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EXHIBIT 10.20
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made and entered into as of the 17th
day of January, 1997, among PACKAGED ICE, INC., a Texas corporation (the
"Company"), and the Investors named in Schedule A attached hereto and
incorporated herein by reference (collectively "Investors" and individually
"Investor").
W I T N E S S E T H:
WHEREAS, to obtain additional equity financing, the Company desires to
issue and sell shares of its $.01 par value Series B Convertible Preferred
Stock (the "Series B Preferred Stock") to the Investors, and each Investor
desires to purchase such Series B Preferred Stock, at the prices, on the terms,
and subject to the conditions as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Authorization of Securities. The Company will authorize the
issuance and sale of up to 200,000 shares of its Series B Preferred Stock,
which shall have the powers, designations, preferences, rights, qualifications,
limitations and restrictions as set forth in the form of Certificate of
Designation of Resolutions Establishing Shares of Series B Preferred Stock
("Certificate of Designation") attached hereto as Exhibit 1.1 and incorporated
herein. The Series B Preferred Stock shall sometimes hereinafter be referred to
as the "Securities."
1.2 Issuance and Sale of Securities. At the Closing, subject to
the terms and conditions of this Agreement and on the basis of the
representations and warranties set forth herein, the Company agrees to issue
and sell to each Investor, and each Investor severally agrees to purchase from
the Company, the number of shares of Series B Preferred Stock, at the
respective purchase prices, as set forth below the name of each Investor on
Schedule A hereto.
1.3 Delivery and Payment. At the Closing, the Company will execute
and deliver to each Investor certificates evidencing the number of shares of
Series B Preferred Stock purchased hereunder, as set forth opposite the name of
each Investor on Schedule A hereto, against payment, by each Investor to the
Company of the purchase price for the shares of Series B Preferred Stock as set
forth below the name of each Investor on Schedule A hereto. Payment for the
Securities shall be made by cancellation by the Investors of the principal and
accrued interest payable under their respective 10% convertible demand
promissory notes dated December 11, 1996.
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1.4 Closing. The consummation of the issuance, sale and purchase
of the Securities to be purchased pursuant to this Agreement shall be effected
(the "Closing") at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.,
000 Xxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000 commencing at 10:00 a.m., on
January 17, 1996 (the "Closing Date") or at such other time or place as the
Company and the Investors shall mutually agree.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as follows:
2.1 Organization and Standing of the Company. The Company and each
of its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to issue the Securities and to own its
properties and assets and to carry on its business as now conducted and as
proposed to be conducted. The Company and each of its subsidiaries is duly
qualified to transact business and is in good standing in all jurisdictions in
which such qualification is required. The copies of the Articles of
Incorporation and Bylaws of the Company and each of its subsidiaries delivered
to the Investors prior to the execution of this Agreement are true and complete
copies of the duly and legally adopted Articles of Incorporation and Bylaws of
the Company and its subsidiaries in effect as of the date of this Agreement.
2.2 Capitalization of the Company. The authorized capital stock of
the Company consists of 50,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock"), of which 2,826,371 shares are issued and
outstanding and 5,000,000 shares of preferred stock, par value $.01 per share.
The Company's Board of Directors has authorized the designation of 450,000
shares of the preferred stock as the Series A Convertible Preferred Stock (the
"Series A Preferred Stock"), of which 450,000 shares are issued and
outstanding. The Company's Board of Directors has authorized the designation of
200,000 shares of the preferred stock as the Series B Convertible Preferred
Stock (the "Series B Preferred Stock") and has authorized the issuance pursuant
to this Agreement of 124,831 shares of Series B Preferred Stock. Except as set
forth on Section 2.2 of the Disclosure Schedule, attached hereto as Schedule B
and incorporated herein by reference (the "Disclosure Schedule"), at the
Closing there will be no other warrants, options, subscriptions or other rights
or preferences (including conversion or preemptive rights) outstanding to
acquire capital stock of the Company or its subsidiary, or notes, securities or
other instruments convertible into or exchangeable for capital stock of the
Company, nor any commitments, agreements or understandings by or with the
Company with respect to the issuance thereof, nor any obligation to repurchase
or redeem any capital stock of the Company. Except as set forth on Section 2.2
of the Disclosure Schedule, no shareholders of the Company have any right to
require the registration of any securities of the Company or to participate in
any such registration. All outstanding securities of the Company have been
issued in full compliance with
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an exemption or exemptions from the registration and prospectus delivery
requirements of the Securities Act and from the registration and qualification
requirements of all applicable state securities laws.
2.3 Duly Issued. All of the issued and outstanding shares of
Common Stock and Series A Preferred Stock have been duly authorized, are
validly issued, fully paid and non-assessable. Upon issuance and delivery to
each of the Investors of the number of shares of the Series B Preferred Stock
set forth opposite each Investor's name on Schedule A against payment of the
purchase price therefor pursuant to this Agreement, such shares will be validly
issued, fully paid and non-assessable. The shares of Series B Preferred Stock,
upon issuance pursuant to this Agreement, will have the rights and preferences
set forth in the Certificate of Designation. The shares of Common Stock
issuable upon conversion of the Series B Preferred Stock have been reserved for
issuance based upon the initial Conversion Price (as defined in the Certificate
of Designation), and when issued upon conversion, will be duly authorized,
validly issued and outstand- ing, fully paid and nonassessable.
2.4 Authorization. This Agreement has, and each other agreement
required to be entered into by the Company pursuant to the terms and conditions
hereof, when executed and delivered by the Company, will have been duly
authorized, executed and delivered by and on behalf of the Company, and will
constitute the valid and binding agreements of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally. The Company has the requisite corporate power and authority
to enter into this Agreement and each other agreement required to be entered
into by the Company pursuant to the terms and conditions hereof, and to perform
its obligations hereunder and thereunder.
2.5 Subsidiaries. Except as set forth on Section 2.5 of the
Disclosure Schedule, the Company has no subsidiaries and does not, directly or
indirectly, own any interest in any corporation, partnership, firm or other
business entity. The Company is not a participant in any joint venture,
partnership, or similar agreement. Section 2.5 of the Disclosure Schedule
accurately sets forth the name of each corporation, partnership, firm or other
business entity in which the Company has an interest, the state of
organization, and the percentage ownership by the Company.
2.6 Financial Position.
(a) The Company has previously provided to the Investors
the Company's audited, consolidated balance sheet as of December 31, 1995 (the
"1995 Balance Sheet"), and the related consolidated statements of income and
cash flow for the fiscal year then ended, together with the report thereon of
Deloitte & Touche, LLP, certified public accountants, and the unaudited,
consolidated balance sheet of the Company as at November 30, 1996 (the
"November 30 Balance Sheet"), and the related, unaudited consolidated
statements of income and cash flow for the eleven month period ended on
November 30, 1996 (such balance sheets and related
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statements are collectively referred to herein as the "Financial Statements").
Except as set forth in Section 2.6 of the Disclosure Schedule, the Financial
Statements present fairly the financial position of the Company and its
subsidiaries as of such dates, respectively, all in conformity with generally
accepted accounting principles, consistently applied, following in the case of
the interim financial statements the Company's normal internal accounting
practices and subject to year end adjustments and the absence of notes.
(b) Except as set forth on Section 2.6 of the Disclosure
Schedule, since the date of the November 30 Balance Sheet, no event or
condition has occurred, and no event or condition is to the knowledge of the
Company's officers threatened, which has had a materially adverse effect, or
could reasonably be expected to have a materially adverse effect, on the
Company's or any subsidiary's properties, assets, or financial position. Except
as set forth in Section 2.6 of the Disclosure Schedule, the Company has no
material liabilities or financial obligations not disclosed in the November 30
Balance Sheet. Except as disclosed in the Financial Statements, the Company is
not an indemnitor or guarantor of any indebtedness of any other person, firm or
corporation. The Company maintains and will continue to maintain its books and
records in accordance with generally accepted accounting principles
consistently applied. Since the November 30 Balance Sheet, neither the Company
nor its subsidiaries has (i) incurred any debts, obligations or liabilities,
absolute, accrued or contingent and whether due or to become due, except
current liabilities incurred in the ordinary course of business, which
(individually or in the aggregate) will not materially and adversely affect the
business, properties or prospects of the Company or its subsidiaries; (ii) paid
any obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing current liabilities, in each case in the
ordinary course of business; (iii) declared or made any payment or distribution
to its shareholders as such or purchased or redeemed any of its shares of
capital stock or other securities, or obligated itself to do so; (iv) sold,
transferred or leased any of its assets except in the ordinary course of
business; (v) issued or sold any shares of capital stock or other securities or
granted any options, warrants or other purchase rights with respect thereto
other than as contemplated by this Agreement. There has been no material
adverse change in the condition, financial or otherwise, or operations, results
of operations or business of the Company or its subsidiaries since the November
30 Balance Sheet.
2.7 Tax Returns. Each of the Company and its subsidiaries has
timely filed all Tax Returns required by law and has paid all Taxes required to
be paid, together with any penalties and interest. These Tax Returns are true
and correct in all material respects. There is no pending dispute with any
taxing authority relating to any of the Company's or subsidiaries' Tax Returns.
There is no tax audit of any Tax Return of the Company or any subsidiaries
pending or currently in process. The Company and its subsidiaries have paid all
Taxes and assessments determined to be owing as a result of any prior audit.
The Company has not elected pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as an S corporation or a collapsible
corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has
it made other elections that would have a material adverse effect on the
business, properties, prospects or financial condition of the Company or its
subsidiaries. The Company and its subsidiaries have
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withheld or collected from each payment made to each employee, the amount of
all Taxes, including, but not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes
required to be withheld or collected therefrom, and has paid the same to the
proper tax receiving offices or authorized depositories. For purposes of this
Agreement, (i) the term "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, occupation, use, service, service use, license,
payroll, franchise, transfer and recording taxes, fees and charges imposed by
the United States or any state, local or foreign government or subdivision or
agency thereof, whether computed on a separate, consolidated, unitary, combined
or any other basis; and such term shall include any interest, liabilities,
additional amounts, penalties and additions to tax; and (ii) the term "Tax
Return" shall mean any report, return, information return or other document
(including related or supporting information) filed or required to be filed by
the Company or its subsidiaries with any governmental or regulatory authority
or other authority in connection with the determination, assessment or
collection of any Taxes (whether or not such Taxes are imposed on the Company
or its subsidiaries) or the administration of any law, regulation or
administrative requirements relating to any Taxes.
2.8 Title to Properties. Except as set forth on Section 2.8 of the
Disclosure Schedule, each of the Company and its subsidiaries has good and
marketable title to, and the exclusive use of, all of its tangible properties
and assets, free and clear of all mortgages, liens, claims and encumbrances.
2.9 ERISA
(a) The Company, each subsidiary and each ERISA Affiliate
have complied in all material respects with the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA") and, where
applicable, the Code regarding each Plan. "ERISA Affiliate" shall mean each
trade or business (whether or not incorporated) which together with the Company
or any subsidiary would be deemed to be a "single employer" within the meaning
of Section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section
414 of the Code.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code. "Plan" shall mean any
employee pension benefit plan, as defined in Section 3(2) of ERISA, which (i)
is currently or hereafter sponsored, maintained or contributed to by the
Company, any subsidiary or an ERISA Affiliate or (ii) was at any time during
the preceding six calendar years, sponsored, maintained or contributed to, by
the Company, any subsidiary or an ERISA Affiliate.
(c) No act, omission or transaction has occurred which
could result in imposition on the Company, any subsidiary or any ERISA
Affiliate (whether directly or indirectly) of (i) either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed
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pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary
duty liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or
any trust created under any such Plan has been terminated since September 2,
1974. No liability to the Pension Benefit Guaranty Corporation ("PBGC") (other
than for the payment of current premiums which are not past due) by the
Company, any subsidiary or any ERISA Affiliate has been or is expected by the
Company, any subsidiary or any ERISA Affiliate to be incurred with respect to
any Plan. No ERISA Event with respect to any Plan has occurred. "ERISA Event"
shall mean (i) a "Reportable Event" described in Section 4043 of ERISA and the
regulations issued thereunder, (ii) the withdrawal of the Company, any
Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, (iv) the institution of
proceedings to terminate a Plan by the PBGC or (v) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
(e) Full payment when due has been made of all amounts
which the Company, any subsidiary or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as contributions to such
Plan, and no accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to any
Plan.
(f) The actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of ERISA does not, as
of the end of the Company's most recently ended fiscal year, exceed the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(g) None of the Company, any subsidiary or any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare benefit
plan, as defined in section 3(1) of ERISA, including, without limitation, any
such plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Company, a subsidiary or any ERISA Affiliate
in its sole discretion at any time without any material liability.
(h) None of the Company, any subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in the
preceding six calendar years sponsored, maintained or contributed to, any
Multiemployer Plan. "Multiemployer Plan" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of XXXXX.
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(x) Xxxx of the Company, any subsidiary or any ERISA
Affiliate is required to provide security under section 401(a)(29) of the Code
due to a Plan amendment that results in an increase in current liability for
the Plan.
2.10 No Breach. Except as set forth on Section 2.10 of the
Disclosure Schedule, neither the Company nor its subsidiaries is in breach or
default of any term or provision of their respective Articles of Incorporation
or bylaws, or any material term or provision of any mortgage, indenture,
instrument, lease, contract, commitment or other agreement to which the Company
or any of its subsidiaries is a party or by which it is bound, or of any
provision of any governmental statute, rule or regulation applicable to or
binding upon the Company or any of its subsidiaries. Neither the execution and
delivery of this Agreement and the other agreements required to be executed and
delivered pursuant to the terms and conditions of this Agreement nor the
consummation of the transactions contemplated hereby or thereby will (a)
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, (i) the Articles of Incorporation or bylaws of
the Company or any of its subsidiaries, (ii) any agreement or instrument to
which the Company or any of its subsidiaries is now a party or by which any of
them is bound, or (iii) any provision of any judgment, decree, order, statute,
rule or regulation applicable to or binding on the Company or any of its
subsidiaries, or (b) result in the creation of any mortgage, pledge, lien,
encumbrance, or charge upon any of the properties or assets of the Company or
any of its subsidiaries.
2.11 Litigation. Except as set forth on Section 2.11 of the
Disclosure Schedule, there is no litigation or other legal, administrative or
governmental proceeding pending or, to the knowledge of the officers of the
Company, threatened against or relating to the Company, its subsidiaries, or
their respective properties or business.
2.12 Court Orders, Decrees, Etc. There is no outstanding order,
writ, injunction or decree of any court, governmental agency or arbitration
tribunal against or adversely affecting the Company, its subsidiaries, or their
respective properties or business.
2.13 Franchises, Permits, and Consents. Each of the Company and its
subsidiaries possesses all governmental franchises, licenses, permits,
consents, authorizations, exemptions and orders, required by the Company and
its subsidiaries to carry on their businesses as now being conducted. All
registrations, designations and filings with all governmental authorities
required in the conduct of the businesses of the Company or its subsidiaries or
in connection with the consummation of the transactions contemplated by this
Agreement have been made or obtained.
2.14 Insurance. The Company and its subsidiaries have in force, and
have paid all premiums due on, liability, casualty and other insurance policies
in the amounts and of the types set forth on Section 2.14 of the Disclosure
Schedule. The Company believes, after advice from its insurance broker, that
such insurance is in amounts acceptable for the nature and extent of the
Company's and its subsidiaries' business and resources.
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2.15 Securities Law Compliance. The offer, issuance and sale of the
Securities to be issued hereunder has been made in compliance with all
applicable federal and state securities laws. Neither the Company nor anyone
acting on its behalf has offered any of the Securities (or similar securities)
for sale to, or solicited offers to buy any of the Securities (or similar
securities) from, any prospective purchaser, so as to make the issuance and
sale of the Securities hereunder subject to the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or applicable
state securities laws.
2.16 Finders' Fees. Except as set forth on Section 2.16 of the
Disclosure Schedule, the Company has incurred no liability for commissions or
other fees to any finder or broker in connection with the transactions
contemplated by this Agreement.
2.17 Intellectual Property. Except as set forth on Section 2.17 of
the Disclosure Schedule, to the actual knowledge of the Company's officers:
(a) The Company and its subsidiaries own or have the
right to use pursuant to license, sublicense, public domain, agreement, or
permission (i) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all patents,
together with all reissuances, revisions, extensions, and reexaminations
thereof, (ii) all trademarks, service marks, trade dress, logos, trade names,
and corporate names, including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection there- with, (iv) all mask works and all applications,
registrations and renewals in connection therewith, (v) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (vi) all other proprietary rights, and (vii) all copies and
tangible embodiments thereof (in whatever form or medium) (collectively,
"Intellectual Property"), currently being used or reasonably anticipated to be
used in the operation of the Company's business.
(b) None of the Company and its subsidiaries has
knowingly interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties, and none
of the Company's officers has ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation, including any claim that any of the Company and
its subsidiary must license or refrain from using any Intellectual Property
rights of any third party. To the knowledge of any of the officers of the
Company and its subsidiaries, no third party has interfered with, infringed
upon, or misappropriated in any material respect any Intellectual Property
rights of any of the Company or its subsidiaries.
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(c) The Disclosure Schedule identifies each patent or
registration which has been issued to any of the Company and its subsidiaries
with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which any of the Company and
its subsidiaries has made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which any of the
Company and its subsidiaries has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). Section 2.17 of
the Disclosure Schedule also identifies each trade name or unregistered
trademark used by any of the Company and its subsidiaries. With respect to each
such item of Intellectual Property required to be identified in the Disclosure
Schedule:
i. the Company and its subsidiaries possess all
right, title, and interest in and to the item, free and clear of any security
interest, license, or other restriction;
ii. except as set forth on the Disclosure
Schedule the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge; and
iii. except as set forth on the Disclosure
Schedule no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the knowledge of any of the
officers of the Company and its subsidiaries, is threatened which challenges
the legality, validity, enforceability, use, or ownership of the item.
(d) Section 2.17 of the Disclosure Statement identifies
each material item of Intellectual Property that any third party owns and that
any of the Company and its subsidiaries uses pursuant to license, sublicense,
agreement, or permission. The Company has delivered or made available at its
offices to the Investors correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each such item of Intellectual Property required to be identified in the
Disclosure Schedule:
i. the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect;
ii. the license, sublicense, agreement or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby;
iii. no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
iv. no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof; and
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v. except as set forth on the Disclosure
Schedule none of the Company and its subsidiaries has granted any sublicense or
similar right with respect to the license, sublicense, agreement, or
permission.
2.18 Environment, Health, and Safety. To the actual knowledge of
the Company's officers, each of the Company and its subsidiaries has complied
in all material respects with all laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) which have jurisdiction over the Company and its subsidiaries
concerning pollution or protection of the environment, public health and
safety, or employee health and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industri- al, hazardous, or toxic materials or wastes into ambient
air, surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, each of the Company
and its subsidiaries has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied, in all material respects, with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in such laws.
2.19 Product Liability. To the actual knowledge of the Company's
officers, none of the Company and its subsidiaries has any liability (and to
such officers' actual knowledge there is no factual basis for any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Company and its
subsidiaries.
2.20 Conflicts of Interest. Except as disclosed in Section 2.20 of
the Disclosure Schedule, no officer, director or shareholder of the Company or
its subsidiaries or any affiliate of any such person has any direct or indirect
interest (a) in any entity which does business with the Company or its
subsidiaries, or (b) in any property, asset or right which is used by the
Company or any subsidiary in the conduct of business, or (c) in any contractual
relationship with the Company or any of its subsidiaries other than as an
employee.
2.21 Company Equipment. The Company's ice bagging equipment
manufactured by Lancer Corporation (the "Equipment") has received approval by
the National Sanitation Foundation. To the knowledge of the Company, the ice
making equipment manufactured by Hoshizaki America, Inc. has received approval
of the National Sanitation Foundation.
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2.22 Material Contracts. Set forth in Section 2.22 of the
Disclosure Schedule are the following:
(a) A list of all written and oral contracts, agreements,
subcontracts, purchase orders, commitments and arrangements involving payments
remaining to or from the Company or any of its subsidiaries in excess of
$10,000, and other agreements material to the Company's or its subsidiaries'
business to which the Company or any of its subsidiaries is a party or by which
it is bound under which full performance (including payment) has not been
rendered by any party thereto;
(b) A listing of all employment agreements, consulting
agreements, noncompetition agreements, all nondisclosure agreements which
restrict the Company from disclosing information obtained from third parties,
entered into or adopted by the Company or any of its subsidiaries;
(c) A listing of all deeds of trusts, mortgages, security
agreements, pledge agreements and other agreements or arrangements whereby any
of the assets or properties of the Company or any of its subsidiaries are
subject to any lien, encumbrance, security interest or charge.
Prior to the Closing Date, the Company shall, upon request, provide
legal counsel for the Investors with a true and complete copy of each document
referred to above. The Company and its subsidiaries have in all material
respects substantially performed all obligations required to be performed by
them to date and are not in default in any material respect under any of the
contracts, agreements, leases, documents, commitments or other arrangements to
which any of them is a party or by which any of them is otherwise bound. All
instruments referred to above are in effect and enforceable according to their
respective terms, and there is not under any of such instruments any existing
material default or event of default or event which, with notice or lapse of
time or both, would constitute an event of default thereunder. All parties
having material contractual arrangements with the Company or any of its
subsidiaries are in substantial compliance therewith and none are in material
default in any respect thereunder.
2.23 Small Business Concern. The Company (as that term is defined
in Title 13, Code of Federal Regulations, Section 121.401) is a "small business
concern" within the meaning of the Small Business Investment Act of 1958 and
the regulations thereunder, including Title 13, Code of Federal Regulations,
Section 121.802 (the "SBIA"). The information set forth in the Small Business
Administration Forms 480, 652 and Section A of Form 1031 regarding the Company
is accurate and complete. Copies of such forms shall have been completed and
executed by the Company and delivered to each Investor that is a licensed small
business investment company (an "SBIC") at the Closing Date. The Company does
not presently engage in, and it shall not hereafter engage in, any activities,
and shall not use directly or indirectly the proceeds from the sale of the
Securities for any purpose for which an SBIC is prohibited from providing funds
by the SBIA.
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2.24 Application of Proceeds. The proceeds from the issuance and
sale of Securities pursuant to this Agreement will be used to fund working
capital and other general corporate purposes. No portion of such proceeds (i)
will be used to provide capital to a corporation licensed under the SBIA, (ii)
will be used outside the United States (except (x) to acquire abroad materials
and industrial property rights for a domestic operation or (y) for transfer to
a controlled foreign subsidiary, so long as at least 51% of the assets and
activities of the Company will remain within the United States), or (iii) will
be used for any purpose contrary to the public interest (including but not
limited to activities which are in violation of law) or inconsistent with free
competitive enterprise, in each case, within the meaning of 13 CFR Section
107.901. The Company's primary business activity does not involve, directly or
indirectly, providing funds to others, the purchase or discounting of debt
obligations, factoring or long-term leasing of equipment with no provision for
maintenance or repair, and the Company is not classified under Major Group 65
(Real Estate) of the SIC Manual.
2.25 Disclosure. The Company has not knowingly withheld from the
Investors any material facts relating to the assets, business, operations,
financial condition or prospects of the Company or its subsidiaries. The
representations and warranties contained in this Agreement and all other
agreements being entered into in connection with this Agreement do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained herein or
therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INVESTORS
Each of the Investors severally, and not jointly, represents and
warrants to the Company, the following:
3.1 Authorization. This Agreement has been duly executed and
delivered by such Investor and constitutes the valid and binding agreement of
the Investor enforceable in accordance with its terms, and each other agreement
required to be entered into by the Investor pursuant to the terms and
conditions hereof, when executed and delivered by the Investor will constitute
the valid and binding agreement of the Investor enforceable in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally. If the
Investor is not a natural person, it has all requisite power and authority to
enter into this Agreement and to perform its obligations hereunder.
3.2 Securities Not Registered. The Investor is acquiring the
Securities for investment purposes only, for his own account and not with a
view to, or for resale in connection with, any distribution thereof in
violation of applicable securities laws. The Investor has been advised that the
Securities being purchased and issued hereunder have not been registered under
the Securities Act or applicable state securities laws and that such shares
must be held indefinitely unless the offer and sale thereof are subsequently
registered under the Securities Act or an exemption from
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such registration is available. The Investor acknowledges and agrees that the
certificates evidencing the Securities will bear a restrictive legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND THEY
MAY NOT BE OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT THEREUNDER OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
and that such instruments will bear such restrictive or other legends as are
required by applicable state laws.
3.3 Access to Information. The Company has made available to the
Investor the opportunity to ask questions of and to receive answers from the
Company's officers, directors and other authorized representatives concerning
the Company and its business and prospects and each Investor been permitted to
have access to all information which he has requested in order to evaluate the
merits and risks of the purchase of the Securities hereunder.
3.4 Investor Due Diligence. In making the investment in the
Company and its Securities, the Investor is not acting on the basis of, or
relying upon, any promotional materials, business plans, financial projections,
representations or warranties other than those express representations and
warranties contained in this Agreement, and the Investor has performed its own
due diligence and has independently made such studies and investigations of the
Company's business, the market for the Company's products and services, the
Company and its management, as the Investor deems necessary to formulate its
decision to purchase Securities pursuant to the terms of this Agreement.
3.5 Investment Experience. The Investor (i) has such knowledge,
skill and experience in financial, business and investment matters relating to
an investment of this type, that it is capable of evaluating the merits and
risks of the purchase of the Securities, (ii) is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act, and (iii) has the ability to bear the risk of losing his entire
investment in the Securities.
3.6 Finders' Fees. The Investor has incurred no liability for
commissions or other fees to any finder or broker in connection with the
transactions contemplated by this Agreement.
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ARTICLE 4
COVENANTS OF THE COMPANY
The Company covenants and agrees that, unless a written waiver from
the Investors in accordance with the provisions of Section 9.2 of this
Agreement is first obtained, from and after the Closing Date the Company will
fully comply with each of the following covenants of this Article 4.
4.1 Books of Account. The Company will, and will cause each of its
subsidiaries to, keep books of record and account in which full, true and
correct entries are made of all of its and their respective dealings, business
and affairs, in accordance with generally accepted accounting principles. The
Company will employ certified public accountants selected by the Board of
Directors of the Company who are "independent" within the meaning of the
accounting regulations of the Securities and Exchange Commission and who are
one of the so-called "Big Six" accounting firms, and have annual audits made by
such independent public accountants in the course of which such accountants
shall make such examinations, in accordance with generally accepted auditing
standards, as will enable them to give such reports or opinions with respect to
the financial statements of the Company and its subsidiaries as will satisfy
the requirements of the Securities and Exchange Commission in effect at such
time with respect to certificates and opinions of accountants.
4.2 Furnishing of Financial Statements and Information. The
Company will deliver to each Investor:
(a) as soon as practicable, but in any event within 30
days after the close of each month, unaudited consolidated balance sheets of
the Company and its subsidiaries as of the end of such month, together with the
related consolidated statements of operations and cash flow for such month,
setting forth the budgeted figures for such month prepared and submitted in
connection with the Company's annual plan as required under Section 4.3 hereof,
all in reasonable detail in a form consistent with prior periods and certified
by an authorized accounting officer of the Company, subject to year-end
adjustments;
(b) as soon as practicable, but in any event within 165
days after the end of each fiscal year, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of such fiscal year, together with
the related consolidated statements of operations, shareholders' equity and
cash flow for such fiscal year, setting forth in comparative form figures for
the previous fiscal year, all in reasonable detail and duly certified by the
Company's independent public accountants, which accountants shall have given
the Company an opinion, unqualified as to the scope of the audit, regarding
such statements;
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(c) within 90 days after the end of each fiscal year,
written notice of the current Conversion Price for the Series B Preferred
Stock, including a brief statement indicating any adjustments reasonably
anticipated;
(d) promptly after the submission thereof to the Company,
copies of all reports and recommendations submitted by independent public
accountants in connection with any annual or interim audit of the accounts of
the Company or any of its subsidiaries made by such accountants;
(e) promptly after transmission thereof, copies of all
reports, proxy statements, registration statements and notifications filed by
it with the Securities and Exchange Commission pursuant to any act administered
by the Securities and Exchange Commission or furnished to shareholders of the
Company or to any national securities exchange;
(f) with reasonable promptness, such other financial data
relating to the business, affairs and financial condition of the Company and
any subsidiaries as is available to the Company and as from time to time the
Investors may reasonably request;
(g) promptly following the issuance of any additional
shares of Common Stock or of any securities convertible into Common Stock, or
any options, warrants or other rights to purchase additional shares of Common
Stock or convertible securities, written notice of the amount of securities so
issued and the total consideration received therefor; and
(h) within 10 days after the Company learns in writing of
the commencement or threatened commencement of any material suit, legal or
equitable, or of any material administrative, arbitration or other proceeding
against the Company, any of its subsidiaries or their respective businesses,
assets or properties, written notice of the nature and extent of such suit or
proceeding.
4.3 Preparation and Approval of Budgets. At least one month prior
to the beginning of each fiscal year of the Company, the Company shall prepare
and submit to its Board of Directors, for its review and approval, an annual
plan for such year, which shall include monthly capital and operating expense
budgets, cash flow statements and profit and loss projections itemized in such
detail as the Board of Directors may reasonably request. Each annual plan shall
be modified as often as is necessary in the judgment of the Board of Directors
to reflect changes required as a result of operating results and the other
events that occur, or may be reasonably expected to occur, during the year
covered by the annual plan, and copies of each such modification shall be
submitted to the Board of Directors. The Company will, simultaneously with the
submission thereof to the Board of Directors, deliver a copy of each such
annual plan and modification thereof to each Investor.
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4.4 Inspection. The Company will permit the Investors, or any
designee thereof, to visit and inspect the properties of the Company or any of
its subsidiaries, including the financial books and records thereof, and the
right to take extracts therefrom, and discuss the affairs, finances and
accounts thereof with the appropriate officers, all at reasonable times upon
reasonable notice, and as often as reasonably may be requested.
4.5 Directors' and Shareholders' Meetings. The Investors shall
have the right to elect three directors of the Company in accordance with the
Amended and Restated Voting Agreement dated September 20, 1995, as amended, one
to be designated by Xxxxxx X. Xxxxxxxxx, one to be designated by The Food Fund
II Limited Partnership, and one to be designated by Norwest Equity Partners V,
a Minnesota Limited Partnership.
The Company shall reimburse the Investors for the reasonable
out-of-pocket expenses incurred by them or the directors designated by them in
connection with the attending of meetings by their director designees or
carrying out any other duties by such director designees that may be specified
by the Board of Directors; shall pay such director designees the same
director's fees paid to the other non-employee directors of the Company; shall
maintain as part of its Articles of Incorporation or Bylaws a provision for the
indemnification of its directors to the full extent permitted by law; and enter
into indemnity agreements reasonably satisfactory to Investors.
In addition, the Company shall notify the Investors of all regular
meetings and special meetings of the Board of Directors of the Company at least
two business days in advance of such meetings.
The Company agrees, as a general practice, to hold a meeting of its
Board of Directors at least once every two months, and during each year to hold
its annual meeting of shareholders within 30 days of delivery of the audited
financial statements.
4.6 Furnishing of Information. The Company will deliver to each
Investor that is an SBIC:
(a) all information necessary in order for such Investor
to prepare and file SBA Form 468 and other information requested or
required by any governmental authority asserting jurisdiction over
such Investor, such information to be provided within 20 days of such
Investor's request;
(b) as soon as reasonably practical after the written
request of any Investor that is an SBIC, confirm the use of the
proceeds as described in Section 2.24 hereof; and
(c) with reasonable promptness, such information as from
time to time the Investors may request to enable the Investors to
comply with SBA regulations.
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4.7 Other Restrictions. Without the prior approval of the Board of
Directors of the Company by an affirmative vote of at least two-thirds of its
members, neither the Company nor its subsidiaries will do any of the following:
(a) declare or pay any dividend or make any other
distribution on any shares of its capital stock other than those payable solely
in shares of Common Stock, or purchase, redeem or otherwise acquire for any
consideration, or set aside a sinking fund or other fund for the redemption or
repurchase of any shares of capital stock or any warrants, rights or options to
purchase shares of capital stock (except that any subsidiary may pay dividends
to the Company);
(b) grant to the holders of any securities issued or to
be issued by the Company a "demand" right to register such securities under the
Securities Act;
(c) guarantee, endorse or otherwise be or become
contingently liable, or permit any subsidiary to guarantee, endorse or
otherwise become contingently liable, in connection with obligations in excess
of one million dollars ($1,000,000) in the aggregate, securities or dividends
of any person, firm, association or corporation (other than the Company and any
100% owned subsidiary), except that the Company and any subsidiary may endorse
negotiable instruments for collection in the ordinary course of business;
(d) make or permit any subsidiary to make loans or
advances to any person (including without limitation to any officer, director
or shareholder of the Company or any officer or director of any subsidiary),
firm, association or corporation (other than the Company and any 100% owned
subsidiary), except advances to suppliers, customers and employees made in the
ordinary course of business;
(e) make any material change in the nature of its
business as carried on at the date of this Agreement;
(f) organize any subsidiary, joint venture, partnership,
or acquire a business (by asset purchase, stock purchase, merger or otherwise),
or acquire any assets or make any investment (all of the foregoing being
hereinafter referred to as an "Investment"), except that in the case of an
Investment which is in the same line of business as the Company (i.e., the
distribution of packaged ice systems and the sale of bags for use in such
systems) or to be used in or in connection with the Company's business as
currently conducted, the Company and its subsidiaries may make such Investment
to the extent that the total expenditure for such Investment does not exceed
$500,000;
(g) issue any securities (including without limitation
options, warrants, other rights to purchase capital stock or convertible
securities of the Company) at a price which would result in an adjustment of
the Conversion Price for the Series A Preferred Stock or the Series B Preferred
Stock; or
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(h) mortgage, pledge, or create a security interest in
all or substantially all of the Company's assets as collateral, provided that
the Company may pledge substantially all of its assets as security for its loan
from Bank One Texas, N.A.
4.8 Application of Proceeds. Unless otherwise approved by the
Investors, the net proceeds received by the Company from the sale of the
Securities shall be used substantially for working capital purposes. Pending
use of the proceeds in the business, they shall be deposited in a bank or banks
having deposits of $150,000,000 or more, invested in money market mutual funds
having assets of $500,000,000 or more, or invested in securities issued or
guaranteed by the United States Government.
4.9 Compliance. So long as any Investor that is an SBIC holds any
Securities (i) without the prior written consent of such Investor, the Company
shall not use the proceeds from the sale of the Securities issued and sold
pursuant to this Agreement for any purpose other than as set forth in Section
4.8 above, (ii) the Company shall not use the proceeds from the sale of the
Securities issued and sold pursuant to this Agreement for any prohibited
purposes outlined in the second sentence of Section 2.24, (iii) the Company
shall not change its business activity in any manner which, by reason of such
change in business activity, would cause the Company to fall within a different
SIC Code and thereby render the Company ineligible as a "small business
concern" under the SBIA and (iv) the Company shall at all times comply with the
non-discrimination requirements of 13 CFR Parts 112, 113 and 117. The Company
shall at all times permit any Investor that is an SBIC and, if necessary, a
representative of the Small Business Administration, access to the Company's
records and the Company shall provide such information as such Investor that is
an SBIC may request in order to verify compliance with this Section 4.9
including, without limitation, an officer's certificate indicating such
compliance. The Company hereby acknowledges that (A) any diversion of the
proceeds from their intended use as specified in Section 4.8 and this Section
4.9, (B) the Company's becoming ineligible as a "small business concern" by
reason of a change in the Company's business activity within one year from the
Closing Date or (C) failure to provide the information specified in Section
4.6, shall entitle any Investor that is an SBIC, upon demand, and in addition
to any other remedies that may exist, to immediate rescission of this Agreement
and repayment in full of the funds invested hereunder as contemplated by 13 CFR
Section 107.305 and 13 CFR Section 107.706.
4.10 No Issuance of Series B Preferred Stock. After the Closing,
the Company shall not issue additional shares of the Series B Preferred Stock
without the approval of the holders of 80% of the then outstanding shares of
Series B Preferred Stock.
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ARTICLE 5
CONDITIONS TO INVESTORS' OBLIGATIONS
The obligation of each Investor to purchase and pay for the Securities
to be delivered to it hereunder at the Closing Date is subject to the
fulfillment, on or before the Closing Date, of each of the following
conditions:
5.1 Compliance with Representations and Warranties. The
representations and warranties contained in Article 2 hereof shall be true on
and as of the Closing Date with the same effect as though made on and as of
that date, and the Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by the Company prior to or at the Closing.
5.2 Compliance Certificate. The Company shall have delivered to
the Investors a certificate, dated as of the Closing Date and signed by the
Company's President, certifying that the conditions in this Article 5 required
to be fulfilled prior to the Closing Date have been fulfilled.
5.3 Amendment No. 1 to Amended and Restated Shareholders
Agreement. The Company and the holders of 80% or more of the outstanding shares
of Common Stock and Series A Preferred Stock voting on an as-converted basis
shall have entered into a counterpart of the Amendment No. 1 to Amended and
Restated Shareholders Agreement in the form attached hereto as Exhibit 5.3.
5.4 Amendment No. 1 to Amended and Restated Voting Agreement. The
Company and the holders of 80% or more of the outstanding shares of Common
Stock and Series A Preferred Stock voting on an as-converted basis shall have
entered into Amendment No. 1 to Amended and Restated Voting Agreement in the
form attached hereto as Exhibit 5.4.
5.5 Stock Certificates. The Company shall have delivered to each
of the Investors stock certificates evidencing the number of shares of Series B
Preferred Stock purchased hereunder.
5.6 Registration Rights Agreement. The Company and the Investors
shall have duly authorized and executed Amendment No. 1 to Registration Rights
Agreement in the form set forth as Exhibit 5.6 hereof.
5.7 Opinion of Counsel. The Company shall have delivered to the
Investors the opinion of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. dated the
Closing Date, substantially in the form of Exhibit 5.7.
5.8 Investment by Other Investors. On the Closing Date,
concurrently with the purchase by such Investor, each other Investor shall have
purchased and paid for the Securities being purchased by it hereunder.
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5.9 Execution of SBA Forms. Each of the Investors that is a small
business investment company shall have received from the Company the Size
Status Declaration on SBA Form 480 and the Company's duly executed
certification, dated the Closing Date, on SBA Form 652 that the Company will
not illegally discriminate in its operations, employment practices or
facilities.
5.10 Waiver of Preferential Rights. All of the shareholders not a
party to this Agreement who are parties to that certain Stock Purchase
Agreement dated September 20, 1995 by and among the Company, the Trustees UID
12/18/80 FBO Xxxxxxx X. Xxxxxxxxx, the Trustees UID 12/18/80 Grandchildren, J.
Xxxx Xxxxxxxx, Lancer Corporation, Southwest Texas Distributors, Inc., Xxxx
Xxxxxx and Xxxxxxxxx Xxxxxxxxxx Xxxxxxx, shall have waived their respective
rights under Article 8 of said Stock Purchase Agreement to purchase the 10%
convertible demand promissory notes dated December 11, 1996, any Series B
Preferred Stock, and Common Stock issuable upon conversion of the Series B
Preferred Stock.
ARTICLE 6
CONDITIONS TO COMPANY'S OBLIGATIONS
The obligation of the Company to issue and sell the Securities to the
Investors hereunder is subject to the fulfillment by each Investor, at or
before the Closing, of the following conditions:
6.1 Compliance with Representations and Warranties. The
representations and warranties of each of the Investors contained in Article 3
hereof shall be true on and as of the Closing Date with the same effect as
though made on that date (except to the extent that any representations and
warranties of the Investor specifically apply to conditions existing at a
particular date).
6.2 Other Agreements. The holders of 80% or more of the
outstanding shares of Common Stock and Series A Preferred Stock voting on an
as-converted basis shall have entered into the Amendment No. 1 to Amended and
Restated Shareholders Agreement and the Amendment No. 1 to Amended and Restated
Voting Agreement.
6.3 Waiver of Preferential Rights. All of the shareholders not a
party to this Agreement who are parties to that certain Stock Purchase
Agreement dated September 20, 1995 by and among the Company, the Trustees UID
12/18/80 FBO Xxxxxxx X. Xxxxxxxxx, the Trustees UID 12/18/80 Grandchildren, J.
Xxxx Xxxxxxxx, Lancer Corporation, Southwest Texas Distributors, Inc., Xxxx
Xxxxxx and Xxxxxxxxx Xxxxxxxxxx Xxxxxxx, shall have waived their respective
rights under Article 8 of said Stock Purchase Agreement to purchase the 10%
convertible demand promissory notes dated December 11, 1996, any Series B
Preferred Stock, and Common Stock issuable upon conversion of the Series B
Preferred Stock.
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ARTICLE 7
INDEMNIFICATION
The Company shall indemnify and hold harmless the Investors, and the
Investors, severally and not jointly, shall indemnify and hold harmless the
Company, against all claims, liability, damage, loss, cost and expense
(including reasonable attorneys' and accountants' fees) incurred by the
indemnified party or parties as a result of or in connection with the breach by
the indemnifying party or parties of any representation, warranty or covenant
contained in this Agreement or in any other agreement entered into pursuant to
the terms and conditions of this Agreement and any and all actions, suits,
proceedings, claims, demands and judgments incident to or alleged to be
incident to any of the foregoing.
ARTICLE 8
OTHER MATTERS
8.1 Termination of Xxxxxxxxx Option. Effective as of the Closing,
that certain Stock Option Agreement dated June 9, 1992 among the Company and
Xxxxxx X. Xxxxxxxxx, as amended on April 1, 1996, granting Xxxxxx X. Xxxxxxxxx
the right to purchase 80,358 shares of Common Stock, shall be terminated and of
no further force or effect.
8.2 Waiver of Preemptive Rights. Each of Norwest Equity Partners
V, a Minnesota Limited Partnership ("NEP") and The Food Fund II Limited
Partnership ("FFLP") hereby waives its right under Article 8 of that certain
Stock Purchase Agreement dated September 20, 1995 by and among the Company, NEP
and FFLP (the "NEP/FFLP Stock Purchase Agreement") to purchase its Pro Rata
Share (as such term is defined in the NEP/FFLP Stock Purchase Agreement) of the
10% convertible demand promissory notes dated December 11, 1996, the Series B
Preferred Stock issued pursuant to this Agreement and Common Stock issuable
upon conversion of the Series B Preferred Stock.
8.3 Waiver of Preemptive Rights. Xxxxxx X. Xxxxxxxxx hereby waives
his right under Article 8 of that certain Stock Purchase Agreement dated
September 20, 1995 by and among the Company, Xxxxxx X. Xxxxxxxxx, and other
investors named therein (the "Xxxxxxxxx Stock Purchase Agreement") to purchase
his Pro Rata Share (as such term is defined in the Xxxxxxxxx Stock Purchase
Agreement) of the 10% convertible demand promissory notes dated December 11,
1996, the Series B Preferred Stock issued pursuant to this Agreement and Common
Stock issuable upon conversion of the Series B Preferred Stock.
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ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests, demands and other
communications hereunder, and each other agreement required to be entered into
pursuant to the terms and conditions of this Agreement, shall be in writing and
shall be delivered by hand, overnight courier, facsimile transmission, or by
United States Mail, and shall be deemed to have been duly given when actually
received, or when mailed, first class postage prepaid, certified mail, return
receipt requested, to an Investor at the address set forth below his name on
Schedule A hereto, to the Company at the address set forth below, or to such
other address as may be designated hereafter by prior written notice from the
recipient to the sender:
If by mail, to: Packaged Ice, Inc.
X.X. Xxx 00000
Xxxxxxx, Xxxxx 00000-0000
If by hand delivery or
overnight mail, to: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
If by FAX, to: Packaged Ice, Inc.
Fax: (000) 000-0000
9.2 Modification and Waiver.
(a) No amendment or modification to this Agreement shall
be made without the approval of the Company and the affirmative vote of 80% of
the shares of Series B Preferred Stock.
(b) Approval, waiver and consent by the Investors
hereunder shall require the affirmative vote of the holders of 80% of the
shares of Series B Preferred Stock.
(c) Notwithstanding anything to the contrary herein
contained, the fulfillment by the Company of a condition precedent to an
Investor's obligation to purchase Securities hereunder may be waived from time
to time by any such Investor by written consent to, or waiver of, any such
condition.
9.3 Termination. This Agreement shall continue in effect from the
date of execution until the Company has completed an initial public offering,
defined as a bona-fide firm commitment underwritten public offering of shares
of the Company's Common Stock made
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through a nationally recognized underwriting firm pursuant to an effective
registration statement under the Securities Act, which results in gross
proceeds to the Company of not less than $7.5 million.
9.4 Conflicts. If there shall be any conflict between any
provision of this Agreement and any provision of the other agreements required
to be entered into pursuant to the terms and conditions of this Agreement, the
conflicting provision of such other agreements shall control.
9.5 Gender. Wherever herein, and in each other agreement required
to be entered into pursuant to the terms and conditions of this Agreement, the
singular number is used, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and vice versa, as the
context may require.
9.6 Headings. The headings contained in this Agreement, and in
each other agreement required to be entered into pursuant to the terms and
conditions of this Agreement, are for reference purposes only and shall not in
any way affect their meaning or interpretation.
9.7 Counterparts. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, may be executed in any number of counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
9.8 Parties in Interest. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, shall, except as may otherwise be specifically provided to the
contrary therein, inure to the benefit of and be binding upon each of the
parties hereto and thereto, as the case may be, and their respective heirs,
executors, legal representatives, successors and assigns.
9.9 Survival. All covenants, agreements, representations and
warranties made herein, and in each other agreement required to be entered into
pursuant to the terms and conditions of this Agreement, or otherwise in writing
in connection therewith, shall survive the execution and delivery hereof, and
thereof and the consummation of the transactions contemplated hereby and
thereby.
9.10 Entire Agreement. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, embody the entire agreement and understanding between the parties
thereto, and supersede all prior agreements and understandings, written and
oral, relating to the subject matter thereof, including, without limitation,
all letters of intent and summary term sheets heretofore executed or examined
by the parties.
9.11 Governing Law. THIS AGREEMENT, AND EACH OTHER AGREEMENT
REQUIRED TO BE ENTERED INTO PURSUANT TO THE TERMS AND CONDITIONS OF
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THIS AGREEMENT, SHALL, EXCEPT AS MAY OTHERWISE BE SPECIFICALLY PROVIDED TO THE
CONTRARY THEREIN, BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
9.12 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, including, without
limitation any claim for violation of securities laws, shall be settled by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, in Houston, Texas, and judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof, and shall not be appealable.
9.13 Expenses and Attorneys' Fees. The Company shall pay all
reasonable costs and expenses that are incurred with respect to the
negotiation, execution, closing, delivery and performance of this Agreement,
and each other agreement required to be entered into pursuant to the terms and
conditions of this Agreement including without limitation those reasonable
legal, accounting and travel costs and expenses incurred by the Investors. The
Company's obligation to pay the Investors expenses shall not be incurred by the
Company until the Closing.
9.14 Language. The language used in this Agreement, and the other
agreements required to be entered into pursuant to the terms and conditions of
this Agreement, shall be deemed to be language chosen by the parties thereto to
express their mutual intent, and no rule of strict construction against any
party shall apply to any term or condition thereof.
9.15 Severability. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions hereof and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
9.16 Waiver. No waiver by any party of the performance of any
provision, condition or requirement herein shall be deemed to be a waiver of,
or in any manner release the other party from, performance of any other
provision, condition or requirement herein; nor deemed to be a waiver of, or in
any manner release the other party from future performance of the same
provision, condition or requirement; nor shall any delay or omission by any
party to exercise any right hereunder in any manner impair the exercise of any
such right accruing to it thereafter.
9.17 No Third-Party Beneficiaries. Nothing contained in this
Agreement shall be construed to give any person other than the Company and
Investors, their successors and assigns, any legal or equitable right, remedy
or claim under or with respect to this Agreement.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
THE COMPANY: PACKAGED ICE, INC.
By:
--------------------------------
Xxxxx X. Xxxxxx, President
THE INVESTORS: NORWEST EQUITY PARTNERS V,
A MINNESOTA LIMITED PARTNERSHIP
By: Itasca Partners V, L.L.P.,
its General Partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
THE FOOD FUND II LIMITED PARTNERSHIP
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-----------------------------------
Xxxxxx X. Xxxxxxxxx
Attachments:
Schedule A - Investors
Schedule B - Disclosure Schedule
Exhibit 1.1 - Certificate of Designation of Resolutions Establishing Shares of
Series B Preferred Stock
Exhibit 5.3 - Amendment No. 1 to Amended and Restated Shareholders Agreement
Exhibit 5.4 - Amendment No. 1 to Amended and Restated Voting Agreement
Exhibit 5.6 - Amendment No. 1 to Registration Rights Agreement
Exhibit 5.7 - Opinion of Counsel
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SCHEDULE A
FOOD FUND II LIMITED PARTNERSHIP (1)
0000 XXXXXXX XXXXX, XXXXX 000
XXXXXXXXXX, XX 00000
Shares Price Total
------ ----- -----
4,161 shares $6.07 $25,257.27
NORWEST EQUITY PARTNERS V, (2)
A MINNESOTA LIMITED PARTNERSHIP
2800 XXXXX XXXXXXX TOWER
000 XXXXX XXXXX XXXXXX
XXXXXXXXXXX, XX 00000-0000
Shares Price Total
------ ----- -----
37,449 shares $6.07 $227,315.43
XXXXXX X. XXXXXXXXX (3)
00000 XXXXXXXX XXXXXX
XXXXXX, XXXXX 00000
Shares Price Total
------ ----- -----
83,221 shares $6.07 $505,151.47
(1) The purchase price will be in the form of cancellation of a promissory note
dated December 11, 1996 in the principal amount of $25,000 and forgiveness
of accrued interest in the amount of $257.27.
(2) The purchase price will be in the form of cancellation of a promissory note
dated December 11, 1996 in the principal amount of $225,000 and forgiveness
of accrued interest in the amount of $2,315.43.
(3) The purchase price will be in the form of cancellation of a promissory note
dated December 11, 1996 in the principal amount of $500,000 and forgiveness
of accrued interest in the amount of $5,151.47.
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