructed hereby to
pay directly the claims of any Government Creditor of any of the
California Parties. Escrow Agent shall be entitled to disburse
any such payment at any time three (3) business days following
the date Escrow Agent is instructed in writing to make such
payment by PI, which shall concurrently provide the California
Parties with a copy of any such written instruction.
d. Advance. In the event cash held in the Escrow Fund is
insufficient to pay a Claim, PI may, but shall not be obligated
to advance the amount of cash necessary to pay any such Claim in
full by delivery of cash to Escrow Agent. Thereafter, upon
written demand from PI, Escrow Agent shall promptly deliver to PI
Shares (up to all Shares) having a value (determined as provided
above) equal to the cash so advanced by PI.
5. Cash Dividends and Voting Rights. Subject to Section 3.b, Alaska shall
receive all cash dividends declared and paid on Shares throughout the
period that Shares are held in the Escrow in the same manner as any
other shareholder of PI, which dividends shall at no time be a part of
the Escrow or subject to the Pledge. All other distributions in respect
of the Shares that are taxable as dividends for Federal income tax
purposes shall also be paid directly to Alaska. Alaska shall also
retain all voting rights with respect to his Shares during such period.
EXHIBIT D
Page 6 of 10
45
6. Concerning the Escrow Agent.
a. Under no circumstances shall the Escrow Agent be liable to the
California Parties for any act it may take in its capacity as
Escrow Agent, or for the failure to take any action, or for any
damage, loss or expenses suffered or incurred resulting therefrom
or in acting hereunder, except only for acts of gross negligence
or willful misconduct.
b. The Escrow Agent may consult with counsel of its choice and may
rely in good faith on advice of such counsel.
c. The California Parties each shall indemnify and hold the Escrow
Agent harmless in respect of any and all losses, costs, expenses,
liabilities, judgments, assessments, penalties, damages,
deficiencies, suits, actions, proceedings or demands, and
attorneys fees and expenses incident thereto resulting from any
action or refusal to act by the Escrow Agent in accordance with
the instructions of any of the California Parties. The Escrow
Agent shall promptly notify the California Parties of any
asserted liability for which the Escrow Agent would be entitled
to indemnification by the California Parties, and the California
Parties and their legal representatives shall have, at the
election of the California Parties, a right to compromise or
defend any such matter involving asserted liability, through
counsel of their own choosing, at their expense; provided,
however, that the California Parties shall indemnify the Escrow
Agent, its officers, employees and agents, against any damage
resulting from the failure to pay any claims on all such
litigation pending. In the event any of the California Parties
undertakes to compromise or defend any such liability, the
California Parties shall notify the Escrow Agent in writing
promptly of their intention to do so, and the Escrow Agent shall
cooperate with the California Parties and their counsel in the
compromising of or the defending against any such liabilities or
claims, at the expense of the California Parties.
d. The Escrow Agent may resign from its duties and obligations
hereunder by giving at least 30 days advance notice in writing of
when such resignation shall take effect. Upon any resignation or
discharge of the Escrow Agent, the Texas Parties and California
Parties shall jointly designate a new Escrow Agent. If the Texas
Parties and California Parties cannot promptly agree upon a new
Escrow Agent, a new Escrow Agent shall be appointed by the
Presiding Judge of the Superior Court for the County of San Diego
upon petition by PI. If the Escrow Agent is served with
conflicting demands which cannot be promptly resolved, the Escrow
Agent shall interplead the matter by petition in the Superior
Court for the County of San Diego, which shall resolve such
matter. The parties hereto consent to such proceeding being
commenced and shall indemnify and hold the Escrow Agent harmless
from any expense or cost including attorneys' fees, incurred in
such action.
EXHIBIT D
Page 7 of 10
46
7. Fees of the Escrow Agent. The Escrow Agent shall charge no fees for its
services in acting hereunder.
8. Miscellaneous.
a. Successors. This Escrow Agreement shall be binding upon and
shall inure to the benefit of the parties herein and their
respective heirs, executors, successors and assigns.
b. Amendment, Etc. This Escrow Agreement may not be released,
discharged, abandoned, changed or modified in any manner, except
by an instrument in writing signed on behalf of each of the
parties hereto by their duly authorized officers or
representatives. The failure of any party hereto to enforce at
any time any provision of this Escrow Agreement shall in no way
be construed to be a waiver of such provision, nor in any way to
affect the validity of this Escrow Agreement or any part thereof
or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Escrow Agreement
shall be held to be a waiver of any other or subsequent breach.
c. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if
delivered personally, mailed by certified mail (return receipt
requested) or sent by telecopier (confirmed thereafter by such
certified mail) to the parties at the following addresses or at
such other addresses as shall be specified by the parties by like
notice:
(a) if to the Texas Parties or Escrow Agent:
Packaged Ice, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxx, III, President
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
EXHIBIT D
Page 8 of 10
47
and to:
Xxxx Xxxxxxxxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1500 Nations Bank Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(b) if to the California Parties:
Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (___) ______________
and to:
Xxxxx Xxxxxxxx, Esq.
Weeks, Rathbone, Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Notice so given shall (in the case of notice so given by mail) be deemed to be
given and received on the fifth calendar day after posting and (in the case of
notice so given by telecopier or personal delivery) on the date of actual
transmission or (as the case may be) personal delivery.
d. Defined Terms. The Capitalized terms used herein without
definition and which are defined in the Reorganization Agreement
or Asset Agreement shall have the respective meanings, herein as
defined in said agreements.
e. Captions. The captions appearing in this Escrow Agreement are
inserted only as a matter of convenience and as a reference and
in no way define, limit or describe the scope or intent of this
Escrow Agreement or any of the provisions hereof.
f. Governing Law. This Escrow Agreement shall be construed and the
rights of the parties hereafter shall be governed by the laws of
the State of California.
g. Counterparts. This Escrow Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
EXHIBIT D
Page 9 of 10
48
h. Fractional Shares. No fractional shares of the Shares shall be
issued or delivered pursuant to any provision of this Escrow
Agreement. In making delivery of the Shares to PI or Alaska, the
Escrow Agent shall round off any fractional share resulting from
any calculation hereunder to the nearer whole share.
i. Distribution by Consent. Any other provision of this Escrow
Agreement to the contrary notwithstanding, the Escrow Agent shall
distribute any assets held in Escrow in such manner at such time
or times as the Texas and California Parties may, in writing,
jointly direct.
j. Security Agreement. This Escrow Agreement shall constitute a
Security Agreement within the meaning of the California
Commercial Codes.
k. Termination. This Escrow Agreement shall terminate when the
Escrow Fund has ceased to be subject to this Escrow Agreement.
l. Tax Identification Number. Each party hereto, except the Escrow
Agent, shall provide the Escrow Agent with its Tax Identification
Number ("T.I.N.") as assigned by the IRS. All interest and other
income earned under the Escrow Agreement shall be allocated and
paid as provided hereunder and reported by the recipient to the
IRS as having been so allocated and paid.
IN WITNESS WHEREOF, the parties have executed this Reorganization
Agreement as of the date set forth herein.
A ALASKA ICE, INC. SOUTHWESTERN ICE, INC.
By: By:
------------------------------ --------------------------------
Its: Its:
----------------------------- -------------------------------
CMC ICE, INC. PACKAGED ICE, INC.
By: By:
------------------------------ --------------------------------
Its: Its:
----------------------------- -------------------------------
PACKAGED ICE, INC., as Escrow Agent
--------------------------------
Xxxxxx Xxxxxxx By:
--------------------------------
Its:
-------------------------------- -------------------------------
Xxxxx Xxxxxxx
EXHIBIT D
Page 10 of 10
49
EXHIBIT E
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into and becomes
effective as of ___________, 1997 by and between Southwestern Ice, Inc., a
Texas corporation ("Employer"), and Xxxxxx Xxxxxxx ("Xxxxxxx").
RECITALS
A. Employer is a corporation authorized to do and is doing business
in the State of California.
B. Employer has recently purchased substantially all of the assets
of the ice business of Employee's former employer. Employee has terminated his
employment with his former employer. Both Employer and Employee desire that
Employee become an employee on a full-time basis for Employer.
AGREEMENT
IN CONSIDERATION of the promises and of the mutual covenants contained
herein, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. Employment. Employer hereby engages Employee to serve as a
General Manager of the Company's CMC ice division (the "CMC Ice Division") and
Employee hereby accepts such an engagement upon the terms and conditions set
forth herein.
2. Effective Date and Term. The effective date of this Agreement
shall be ________________, 1997, and the term of this Agreement shall begin on
the effective date and shall remain in effect until _____________________,
1998, unless terminated earlier pursuant to Paragraph 12.
3. Duties. Employee is employed to serve as a General Manager and
shall perform such duties as are customarily performed by a General Manager and
such duties as Employer makes from time to time. As part of Employee's duties,
Employee acknowledges and understands that: (a) Employee will devote utmost
knowledge and best skill to the performance of his duties; (b) Employee shall
devote not less than 150 hours per month to the rendition of such services,
subject to absences for customary vacations and for temporary illness; and (c)
Employee will not engage in any other gainful occupation which requires his
personal attention without the prior written consent of Employer, with the
exception that Employee may personally trade in stock, bonds, securities,
commodities or real estate investments for his own benefit. Notwithstanding
the above, Employee
EXHIBIT E
Page 2 of 5
50
may devote reasonable time to engage in the Permitted Activities set forth in
his Covenant Not to Compete with Employer of even date herewith.
4. Confidentiality. Employee shall not disclose any information
relating to the Employer, its employees or customers, and information regarding
the affairs or operations of Employer, including Employer's proprietary
information, trade secrets, patents and customer lists, to any third party or
parties during or after the term of this Agreement, without the prior written
consent of Employer.
5. Patents and Inventions. Employee agrees that all patents,
designs, plans and inventions which Employee discovers, develops, or
participates in during the time he is employed by Employer become the exclusive
property of Employer.
6. Limitations on Authority. Without the express written consent
from Employer, Employee shall have no apparent or implied authority to:
a. Pledge the credit of Employer;
b. Bind the Employer under any contract, agreement, note,
mortgage or otherwise for any obligation;
c. Release or discharge any debt due to Employer unless the
Employer has received the full amount thereof; and,
d. Sell, mortgage, transfer or otherwise dispose of any
assets of the Employer.
7. Personnel Policies and Procedures. The Employer shall have the
authority to establish from time to time personnel policies and procedures to
be followed by its employees. Employee agrees to comply with the policies and
procedures of the Employer. To the extent any provisions in Employer's
personnel policies and procedures differ with the terms of this Agreement, the
terms of this Agreement shall apply.
8. Base Compensation. During the term of this Agreement, Employee
shall be paid an annual base salary of $60,000 in twenty-six (26) equal bi-
weekly installments.
9. Fringe Benefits.
a. Life Insurance. The Employer shall pay for and provide
term life insurance during the term of the Agreement for the benefit of
Employee under the company's group life insurance plan.
b. Health Insurance. The Employer shall provide health
insurance pursuant to the existing company health insurance plan.
EXHIBIT E
Page 3 of 5
51
10. Expenses. The Employer shall reimburse Employee for reasonable
and necessary expenses (including a car or mileage allowance for vehicle
expense) incurred by Employee in the ordinary course of business for the
Employer, as may be approved from time to time by Employer.
11. Termination. This Agreement and the employment of Employee shall
terminate prior to its expiration date under the following conditions:
a. The death of Employee;
b. The permanent disability of Employee (permanent disability
shall exist when Employee suffers from a condition of mind or body that
indefinitely prevents him from further performance of his essential job
duties); or,
c. Upon receipt by Employee of written notice from Employer
that Employee's employment is being discharged for "good cause". The Employer
has "good cause" to discharge Employee if:
1. Employee fails or refuses to faithfully and
diligently perform the usual and customary duties of his employment which
failure or refusal is not cured within 30 days after written notice thereof is
given to Employee;
2. Employee fails or refuses to comply with the
policies, standards and regulations of the Employer which from time to time may
be established, which failure or refusal is not cured within 15 days after
written notice thereof is given to Employee;
3. Employee violates any term or condition of this
Agreement and fails to cure the same promptly following written notice from
Employer; or
4. It is determined that the Employee has conducted
himself in an unprofessional, unethical or fraudulent manner, or has acted in a
manner detrimental to the reputation, character or standing of Employer.
12. Compensation Upon Termination. In the event Employee is
terminated for good cause, Employee shall be terminated immediately upon notice
from Employer of such termination and Employee shall be entitled to receive
compensation in the amount equal to two weeks of base compensation. Employee
is entitled to no other severance compensation when he is terminated for good
cause as defined in paragraph 11(c).
13. Arbitration/Sole Remedy for Breach of Agreement. In the event of
any dispute between Employer and Employee concerning any aspect of the
employment relationship, including any disputes upon termination, all such
disputes shall be resolved by binding arbitration before a single neutral
arbitrator. The arbitrator shall be selected from the American Arbitration
Association through its procedures. All rules governing the arbitration shall
be the rules as set forth by the American Arbitration Association's Employment
Dispute Resolution Rules. The arbitrator is bound
EXHIBIT E
Page 4 of 5
52
to rule only on whether or not there has been a violation of the terms of this
Agreement and to render an award, if any, that is consistent with the terms of
this Agreement. Neither party to this Agreement is entitled to any legal
recourse or rights or remedies other than those provided within this Agreement.
The Employee's sole remedies for claims arising out of his employment, with the
exception of Workers' Compensation and state unemployment remedies, are those
set forth in this Agreement. In the event of a termination of employment, the
arbitrator is limited to a determination of whether or not the discharge was
for good cause or for other than good cause. The arbitrator may apportion the
costs of the arbitration, including arbitrator's fees, among the parties, but
shall have no power to award attorneys' fees. Each party shall be responsible
for its own attorneys' fees.
14. Successors and Assigns. The rights and obligations of the
Employer under this Agreement shall enure to the benefit of and shall be
binding upon the successors and assigns of Employer. Employee shall not be
entitled to assign any of his rights or obligations under this Agreement.
15. Governing Law. This Agreement shall be interpreted, construed,
governed and enforced in accordance to the laws of the State of California.
16. Amendments. No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by the
parties hereto.
17. Separate Terms. Each term, condition, covenant or provision of
this Agreement shall be viewed as separate and distinct, and in the event that
any such term, covenant or provision shall be held by a court of competent
jurisdiction to be invalid, the remaining provisions shall continue in full
force and effect.
18. Waiver. A waiver by either party of a breach of provision or
provisions of this Agreement shall not constitute a general waiver, or
prejudice the other party's right otherwise to demand strict compliance with
that provision or any other provisions in this Agreement.
19. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing, sent by mail to his residence in
the case of Employee, or hand delivered to the Employee, or to its principal
office in the case of the Employer.
20. Entire Agreement; Counterparts. Employee acknowledges receipt of
this Agreement and agrees that this Agreement represents the entire Agreement
with Employer concerning the subject matter hereof, and supersedes any previous
oral or written communications, representations, understandings or Agreements
with Employer or any agent thereof. Employee understands that no
representative of the Employer has been authorized to enter into any Agreement
or commitment with Employee which is inconsistent in any way with the terms of
this Agreement. This Agreement may
EXHIBIT E
Page 5 of 5
53
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Agreement.
IN WITNESS HEREOF, the parties have executed this Agreement as of the
date set forth above.
Employer:
SOUTHWESTERN ICE, INC., a Texas corporation
By:
-----------------------------------------
X. X. Xxxxx, III, President
Employee:
--------------------------------------------
Xxxxxx Xxxxxxx
EXHIBIT E
Page 6 of 5
54
EXHIBIT F-1
SUBLEASE
1. Parties. This Sublease, dated for reference purposes only
__________, 1997, is made by and between CMC Ice, Inc. (herein called
"Sublessor"), and Southwestern Ice, Inc. (herein called "Sublessee").
2. Premises. Sublessor hereby subleases to Sublessee, and Sublessee
hereby subleases from Sublessor, for the term, at the rental and upon all of
the conditions set forth herein, that certain property described as follows:
0000 00xx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 (herein called the "Premises").
3. Term. The term of this sublease shall commence on the date first
written above and end on February 28, 1998 unless sooner terminated by
Sublessee upon thirty (30) days prior written notice to Sublessor from
Sublessee.
4. Rent. Sublessee shall pay to Sublessor as rent for the Premises
equal to the rent due under the Master Lease referred to below plus $1000 as
one month's rental for parking on property adjacent to the Premises.
5. Master Lease. Sublessor is a lessee of the Premises by virtue of
a lease, hereinafter referred to as the "Master Lease", a copy of which is
attached hereto. This sublease is subject and subordinate to the Master Lease.
Sublessor agrees to maintain the Master Lease in effect during the entire term
of this sublease.
6. Sublessee's Rights and Duties. Sublessor and Sublessee are
parties to an Asset Purchase Agreement, dated September __, 1997, (the
"Agreement"). The parties acknowledge that the capitalized terms in this
Section 6 shall have the meanings set forth in the Agreement.
Following the date hereof but prior to February 28, 1998,
Sublessee intends to remove the Assets from the Main Facility. In connection
with Sublessee's preparation, disassembly, packing, loading and transporting of
the Assets from the Main Facility (the "Removal"), Sublessee shall use
reasonable care and shall conduct the Removal in a reasonably orderly manner.
Except as otherwise provided below, Sublessee shall be solely responsible for
all costs incurred in connection with the Removal, including, but not limited
to, all costs associated with the destruction or demolition of any interior
and/or exterior walls or other structures which are necessary for efficient
Removal.
In connection with the Removal, Sublessor shall; (i) provide the
Sublessee with physical access to the Main Facility necessary for the Removal;
(ii) cooperate with Sublessee to obtain all necessary governmental consents,
permits and licenses to permit the Removal (including the right to remove
walls, etc. to the extent reasonably necessary to accomplish the Removal), and
EXHIBIT F-1
Page 1 of 2
55
(iii) maintain public liability insurance during the course of the Removal in
such amounts as have been historically maintained by Sublessor.
7. Attorneys' Fees. If either party brings an action to enforce the
terms hereof, or to declare rights hereunder, the prevailing party in any such
action, on trial and appeal, shall be entitled to reasonable attorneys' fees to
be paid by the losing party as fixed by the court.
Executed at San Diego, California on _______________, 1997.
CMC Ice, Inc. Southwestern Ice, Inc. a Texas corporation
By: By:
----------------------------- ---------------------------------
Sublessor Sublessee
EXHIBIT F-1
Page 2 of 2
56
EXHIBIT F-2
SUBLEASE
1. Parties. This Sublease, dated for reference purposes only
__________, 1997, is made by and between CMC Ice, Inc. (herein called
"Sublessor"), and Southwestern Ice, Inc. (herein called "Sublessee").
2. Premises. Sublessor hereby subleases to Sublessee, and Sublessee
hereby subleases from Sublessor, for the term, at the rental and upon all of
the conditions set forth herein, that certain property described as follows:
0000 00xx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 -(herein called the "Premises").
3. Term. The term of this sublease shall commence on the date first
above written and end on February 28, 1998 unless sooner terminated by
Sublessee upon thirty (30) days prior written notice to Sublessor from
Sublessee..
4. Rent. Sublessee shall pay to Sublessor as rent for the Premises
equal to the rental due under the Master Lease referred to below.
5. Master Lease. Sublessor is a lessee of the Premises by virtue of
a lease, hereinafter referred to as the "Master Lease", a copy of which is
attached hereto. This sublease is subject and subordinate to the Master Lease.
Sublessor agrees to maintain the Master Lease in effect during the entire term
of this sublease.
6. Sublessee's Rights and Duties. Sublessor and Sublessee are
parties to an Asset Purchase Agreement, dated September __, 1997, (the
"Agreement"). The parties acknowledge that the capitalized terms in this
Section 6 shall have the meanings set forth in the Agreement.
Following the date hereof but prior to February 28, 1998,
Sublessee intends to remove the Assets from the Ancillary Facility. In
connection with Sublessee's preparation, disassembly, packing, loading and
transporting of the Assets from the Ancillary Facility (the "Removal"),
Sublessee shall use reasonable care and shall conduct the Removal in a
reasonably orderly manner. Except as otherwise provided below, Sublessee shall
be solely responsible for all costs incurred in connection with the Removal,
including, but not limited to, all costs associated with the destruction or
demolition of any interior and/or exterior walls or other structures which are
necessary for efficient Removal.
In connection with the Removal, Sublessor shall; (i) provide the
Sublessee with physical access to the Ancillary Facility necessary for the
Removal; (ii) cooperate with Sublessee to obtain all necessary governmental
consents, permits and licenses to permit the Removal (including the right to
remove walls, etc. to the extent reasonably necessary to accomplish the
Removal), and
EXHIBIT F-1
Page 1 of 2
57
(iii) maintain public liability insurance during the course of the Removal in
such amounts as have been historically maintained by Sublessor.
7. Attorneys' Fees. If either party brings an action to enforce the
terms hereof, or to declare rights hereunder, the prevailing party in any such
action, on trial and appeal, shall be entitled to reasonable attorneys' fees to
be paid by the losing party as fixed by the court.
Executed at San Diego, California on _______________, 1997.
CMC Ice, Inc. Southwestern Ice, Inc. a Texas corporation
By: By:
--------------------------------- ---------------------------------
Sublessor Sublessee
EXHIBIT F-1
Page 2 of 2
