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EXHIBIT 10.41
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of June 30, 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 Pure Flo Package Water and
Ice Co., a California corporation (the "Seller"), 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 Xxxxxxx Xxxxx Xxxx, Xxxxxx, Xxxxxxxxxx (the "Facility"). Such Property
and Equipment shall include, but not be limited to, the list of property and
equipment set forth on Exhibit A. The Property and Equipment set forth on
Exhibit A includes vehicles which are owned by Xxxxx'x Xxxx, Inc. ("Xxxxx'x
Xxxx"), which is owned by Xxxxxxx X. Xxxxx, a principal shareholder of Seller.
(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'
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and vendors' warranties, and specifically including the credit balance with
Leer Manufacturing (collectively the "Claims");
(c) Goodwill. All of Seller's goodwill in, and the going
concern value of, the Business; and
(d) Other Property. All telephone numbers and directory
listings, telephone and mobile communications equipment, service contracts,
customer lists and 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) Accounts Receivable. All accounts receivable earned in
the Business before the Closing Date (the "Accounts Receivable"). As set forth
in Section 10.1, Buyer will remit to Seller any payments received by it on any
of the accounts receivable incurred in the Business prior to the Closing Date.
(c) 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.
(d) Personal Property Consumed. All tangible personal
property consumed by Seller in the ordinary course of business between the date
hereof and the Closing Date.
(e) Tax Refunds. All amounts due the Seller in connection
with any tax refunds, prepaid taxes, rights under any tax-sharing agreement, or
similar payments.
(f) Corporate Records. The corporate minute book, corporate
seals, tax return work papers, and similar corporate records of Seller.
(g) Licenses and Permits. All governmental licenses and
permits, or similar rights that cannot by their terms be assigned to Buyer.
1.3 Liabilities.
(a) Except as specifically provided for in this Section 1.3,
Buyer 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.
Buyer agrees, as of the Closing Date, to assume only the following liabilities
and obligations of Seller (collectively, the "Assumed Liabilities"):
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(i) The obligations of Seller under the contracts
listed on Exhibit B hereto (the "Contracts").
(ii) All liabilities and obligations relating to the
Assets or the Business incurred or arising in connection with Buyer's operation
of the Business on and after the Closing Date;
(iii) One-half of the sales, transfer, recording, and
similar taxes (other than income taxes) arising out of the sale and transfer of
the Assets.
Buyer's obligation to assume the Contracts is limited in
accordance with Section 12.4 below.
(b) The Assumed Liabilities shall not include, and Buyer shall
not assume or be liable for, and does not undertake or attempt to assume or
discharge any of the following:
(i) All current or long term liabilities of Seller
relating to the Assets or the Business set forth on the Balance Sheet;
(ii) All current liabilities of Seller relating to the
Assets or the Business arising in the ordinary course of business from the
Balance Sheet Date through the Closing Date;
(iii) Any income tax, sales tax, or payroll liability or
obligation of Seller relating to the operation of the Business prior to the
Closing Date or any delinquent sales, payroll or other delinquent tax
obligation;
(iv) Any workers' compensation liabilities with respect
to employees of the Business relating to illnesses or injuries occurring prior
to the Closing Date;
(v) Any liability or obligation of Seller created under
this Agreement or arising out of the transactions contemplated hereby, except
as specifically provided in this Agreement;
(vi) Any liability or obligation of Seller arising out
of or relating to any pension, retirement or profit-sharing plan or trust or
any liability relating to the rollover by Seller's employees of any assets into
or out of such plans ;
(vii) Any liability or obligation relating to the Assets
or the Business incurred or arising in connection with the Seller's operation
of the Business prior to the Closing Date; and
(viii) Any other liabilities or obligations of Seller not
expressly assumed by Buyer hereunder.
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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 (i)
a cash payment at the Closing to Seller of Two Million Eight Hundred Thousand
Dollars ($2,800,000) subject to adjustment by the amount of the Ice Bag
Adjustment and (ii) the payment of Two Hundred Thousand Dollars ($200,000) (the
"Contingent Payment") to Seller pursuant to the provisions of Section 1.6. The
cash payment to Seller at the Closing shall be paid by wire transfer or
cashier's check.
1.5 Ice Bag Adjustment. As set forth in Section 1.4 above, the cash
payment to Seller shall be adjusted by the amount of the Ice Bag Adjustment, if
any. The Purchase Price will be subject to an upward adjustment at the Closing
equal to the value of the quantity of ice bags received by Seller from and
including June 20, 1997 to and including the Closing Date (the "Ice Bag
Adjustment"). The ice bags shall be valued at Seller's cost. The quantity of
ice bags received by Seller shall be determined from Seller's invoices and
delivery tickets.
1.6 Contingent Payment. At the Closing, the Contingent Payment shall
be deposited by Buyer into an escrow account (the "Escrow") with Mission Valley
Escrow to be paid to Seller in the manner set forth in this Section 1.6. Sales
of product which are attributable to the Business for the calendar year 1997,
including sales prior to the Closing, shall be measured as of December 31, 1997
(the "1997 Sales"). For each dollar by which the 1997 Sales exceed $1,800,000
(the "Target Sales Amount"), Seller shall be paid from Escrow one dollar of the
Contingent Payment. To the extent the 1997 Sales are less than the Target
Sales Amount or the 1997 Sales are less than $2,000,000, the Contingent Payment
or any remaining portion thereof shall remain in Escrow to be paid to Seller
based on First Year Sales. Sales of product which are attributable to the
Business for the one year period from the Closing Date shall be measured as of
June 30, 1998 (the "First Year Sales"). For each dollar by which the First
Year Sales exceed the 1997 Sales, Seller shall be paid from Escrow one dollar
of the remaining portion of the Contingent Payment. To the extent the greater
of the 1997 Sales or First Year Sales are less than $2,000,000, the Contingent
Payment or any remaining portion thereof shall be returned to Buyer. The
Contingent Payment or any portion thereof which is due to Seller hereunder
shall be paid to Seller within forty-five (45) days after December 31, 1997 or
June 30, 1998. If Buyer replaces the service currently provided by Seller to a
customer existing as of the Closing Date with service from another business of
Buyer or an affiliate of Buyer, then the 1997 Sales and First Year Sales shall
be credited by the amount of sales by Seller to that customer during the one
(1) year period prior to the Closing Date. Sales by Seller to such a customer
for any period less than one (1) year prior to the Closing Date shall be
annualized for purposes of crediting the 1997 Sales and First Year Sales. The
Buyer shall pay the costs of the Escrow. Buyer and Seller shall execute escrow
instructions (the "Escrow Instructions") to be delivered to Mission Valley
Escrow.
1.7 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as provided in Exhibit A. 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.
1.8 Covenant Not to Compete. At the Closing, the Seller and the
principals of Seller shall enter into Covenants Not to Compete with Buyer (the
"Non-Compete Agreement").
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1.9 Lease Agreement. At the Closing, Seller and Buyer shall enter
into a Lease Agreement (the "Lease Agreement") for (i) use of the ice plant
portion of the Facility until February 28, 1998, and (ii) sublease of the ice
storage containers located in Vista, California until February 28, 1998. The
terms of the Lease Agreement will include, but not be limited to, (i) a monthly
rental of $1.00 per month, (ii) a set fee for utilities which are not
separately metered (all water used will be included without additional charge),
and (iii) the requirement that Buyer provide at least $5,000,000 general
liability insurance together with insurance on the ice plant portion of the
Facility and an indemnity to Seller, its officers, directors, employees, and
shareholders from any liability relating to the operation of the ice plant
portion of the Facility, specifically including the operation of the Ammonia
Refrigeration System.
1.10 Closing. The date of Closing (herein referred to as the "Closing
Date") shall be on or before June 30, 1997 with the actual day of Closing on or
before such date as mutually agreed to by the parties in writing. Unless
otherwise agreed, the Closing shall take place at the offices of Xxxx, Forward,
Xxxxxxxx & Scripps LLP, 000 Xxxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx,
at the hour of 4:00 p.m.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as specifically disclosed by Seller to Buyer in this Agreement or
in Seller's Disclosure Memorandum (which disclosures shall be deemed to modify
and qualify each of the following representations and warranties of Seller),
Seller represents and warrants to Buyer as follows:
2.1 Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. Seller only conducts its business in San Diego County and is not
required to be qualified to do business in any other jurisdiction. Seller has
all necessary corporate powers to carry on the Business as it is now being
conducted. Seller has full right, power and authority to execute and deliver
this Agreement and consummate the transactions contemplated hereby.
2.2 Corporate Actions. All actions and proceedings necessary to be
taken by or on the part of the Seller in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement, including, to the extent required by its
Articles of Incorporation, Bylaws and by law, the obtaining of votes, and
consents and approvals by the shareholders and board of directors of Seller,
have been duly and validly taken and obtained, and this Agreement has been duly
and validly authorized, executed and delivered by Seller and constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with and subject to its terms.
2.3 Capitalization; No Subsidiaries. The authorized number of shares
of Seller is 8,200, all of one class, all of which are issued and outstanding,
of which 4,184 shares are owned by the Xxxxxxx X. Xxxxx Family Trust which was
established December 13, 1988, and Xxxxx X. Xxxxx, Xxxx X. Xxxx, Xxxxx X.
Xxxxxxxx and Xxxxx X. Xxxx each own 1,004 shares. The trustees of the Xxxxxxx
X. Xxxxx Family Trust are Xxxxxxx X. Xxxxx and Xxxxxx X. Xxxxx.
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2.4 No Defaults. Neither the execution, delivery or performance by
Seller of this Agreement nor the consummation by Seller of the transactions
contemplated hereby, itself or with the giving of notice or the passage of time
or both, will:
(a) Violate or conflict with the provisions of the Articles of
Incorporation or the Bylaws of Seller;
(b) Violate or conflict with or result in any breach or in any
default under, result in any termination or modification of, or cause any
acceleration of any obligation of 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 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 with all rent obligations owing under the Business'
real property leases and with regard to all maintenance and repair expenses
relating to equipment of the Business, invoices for which Seller pays in due
course following receipt.
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. To Seller's knowledge, no permit, license,
consent, approval or authorization of, or filing with, any governmental
regulatory authority or agency is required in connection with the execution,
delivery and performance of this Agreement, or the consummation of the
transactions contemplated hereby, except where its absence would not have a
material adverse effect on the Business and Assets taken as a whole.
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.
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(c) Seller has all rights necessary to occupy the Facility and
to enter into the Lease Agreement contemplated by this Agreement.
(d) Seller is not in breach of the terms of the lease
agreement for the ice storage containers used by Seller which are located in
Vista, California (the "Vista Storage Lease"). The Vista Storage Lease is paid
in full and current as of the date hereof.
(e) Seller has the full right, power and authority to transfer
to Buyer the vehicles owned by Xxxxx'x Xxxx.
2.8 Balance Sheet of Seller. The Balance Sheet and Income Statement,
a copy of which is contained in Seller's Disclosure Memorandum:
(a) Presents fairly in all material respects the financial
position of the Business as of the date shown thereon; and
(b) Has been prepared for use in the ordinary course of the
Business and in accordance with the books and records of Seller.
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 shown as due thereon (including without limitation income,
withholding, excise, unemployment, social security, occupation, transfer,
franchise, property, sales
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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. To the best of Seller's
knowledge, 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,
except where the failure to be in such compliance would not have a material
adverse effect on the Business or the Assets taken as a whole. To the best of
Seller's knowledge, Seller and the Facility are in full compliance with
applicable environmental laws. Seller is not aware of any past or current
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. To the best of Seller's knowledge, there are no
suits, judgments, arbitrations, administrative charges or other legal
proceedings, claims or governmental investigations pending against, or to
Seller's 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 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. Except for the Delphos Group and its agent,
Xxxxxxx Xxxxxxx, whose compensation in connection with this transaction will be
paid solely by Seller, 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
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(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.
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.
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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.
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
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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.
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
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(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 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 the hiring and transitioning of those employees
that Buyer desires to hire. 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 such employees not hired by Buyer
and retained in Buyer's employ for at lease 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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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.
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.
6.5 Offer of Employment. Buyer shall offer employment to certain
employees of the Business to whom Buyer decides, in its sole discretion, to
offer employment. Seller shall offer employment to Xxxxx Holding and Forest
Xxxxx (without relocation from the Business) on terms and conditions acceptable
to Buyer in its sole discretion. 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.
6.6 Post-Closing Sale. Buyer shall use its best efforts to maximize
the sales of the Business during the period from the Closing Date to June 30,
1998
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
7.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall have been true and correct as of the
Effective Date and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent changes are permitted or contemplated pursuant to this
Agreement; and
(b) Buyer shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
7.2 Officer's Certificate. Buyer shall have furnished Seller with a
certificate, dated the Closing Date and duly executed by a duly authorized
manager of Buyer, in form and substance satisfactory to the Seller, certifying
that the conditions set forth in Sections 7.1(a) and (b) have been satisfied.
7.3 Deliveries. Buyer shall have complied with each and every one of
its obligations set forth in Section 9.2.
7.4 Consents. All of the consents required to be obtained pursuant
to Section 5.8 shall have been obtained.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
8.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Seller
contained in this Agreement shall have been true and correct as of the
Effective Date and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent changes are permitted or contemplated pursuant to this
Agreement;
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(b) Seller shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by it prior to or on the Closing Date; and
8.2 Officer's Certificate. Seller shall have furnished Buyer with a
certificate, dated the Closing Date and duly executed by a duly authorized
executive officer of Seller, to the effect that the conditions set forth in
Sections 8.1 (a) and (b) have been satisfied.
8.3 Deliveries. Seller shall have complied with each and every one
of its obligations set forth in Section 9.1.
8.4 Consents. All of the consents required to be obtained and the
estoppel certificate referenced in Sections 5.8 shall have been obtained.
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;
(c) The consents obtained pursuant to Section 5.8;
(d) The certificate referred to in Section 8.2(c);
(e) The Non-Compete Agreement executed by principals of
Seller;
(f) Certificates of Title to motor vehicles and titles to
titled equipment and a xxxx of sale;
(g) The Lease Agreement;
(h) Uniform Commercial Code ("UCC") termination statements
terminating all UCC financing statements which cover any of the Assets or
portions thereof; and
(i) The Escrow Instructions.
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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 cash portion of 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 Lease Agreement; and
(e) The Escrow Instructions.
9.3 Property Tax Proration. The parties shall prorate and adjust at
Closing the 1997 personal property tax, if any, covering assets purchased based
upon their reasonable best estimate of amounts owning as of the Closing Date.
9.4 Transfer Sales Tax. The parties shall share equally the sales,
transfer, recording or similar taxes (other than income taxes) arising out of
the sale and transfer of the Assets.
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 incurred in the Business on or
after the Closing Date. Buyer will promptly remit to Seller any payments
received by it on any of the accounts receivable incurred in the Business prior
to the Closing Date. Buyer shall use its best efforts to collect accounts
receivable incurred in the Business prior to the Closing Date. Buyer may
endorse checks for deposit, payable to Seller, received in payment of accounts
receivable incurred in the Business on or after the Closing Date. 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 Asset Removal and Relocation.
(a) Buyer's Rights and Duties. The parties acknowledge that
following the Closing Date but prior to February 28, 1997, Buyer intends to
remove the Assets from the Facility. In connection with Buyer's preparation,
disassembly, packing, loading and transporting of the Assets from the Facility
after the Closing Date (the "Removal"), Buyer shall use reasonable care and
shall conduct the Removal in a reasonably orderly manner. Except as otherwise
provided below, Buyer shall be solely responsible for all costs incurred in
connection with the Removal, including, but not
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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.
(b) Seller's Rights and Duties. In connection with the
Removal, Seller shall: (i) provide the Buyer with physical access to the
Facility necessary for the Removal, (ii) cooperate with Buyer 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 (iii) maintain public liability insurance
during the course of the Removal in such amounts as have been historically
maintained by Seller.
10.3 License. Seller hereby grants to Buyer an exclusive license to
use the name "Pure Flo" and all associated logos for the conduct of the
Business for a period of one (1) year from the Closing Date. For as long as
Buyer or any subsidiary or parent entity of Buyer are in the business of
producing, storing or distributing ice, Seller shall not grant to any party
other than Buyer or Buyer's assigns the right to use the name "Pure Flo" or any
associated trademarks, trade names or logos for the conduct of the business of
producing, storing or distributing ice.
10.4 SDG&E Agreement. From the Closing Date until February 28, 1997,
Buyer shall comply with all material terms and conditions of the Thermal Energy
Ice Storage Agreement dated April 22, 1988 between San Diego Gas & Electric
("SDG&E") and Seller.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller. Seller 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, excepting
only those certain liabilities expressly assumed by Buyer hereunder. 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 representations and warranties
contained in this Agreement or in any agreement, instrument or document entered
into pursuant hereto or in connection with the Closing, (ii) any breach of or
failure by Seller to perform any of its covenants or agreements contained in
this Agreement or in any 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, or (iv) any liability or obligation of Seller not included in the
Assumed Liabilities. Seller shall not have any liability under this Section
11.1(a) unless Buyer gives written notice to Seller asserting a claim for such
Losses, including reasonably detailed facts and circumstances pertaining
thereto, before the expiration of two (2) years from the Closing Date, except
for claims arising from breach of: (i) representations and warranties as to
taxes and environmental matters, which shall survive until the expiration of
the applicable statute of limitations.
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11.2 Indemnification by Buyer. Buyer shall indemnify, defend and hold
Seller 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 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 unless 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.
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 June 30, 1997; or (c) by Buyer at any time prior to five (5) days after
Seller has supplied all of the requested due diligence materials to Buyer if
Buyer, prior to such date, determines in its sole discretion that the results
of its due diligence investigation of Seller is in any way unsatisfactory. A
termination pursuant to this Section 12.1 shall not relieve any Party of any
liability it otherwise has for a breach of this Agreement. As a condition to
any termination by Buyer hereunder, all information and materials relating to
the Business and to which Buyer obtained access during the negotiations leading
to, or following, execution of this Agreement, and any other writings
containing excerpts of such materials or information, and any or all copies
thereof, shall be delivered to Seller.
12.2 Expenses. Each party hereto shall bear all of its expenses
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith.
12.3 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
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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 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
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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.
ARTICLE XIII
DISPUTE RESOLUTION
13.1 Direct Discussion. In the event of any dispute, claim, question,
or disagreement arising out of or relating to this Agreement (a "Dispute"), the
parties involved in such Dispute shall use their best efforts to settle such
Dispute. To this effect, senior management of the parties involved shall
consult and negotiate with each other in good faith to attempt to reach a just
and equitable solution satisfactory to both parties.
13.2 Arbitration. In the event that the Dispute cannot be settled
under Section 13.1 above, the Dispute shall be submitted to binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and the procedures set forth below. In the event of any
inconsistency between the Rules of the American Arbitration Association and the
procedures set forth below, the procedures set forth below shall control.
Judgment upon the award rendered by the arbitrators may be enforced in any
court having jurisdiction thereof.
(a) Location. The location of the arbitration shall be in San
Diego County, California.
(b) Selection of Arbitrators. The arbitration shall be
conducted by a panel of three neutral arbitrators who are independent and
disinterested with respect to the parties, this Agreement, and the outcome of
the arbitration. Each party shall appoint one neutral arbitrator, and these
two arbitrators so selected by the parties shall then select the third
arbitrator. If one party has given written notice to the other party as to the
identity of the arbitrator appointed by the party, and the party thereafter
makes a written demand on the other party to appoint its designated arbitrator
within the next thirty days, and the other party fails to appoint its
designated arbitrator within thirty-one days after receiving said written
demand, then the arbitrator who has already been designated shall appoint the
other two arbitrators.
(c) Discovery. Unless the parties mutually agree in writing
to some additional and specific pre-hearing discovery, the only pre-hearing
discovery shall be (a) reasonably limited production of relevant and non-
privileged documents, and (b) the identification of witnesses to be called at
the hearing, which identification shall give the witness's name, general
qualifications and position, and a brief statement as to the general scope of
the testimony to be given by the witness. 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.
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(d) Case Management. Prompt resolution of any dispute is
important to the parties; and the parties hereto agree that the arbitration of
any dispute shall be conducted expeditiously. The arbitrators are instructed
and directed to assume case management initiative and control over the
arbitration process (including scheduling of events, pre-hearing discovery and
activities, and the conduct of the hearing), in order to complete the
arbitration as expeditiously as is reasonably practical for obtaining a just
resolution of the Dispute.
(e) Legal Representation. Counsel to the parties in
connection with the negotiation of and consummation of the transactions under
this Agreement shall be entitled to represent their respective party in any and
all proceedings under this Section 13.2 or in any other proceeding. Seller and
Buyer, respectively, waive the right and agree they shall not seek to
disqualify any such counsel in any such proceeding for any reason, including
but not limited to the fact such counsel or any member thereof may be a witness
in any such proceeding or possess or have learned of information of a
confidential or financial nature of the party whose interests are adverse to
the party represented by such counsel in any such proceeding.
(f) Remedies. The arbitrators may grant any legal or
equitable remedy or relief that the arbitrators deem just and equitable, to the
same extent that remedies or relief could be granted by a state or federal
court, provided however, that no punitive damages may be awarded. The decision
of any two of the three arbitrators appointed shall be binding upon the
parties.
(g) Expenses. The expenses of the arbitration, including the
arbitrators' fees, expert witness fees, and attorney's fees, may be awarded to
the prevailing party, in the discretion of the arbitrators, or may be
apportioned between the parties in any manner deemed appropriate by the
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses, both parties shall share equally in the
payment of the arbitrators' fees as and when billed by the arbitrators.
(h) Confidentiality. Except as set forth below, the parties
shall keep confidential the fact of the arbitration, the dispute being
arbitrated, the decision of the arbitrators, and any documents produced by the
parties in the course of the arbitration. Notwithstanding the foregoing, the
parties may disclose information about the arbitration to persons who have a
need to know, such as directors, trustees, management employees, witnesses,
experts, investors, attorneys, lenders, insurers, and others who may be
directly affected. Once the arbitration award has become final, if the
arbitration award is not promptly satisfied, then the prevailing party may,
notwithstanding the foregoing, disclose information about the arbitration only
to the extent necessary to obtain judicial enforcement of the award.
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
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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, XX 00000
Fax: (000) 000-0000
(b) If to Seller, then to:
Pure Flo Package Water And Ice Co.
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
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(c) With a copy to:
Xxxxx X. Xxxx, Esq.
Hinchy, Witte, Wood, Xxxxxxxx & Xxxxxx, APC
000 X Xxxxxx, 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.
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.
[remainder of page intentionally left blank]
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14.8 Entire Agreement. This Agreement and the other documents
delivered hereunder constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof, and supersedes
all prior agreements, understandings, inducements or conditions, express or
implied, oral or written, relating to the subject matter hereof, except as
herein contained. The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
14.9 Execution; Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized signatories, all as of the day and year first
above written.
SOUTHWESTERN ICE, INC., a Texas corporation
By: /s/ X. X. Xxxxx, III
---------------------------------------
X. X. Xxxxx, III, President
PURE FLO PACKAGE WATER AND ICE CO., a
California corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxx X. Xxxxx, President
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EXHIBIT "B"
The Contracts for which Buyer will assume the obligations of Seller are
as follows:
Buyer's standing purchase order to purchase bags from Xxxxx Bag
Co. and Arrow Bag Co.
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