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EXHIBIT 10.52
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
November 21, 1997, by and among Packaged Ice, Inc., a Texas corporation
("Buyer"), and Xxxxxxx X. Xxxxxxxxxx, Xx. and Xxxx Xxxxxx Xxxxxxxxx, Xx. who own
all of the outstanding capital stock of Xxxxxxx Xxxxxxx Ice Company, a Florida
corporation (individually "Seller" and collectively the "Sellers").
PRELIMINARY STATEMENTS
Sellers own all of the outstanding shares of capital stock of Xxxxxxx
Xxxxxxx Ice Company, a Florida corporation (hereinafter the "Company"), such
shares hereinafter referred to as the "Stock".
The Company is engaged in the manufacture and sale of packaged ice
products (such business being herein referred to as the "Business").
Sellers are desirous of selling to Buyer, and Buyer is desirous of
purchasing from Sellers, all of the Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties hereafter set forth, the
parties hereby agree as follows:
I. DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Section I shall have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined.
"Assets" shall mean all of Company's properties and assets, real,
personal, tangible and intangible. The Assets shall include, but shall not be
limited to, those items specifically described in Exhibit A attached hereto.
"Capital Leases" shall mean those leases covering certain capital
equipment used in the Business which are used in the direct manufacturing,
distribution and sale of packaged ice products which equipment will be conveyed
to Buyer at the Closing, free and clear of the Capital Leases, liens, claims and
any other encumbrances whatsoever. The property comprising the Capital Leases is
described in Exhibit B attached hereto.
"Closing" shall mean the consummation of this Agreement.
"Closing Date" shall mean the date on which this Agreement is
consummated.
"Contracts" shall have the meaning set forth in Section 3.14 of this
Agreement.
"Damages" shall have the meaning set forth in Section 9.1 of this
Agreement.
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"Encumbrance" shall mean any mortgage lien, encumbrance, security
interest, charge, pledge, conditional sale agreement, adverse claim, deed of
trust, or restriction of transfer of any nature whatsoever other than those held
by Buyer or granted by the Company at Buyer's request.
"Escrow Agreement" shall have the meaning set forth in Section 2.2 of
this Agreement.
"Escrow Agent" shall mean Xxxx Xxxxxx, CPA.
"Escrow Amount" shall have the meaning set forth in Section 2.2(b) of
this Agreement.
"Excluded Assets" shall mean those assets of the Company that will be
distributed to the Sellers prior to Closing and shall not belong to the Company
on the Closing Date. The Excluded Assets will be described in Schedule 3.13(a)
attached hereto.
"Financial Statements" shall have the meaning set forth in Section 3.3
of this Agreement.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Indemnified Party" shall have the meaning set forth in Section 9.3 of
this Agreement.
"Indemnifying Party" shall have the meaning set forth in Section 9.3 of
this Agreement.
"Intangible Assets" shall mean all patents, trademarks, trademark
licenses, trade names, brand names, slogans, copyrights, reprint rights,
franchises, licenses, authorizations, inventions, processes, know-how, formulas,
trade secrets and other intangible assets (together with all pending
applications, continuations-in-part and extensions for any of the above).
"Investment Letter" shall have the meaning set forth in Section 5.10 of
this Agreement.
"Leases" shall have the meaning set forth in Section 3.12 of this
Agreement.
"Liabilities" shall have the meaning set forth in Section 2.2(c) of
this Agreement.
"Noncompetition Agreement" shall have the meaning set forth in Section
5.9 of this Agreement.
"Owned Real Property" shall mean all of that real property that (i) is
owned by the Company; (ii) comprises the real property located at 0000 X.
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx and 0000 Xxxxxx Xxxx, Xxxxxx Xxxx Xxxxx,
Xxxxxxx upon which the Company's ice manufacturing facilities are located; and
(iii) property that is more fully described in Schedule 3.12(e).
"PI Stock" shall have the meaning set forth in Section 2.2.
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"Personal Property" shall have the meaning set forth in Section 3.13 of
this Agreement.
"Purchase Price" shall have the meaning set forth in Section 2.2 of
this Agreement.
"Real Property" shall have the meaning as set forth in Section 3.12 of
this Agreement.
"Sellers' Disclosure Memorandum" shall mean that schedule attached
hereto and incorporated herein by reference that lists and describes all
disclosures by Sellers concerning the Assets and the Business which are the
subject of this Agreement.
"Stock" shall mean all of the capital stock of the Company outstanding
on the Closing Date.
"Taxes" shall have the meaning as set forth in Section 11.1 hereof.
"Trade Accounts Payable" shall mean those accounts payable accrued by
the Company that relate directly to the manufacture, storage, distribution and
sale of packaged ice products.
II. PURCHASE AND SALE
2.1. STOCK PURCHASE. At the Closing, subject to the terms, covenants
and conditions contained herein, Sellers shall sell to Buyer, and Buyer shall
purchase from Sellers, all of the Stock.
2.2 PURCHASE PRICE.
(a) The purchase price for the Stock shall be Six Million
Eight Hundred Fifty Thousand Dollars ($6,850,000) (the "Purchase Price"), less
the adjustments set forth hereinbelow, and payable as follows:
(b) $6,750,000 of the Purchase Price, less the Escrow Amount
(hereinafter defined) shall be paid to Sellers in cash, by wire transfer, or by
discharge of indebtedness owed by Sellers at Closing, provided that $100,000 of
the cash portion of the Purchase Price shall be placed in escrow (the "Escrow
Amount") with the Escrow Agent pursuant to the escrow agreement in the form
attached hereto as Exhibit 2.2(b) (the "Escrow Agreement").
(c) The cash portion of the Purchase Price shall first be used
to pay and discharge all of the Company=s debts, obligations and other
liabilities including, without limitation, all current liabilities (save and
except the Trade Accounts Payable), all long term liabilities, all interest
bearing debt, Encumbrances, and Capital Leases (collectively, the "Liabilities")
which are estimated to exist as of the Closing Date.
The cash portion of the Purchase Price remaining
after the estimated Liabilities have been paid and discharged shall be paid
directly to the Sellers (less any amounts of Packaged Ice, Inc. common stock to
be issued to Sellers) on a pro rata basis based on their ownership of the Stock
in exchange for all of the Stock owned by the Sellers. In addition, all cash
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belonging to the Company on or before the Closing Date will be distributed to
the Sellers prior to the Closing. The intent and effect of this Section 2.2(c)
is to convey all of the outstanding Stock of the Company to Buyer with there
being no cash, Liabilities (except Trade Accounts Payables) or Encumbrances
immediately after Closing. Sellers hereby agree all Liabilities which are not
discharged at Closing shall be assumed by the Sellers through an Undertaking
Agreement in the form attached hereto as Exhibit 2.2(c).
(d) The remaining $ 0 of the Purchase Price shall be paid in
the form of 0 shares of the $.01 par value common stock of Packaged Ice, Inc.
("PI Stock"), valued at $10 per share.
2.3 POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price
shall be subject to the following adjustments:
(a) On or before twenty-one (21) days after the Closing Date,
Sellers shall deliver to Buyer a copy of the balance sheet of the
Company as of the Closing Date (the "Closing Date Balance Sheet@)
certified by Sellers to the best of their knowledge and belief to be
true and correct. The Closing Date Balance Sheet shall (i) fairly
present the financial position of the Company as at the close of
business on the Closing Date in accordance with the accounting methods
consistently utilized by the Company, and (ii) include a detailed
schedule of Liabilities. The Closing Date Balance Sheet shall be used
to calculate any post closing adjustments to the Purchase Price as of
the Closing Date and the amount of any Liabilities to be paid by
Sellers, all in accordance with the terms and conditions set forth in
this Agreement.
(b) To the extent the Sellers' received at Closing an amount
of cash in excess of what they are entitled to hereunder, Sellers shall
pay to Buyer such amount within five (5) days after such determination.
To the extent Sellers are entitled to a greater amount of cash than
they received at Closing, then the Company shall distribute such amount
within five (5) days after such determination.
2.4 PRORATION. The parties shall prorate at the Closing the current
year's ad valorem taxes and prepaid expenses, based on the latest available
statements from taxing authorities, whether for the current tax year or the
preceding tax year. Sellers' pro rata share of such taxes shall be the portion
attributable to the period through the day preceding the Closing Date, prorated
by days. The prorated amounts shall be payable in the manner set forth below:
(a) If a prorated amount is payable by Buyer and determinable
at the Closing, it shall be added to the amount payable by Buyer at the
Closing.
(b) If a prorated amount is payable by Buyer and not
determinable at the Closing, it shall be billed by Sellers when
determinable and promptly paid by Buyer to Sellers.
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(c) If a prorated amount is payable by Sellers and
determinable at the Closing, it shall be deducted from the amount
otherwise payable by Buyer at the Closing.
(d) If a prorated amount is payable by Sellers and not
determinable at the Closing, it shall be billed by Buyer when
determinable and promptly paid by Sellers to Buyer.
III. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and has all
requisite power and authority to own, lease and operate the Business as
presently conducted and to enter into this Agreement and to perform its
obligations hereunder and is duly qualified to do business in any foreign
jurisdiction in which it is currently conducting business operations. All shares
of Stock owned by Sellers are validly issued, fully paid and nonassessable.
Other than this Agreement, there is no subscription, option, warrant, call,
right, agreement or commitment relating to the issuance, sale, delivery,
repurchase or transfer by Sellers or the Company (including any right of
conversion or exchange under any outstanding security or other instrument) of
any of its capital stock or other securities. Sellers own and have good and
marketable title to the Stock, free and clear of all Encumbrances. Upon the sale
of the Stock to Buyer at Closing, Sellers will transfer to Buyer the entire
legal and beneficial interest in all Stock, free and clear of any Encumbrances.
There are no voting trusts, proxies or any other agreements or understandings
with respect to the voting of the Stock.
3.2 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. This Agreement
has been duly executed and delivered by Sellers and constitutes the valid and
binding obligation of Sellers, enforceable against them in accordance with its
terms. Except as set forth on Section 3.2 of Sellers' Disclosure Memorandum, the
execution, delivery and performance of this Agreement by Sellers and the
consummation of the transactions contemplated hereby will not require the
consent, approval or authorization of any third party or governmental authority,
and will not, with or without the giving of notice, the passage of time, or
both, violate, conflict with, result in a default, breach or loss of rights
under, or result in the creation of any lien, claim or encumbrance pursuant to,
any lien, encumbrance, instrument, agreement, or understanding, or any law,
regulation, rule, order, judgment or decree, to which Sellers are a party or by
which they are bound or affected.
3.3 FINANCIAL STATEMENTS. Sellers have previously caused to be
furnished to Buyer the Company's unaudited balance sheet as of December 31,
1996, and the related statements of income and statements of cash flow for the
fiscal year then ended, and the unaudited balance sheet of Sellers as of
September 30, 1997 and the related unaudited statement of income and statement
of cash flow for the 9-month period ending September 30, 1997 (such balance
sheets and related statements are collectively referred to herein as the
"Financial Statements"). The Financial Statements taken as a whole present
fairly the financial position of the Business as of
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December 31, 1996, and September 30, 1997, respectively, in accordance with
consistently applied accounting methods.
Except as and to the extent reflected or reserved against in the
Financial Statements or as disclosed by Sellers in Sellers' Disclosure
Memorandum and except for trade accounts payable arising in the ordinary course
of business and consistent with past practice since the date of the Company's
September 30, 1997 Balance Sheet, Sellers have operated the Company in the
ordinary course and have incurred no liabilities which would be required by GAAP
to be reflected on a balance sheet of the Company as of the date hereof or
disclosed in the notes thereto. Since September 30, 1997 there has not been any
material adverse change in the business, operations, properties, prospects,
assets or condition of the Company, and no event has occurred or circumstance
exists that may result in such a material adverse change.
As of the Closing, Buyer shall become responsible for the Trade
Accounts Payable of Sellers' Business. As such, Sellers warrant and represent
that, as of the Closing Date, the total amount of Trade Accounts Payable shall
not exceed the total current assets. Within sixty days after Closing, Buyer
shall reconcile the Trade Accounts Payable as of the Closing with the current
assets as of the Closing and if the Trade Accounts Payable as of the Closing
exceed the current assets (hereinafter "Shortages") then Buyer shall be
permitted to adjust the purchase price downward by the same amount as the
Shortages by deducting the amount of the Shortages from the Escrow Amount. If
the Escrow Amount is not sufficient to cover the Shortages, then Sellers shall
promptly pay all additional Shortages to Buyer.
3.4 SHAREHOLDER DEBT. Sellers warrant that there are no Encumbrances
held by Sellers whatsoever against the Company or the Assets.
3.5 BUSINESS OPERATIONS AND CONDITION OF ASSETS. All items comprising
the Assets have been continuously used by the Company in connection with the
Business and are now in serviceable condition, unless expressly disclosed to the
contrary by Sellers in Section 3.5 of Sellers' Disclosure Memorandum.
3.6 GOOD TITLE. Except as set forth in Section 3.6 of Sellers'
Disclosure Memorandum, the Company has good, legal and marketable title to all
of the Assets, including the Owned Real Property, free and clear of
Encumbrances.
3.7 LITIGATION. Except as set forth on Section 3.7 of Sellers'
Disclosure Memorandum, there is no pending claim, action, suit, proceeding or
investigation (judicial, governmental or otherwise), nor any order, decree or
judgment in effect, or, to the knowledge of Sellers, threatened, against or
relating to Sellers, the Company or the Assets, or the transactions contemplated
by this Agreement.
3.8 COMPLIANCE WITH LAWS. To Sellers' knowledge, Sellers and the
Company have complied with all laws, rules, regulations, ordinances, orders,
judgments and decrees relating to the Company, the Stock and the Assets. The
ownership and use of the Assets and the conduct of
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the Business as it specifically relates to the Assets does not conflict with the
rights of any other person.
3.9 TAXES. Except as set forth in Section 3.9 of Sellers' Disclosure
Memorandum, the Company has, within the time and manner prescribed by law, filed
all material returns, declarations, reports and statements required to be filed
by it (together, "Returns") in respect of any Taxes and each such Return has
been prepared in compliance in all material respects with all applicable laws
and regulations and is true and correct in all material respects, and the
Company has, within the time and in the manner prescribed by applicable law,
paid all Taxes that are shown to be due and payable with respect to the periods
covered thereby. The Company is an "S-corporation" under the Code, has had in
effect since its corporate inception, or such other date as set forth in Section
3.9 of Sellers' Disclosure Memorandum, a valid, binding, timely filed election
to be taxed pursuant to Subchapter S of the Code, and is not liable for any
federal income taxes as a "C-corporation" under the Code (other than potential
taxes incurred under Section 1374 of the Code). Except as set forth in Section
3.9 of Sellers' Disclosure Memorandum (i) the Company has not requested or been
granted an extension of the time for filing any Return which has not yet been
filed; (ii) the Company has not consented to extend to a date later than the
date hereof the time in which any Tax may be assessed or collected by any taxing
authority; (iii) no deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Tax has been proposed, asserted or
assessed by any taxing authority against the Company; (iv) there is no action,
suit, taxing authority proceeding, or audit now in progress, pending or, to
Sellers' knowledge, threatened against or with respect to the Company; (v) no
claim has been made by a taxing authority in a jurisdiction where the Company
does not file Tax Returns that the Company is subject to Taxes assessed by such
jurisdiction; (vi) there are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the Assets; (vii) the Company will not be required
to include any amount in taxable income or exclude any item of deduction or loss
from taxable income for any taxable period (or a portion thereof) ending after
the Closing Date as a result of any of the following: (A) a change in method of
accounting for a taxable period ending on or prior to the Closing Date, (B) any
"closing agreement," as described in Code Section 7121 (or any corresponding
provision of state, local or foreign income Tax law) entered into on or prior to
the Closing Date, (C) any sale reported on the installment method where such
sale occurred on or prior to the Closing Date, and (D) any prepaid amount
received on or prior to the Closing Date; and (viii) Company has no obligation
or liability for the payment of Taxes of any other person as a result from any
expressed obligation to indemnify another person, or as a result of such Company
assuming or succeeding to the Tax liability of any other person as successor,
transferee or otherwise.
3.10 ENVIRONMENTAL. To the knowledge of Sellers, the Company has
complied in all material respects with all laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) which have jurisdiction over the Company concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
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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, and to the knowledge of Sellers, the Company has obtained
and been in material compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied, in all material respects, with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in such laws.
3.11 INSURANCE. The Company has continuously maintained insurance
covering the Assets and operations of the Company, including without limitation
fire, liability, workers' compensation, title and other forms of insurance
owned, held by or applicable to the Business. Such insurance policies provide
types and amounts of insurance customarily obtained by businesses similar to the
Business. The Company has not been refused any insurance with respect to its
assets or operations, and its coverage has not been limited, terminated or
cancelled by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance, during the last three (3)
years. Section 3.11 of Sellers' Disclosure Memorandum lists all claims, which
(including related claims which in the aggregate) exceed $10,000 which have been
made by the Company in the last three years under any workers' compensation,
general liability, property or other insurance policy applicable to Sellers or
any of the Assets. Except as set forth on Section 3.11 of Sellers' Disclosure
Memorandum, there are no pending or threatened claims under any insurance
policy. Such claim information includes the following information with respect
to each accident, loss, or other event: (a) the identity of the claimant; (b)
the nature of the claim; (c) the date of the occurrence; (d) the status as of
the report date and (e) the amounts paid or expected to be paid or recovered.
3.12 REAL PROPERTY.
(a) Section 3.12 of Sellers' Disclosure Memorandum contains
(i) a complete and accurate legal description of each parcel of real property
owned by, leased to or used by the Company (the "Real Property") and (ii) a
complete and accurate list of all current leases, lease amendments, subleases,
assignments, licenses and other agreements to which the Real Property is subject
(the "Leases"). Sellers have delivered to Buyer true and complete copies of the
Leases.
(b) Except as disclosed in Section 3.12 of Sellers' Disclosure
Memorandum (i) each of the Leases is in full force and effect and has not been
amended or modified; (ii) neither the Company, nor any other party thereto, is
in default thereunder, nor is there any event which with notice or lapse of
time, or both, would constitute a default thereunder; (iii) Sellers have
received no notice that any party to any Lease intends to cancel, terminate or
refuse to renew the same or to exercise or decline to exercise any option or
other right thereunder; and (iv) no rental under the Leases has been paid more
than one month in advance.
(c) Except as disclosed in Section 3.12 of Sellers' Disclosure
Memorandum, to Sellers' knowledge, (i) there are no tanks on or below the
surface of the Real Property,
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(ii) there is no hazardous or toxic waste, substance or material or other
contaminant or pollutant (as determined under federal, state or local law)
present on or below the surface of the Real Property including, without
limitation, in the soil, subsoil, groundwater or surface water, which
constitutes a violation of any law, ordinance, rule or regulation of any
governmental entity having jurisdiction thereof or subjects or could subject
Buyer to any liability to third parties, and (iii) the Real Property has never
been used by the Company or by any previous owners or operators to generate,
manufacture, refine, produce, store, handle, transfer, process or transport any
hazardous or toxic waste, substance or material or other contaminant or
pollutant.
(d) The zoning of each parcel of the Real Property permits the
improvements located thereon and the continuation of business presently being
conducted thereon. The Real Property is served by utilities and services
necessary for the normal and continued operation of the business presently
conducted thereon.
(e) The Company is the fee simple or leasehold owner of the
Owned Real Property and other real property which are more fully described in
Schedule 3.12(e) attached hereto
3.13 PERSONAL PROPERTY.
(a) Section 3.13 of Sellers' Disclosure Memorandum is a
complete and accurate schedule as of September 30, 1997 describing, and
specifying the location of, all inventory, motor vehicles, machinery, fixtures,
equipment, furniture, supplies, tools, intangible assets and all other tangible
or intangible personal property owned by, in the possession of, or used by
Sellers other than the Excluded Assets (the "Personal Property").
(b) Each lease, license, rental agreement, contract of sale or
other agreement applicable to any Personal Property is listed in Section 3.13 of
Sellers' Disclosure Memorandum and is in full force and effect; neither Sellers
nor any other party thereto is in default thereunder, nor is there any event
which with notice or lapse of time, or both, would constitute a default
thereunder. The Company has received no notice that any party to any such lease,
license, rental agreement, contract of sale or other agreement intends to
cancel, terminate or refuse to renew the same or to exercise or decline to
exercise any option or other right thereunder. No Personal Property is subject
to any lease, license, contract of sale or other agreement that is adverse to
the business, properties or financial condition of the Company.
(c) The inventory of the Company as reflected by the Financial
Statements and as described in Section 3.13 of Sellers' Disclosure Memorandum
consisted and consists of items substantially all of which were and will be of
the usual quality and quantity necessary for the normal conduct of the Company
and reasonably expected to be usable or salable within a reasonable period of
time in the ordinary course of business of the Company, except items of
inventory which have been written down to realizable market value or written off
completely, and damaged or broken items in an amount which does not materially
affect the value of the inventory as reflected on the Financial Statements. With
respect to inventory in the hands of suppliers for which the Company is
committed as of the date hereof, such inventory is reasonably
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expected to be usable in the ordinary course of business of the Sellers as
presently being conducted.
3.14 CONTRACTS. Section 3.14 of Sellers' Disclosure Memorandum contains
a complete and accurate list of all presently effective contracts, leases and
other agreements to which the Company is a party and which have an aggregate
value in excess of $750 and are not cancelable on notice of thirty days or less
(hereinafter "Contracts"). Section 3.14 of Sellers' Disclosure Memorandum shall
also describe true and complete copies (or summaries in the case of oral
contracts) of each Contract which has been delivered to Buyer by Sellers,
including, without limitation, any:
(a) mortgage, security agreement, financing statement or
conditional sales agreement or any similar instrument or agreement;
(b) agreement, commitment, note, indenture or other instrument
relating to the borrowing of money, or the guaranty of any such
obligation for the borrowing of money;
(c) joint venture or other agreement with any person, firm,
corporation or unincorporated association doing business either within
or outside the United States relating to sharing of present or future
commissions, fees or other income or profits;
(d) lease, license, rental agreement, contract of sale or
other agreement applicable to the Personal Property;
(e) franchise agreement;
(f) warranty;
(g) noncompetition agreement;
(h) broker or distributorship contract; or
(i) advertising, marketing and promotional agreement
(including, but not limited to, any agreements providing for discounts
and/or rebates);
(j) employment agreements.
Except as disclosed in Section 3.14 of Sellers' Disclosure Memorandum,
each of the Contracts is in full force and effect and has not been amended or
modified and neither the Company, nor any other party thereto, is in default
thereunder, nor is there any event which with notice or lapse of time, or both,
would constitute a default thereunder. The Company has received no notice that
any party intends to cancel, terminate or refuse to renew any such Contract or
to exercise or decline to exercise any option or other right thereunder.
3.15 LABOR MATTERS. There are no controversies pending or threatened
between the Company and any employees of the Company. The Company has complied
with all laws
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relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining, immigration, safety and the payment of
withholding and social security and similar taxes, and the Company has no
liability for any arrears of wages or taxes or penalties for failure to comply
with any of the foregoing.
3.16 ABSENCE OF SENSITIVE PAYMENTS. To the best knowledge of the
Company and Sellers, neither the Company nor Sellers have made or maintained (i)
any contributions, payments or gifts of its or their funds or property to any
governmental official, employee or agent where either the payment or the purpose
of such contribution, payment or gift was or is illegal under the laws of the
United States or any state thereof, or any other jurisdiction (foreign or
domestic); or (ii) any contribution, or reimbursement of any political gift or
contribution made by any other person, to candidates for public office, whether
federal, state, local or foreign, where such contributions by Sellers were or
would be a violation of applicable law.
3.17 EMPLOYEE BENEFITS. All employee benefit plans (whether or not
covered by ERISA), deferred compensation or executive compensation plans for
employees, directors or independent contractors, and all other employee or
independent contractor arrangements or programs that are maintained or
contributed to by the Company have (collectively, the "Company Plans") been
administered and operated in all material respects in compliance with their
terms, ERISA, if applicable, the Code and other applicable law. All Company
Plans that are intended to be qualified under Section 401(a) of the Code are so
qualified and a current favorable IRS determination letter exists for each such
plan and covers the amendments required by the Tax Reform Act of 1986. All
funded Company Plans are fully funded according to their terms and applicable
law. To the knowledge of the Sellers no prohibited transaction or breach of
fiduciary duty under ERISA has been committed by any fiduciary, disqualified
person or party in interest of any Company Plan. The Company has no liability,
contingent or otherwise, under Title IV of ERISA. All Company Plans are listed
on Schedule 3.17. Copies of all documents comprising Company Plans, all funding
vehicles and ancillary documents for such plans, all Forms 5500 (or other annual
reports) for the past two plan years for applicable Company Plans, all
administrative forms for Company Plans, and all IRS determination letters have
been made available to Buyer.
3.18 CAPITAL IMPROVEMENTS. Section 3.18 of Sellers' Disclosure
Memorandum describes all of the capital improvements or purchases or other
capital expenditures (as determined in accordance with GAAP) which the Company
has committed to or contracted for which have not been completed prior to the
date hereof and the cost and expense reasonably estimated to complete such work
and purchases.
3.19 COMPLETE AND ACCURATE DISCLOSURE. No representation or warranty
made to Buyer in this Agreement or in connection with this transaction contains
or will contain an untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make such representation or warranty not
misleading or necessary to enable Buyer to make a fully informed decision with
respect to its purchase of the Stock. All documents and information which have
been or will be delivered to Buyer or its representatives by or on behalf of the
Company are and will be true, correct and complete copies of the documents they
purport to represent.
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IV. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 CORPORATE EXISTENCE; GOOD STANDING; CAPITALIZATION. Buyer is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Texas.
4.2 POWER AND AUTHORITY. Buyer has the requisite corporate power and
authority, and has been duly authorized, to enter into this Agreement and to
perform all of its obligations hereunder. Buyer represents and warrants to
Sellers that this Agreement has been duly executed and delivered by Buyer, and
constitutes a valid and binding obligation in accordance with its terms.
V. COVENANTS OF SELLERS
Sellers hereby covenant and agree as follows:
5.1 CONDUCT OF BUSINESS. Prior to the Closing Date, Sellers shall cause
the Company to operate the Business in the ordinary course and continue normal
capital expenditures and maintenance prior to the Closing Date, except (i) as
may be permitted by this Agreement or (ii) as necessary to consummate the
transactions contemplated hereby and previously disclosed in writing to and
approved by Buyer.
5.2 INVESTIGATION BY BUYER. Prior to the Closing Date, Sellers shall
(i) give Buyer and its authorized representatives and advisors access, at
reasonable times and on reasonable notice, to all items of Personal Property,
books and records, personnel, offices, and other facilities of the Company, (ii)
permit Buyer to make such inspections thereof as Buyer may reasonably require,
and (iii) cause its employees, and its advisors to furnish to Buyer and its
authorized representatives and advisors such financial and operating data and
other information with respect to the Business prepared in the ordinary course
of the Business as Buyer or its agent shall from time to time reasonably
request.
5.3 CLOSING CONDITIONS. Sellers will, to the extent within their
control, use their best efforts to cause the conditions set forth in Section 8.1
to be satisfied by the Closing Date.
5.4 CONFIDENTIALITY. From and after the date hereof, Sellers will, and
will cause the Company and their officers, employees, representatives,
consultants and advisors to, hold in confidence all confidential information in
the possession of Sellers or the Company, its affiliates or its financial
advisor concerning the Company. Sellers will not release or disclose any such
information to any person other than Buyer and its authorized representatives.
Notwithstanding the foregoing, the confidentiality obligations of this Section
shall not apply to information:
(a) which Sellers or the Company is compelled to disclose by
judicial or administrative process, or, in the reasonable opinion of
counsel, by other mandatory requirements of law;
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(b) which can be shown to have been generally available to the
public other than as a result of a breach of this Section; or
(c) which can be shown to have been provided to Sellers or the
Company by a third party who obtained such information other than as a
result of a breach of a confidential relationship.
5.5 PUBLIC ANNOUNCEMENT. Sellers and Buyer will cooperate in the public
announcement of the transactions contemplated by this Agreement, and, other than
as may be required by applicable law, no such announcement will be made by
either party without the consent of the other party, which consent shall not be
unreasonably withheld.
5.6 NO SHOPPING. From and after the date hereof through the Closing or
the termination of this Agreement, whichever is the first to occur, neither
Sellers nor the Company shall (and Sellers and the Company shall cause their
respective affiliates, officers, directors, employees, representatives and
agents not to) directly or indirectly, solicit, initiate or participate in
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Buyer or
an affiliate or an associate of Buyer) concerning, or enter into any agreement
providing for, any merger, sale of material assets, sale of stock or similar
transactions involving the Company, the Stock or the Assets.
5.7 FURTHER ASSURANCES. Sellers will use their best efforts to
implement the provisions of this Agreement, and for such purpose Sellers, at the
request of Buyer, at or after the Closing Date, will, without further
consideration, promptly execute and deliver, or cause to be executed and
delivered, to Buyer such deeds, assignments, bills of sale, consents, documents
evidencing title and other instruments in addition to those required by this
Agreement, in form and substance satisfactory to Buyer, as Buyer may reasonably
deem necessary or desirable to implement any provision of this Agreement.
5.8 INSURANCE. Sellers shall cause and the Company shall continue to
maintain insurance through the Closing Date with financially sound and reputable
insurers unaffiliated with Sellers in such amounts and against such risks as are
adequate in the judgment of Sellers to protect the Assets and the Business.
5.9 NONCOMPETITION AGREEMENT. At the Closing, Sellers will enter into a
noncompetition agreement in the form attached hereto as Exhibit 5.9 (the
"Noncompetition Agreement").
5.10 INVESTMENT LETTER. At the Closing, each Seller that is receiving
shares of Packaged Ice, Inc. common stock shall execute and deliver to Buyer the
investment letter in the form attached hereto as Exhibit 5.10 (the "Investment
Letter").
5.11 ESCROW AGREEMENT. At the Closing, Sellers shall execute and
deliver to Buyer the Escrow Agreement.
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5.12 TERMINATION OF PROFIT SHARING AND MONEY PURCHASE PENSION PLANS.
Prior to the Closing, the Profit Sharing and Money Purchase Pension Plans will
be terminated by resolution of the board of directors of the Company and amended
as appropriate to effect such termination. It is understood and agreed that
Profit Sharing and Money Purchase Pension Plans will be terminated and wound up
in accordance with their respective terms and applicable law.
In the event that as of the Closing Date there are additional sums that
have accrued to the Company Plans but such amounts have not been paid, then
Sellers shall remain jointly and severally liable for such amounts and shall
reimburse the Company for any amounts that the Company is required to make in
this regard.
Sellers hereby covenant that they will take all necessary actions to
file the appropriate requests with the Internal Revenue Service to obtain a
favorable determination letters with respect to the termination of the Company
Plans and will bear all costs associated with such favorable determination.
VI. COVENANTS OF BUYER
6.1 CLOSING CONDITIONS. Buyer will, to the extent within its control,
use its best efforts to cause the conditions set forth in Section 8.2 to be
satisfied by the Closing Date.
6.2 ANCILLARY AGREEMENTS. At the Closing, Buyer will enter into the
Noncompetition Agreement and the Escrow Agreement.
6.3 COMPANY PLANS. Unless a compelling reason exists by virtue of the
fiduciary standards of ERISA or the applicable duties of the plan sponsor,
Xxxxxxx X. Xxxxxxxxxx shall not be removed as the trustee of any Company Plans
during the time period in which such Company Plans are in a winding up period
pursuant to termination. Unless a competing reason exists by virtue of the
fiduciary standards of ERISA or the applicable duties of the plan sponsor, the
Company will retain Xxxxxxx X. Xxxxxx, CPA at Seller's expense to handle the
accounting and administrative matters with respect to the termination of the
Company Plans.
VII. CLOSING
7.1 TIME AND PLACE. The consummation of the sale and purchase of the
Stock and the execution of the Noncompetition Agreement (the "Closing") shall
take place at a mutually agreeable time and place on or before November 21,
1997. The date of the Closing shall herein be referred to as the "Closing Date."
7.2 SELLERS' OBLIGATIONS AT CLOSING. At the Closing, Sellers shall
execute, acknowledge (where appropriate) and deliver, or cause to be delivered,
to Buyer in form reasonably satisfactory to Buyer:
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(a) Stock certificates representing the Stock, duly endorsed
for transfer or accompanied by stock powers duly executed in blank, and
any other documents that are necessary to transfer to Buyer good and
marketable title to the Stock;
(b) The written approvals, consents and certificates referred
to in Section 3.2 of Sellers' Disclosure Memorandum.
(c) The opinion of counsel referred to in Section 8.1(f).
(d) Letters of resignation of the officers and directors of
the Company.
(e) All other documents and certificates required to be
delivered to Buyer pursuant to this Agreement, including without
limitation, the Noncompetition Agreement and the Escrow Agreement, the
Investment Letter, and the Undertaking Agreement.
From time to time following Closing, Sellers will execute and
deliver such instruments and take such action as Buyer may reasonably request in
order to more effectively transfer, convey, assign and deliver to Buyer, and to
put Buyer in actual possession and operating control of, the Company and its
Assets.
7.3 BUYER'S OBLIGATIONS AT CLOSING. At the Closing, Buyer will:
(a) pay the cash portion of the Purchase Price in accordance
with Section 2.2;
(b) deliver to Xxxxxxx X. Xxxxxxxxxx certificates evidencing
0 shares of Packaged Ice, Inc. common stock;
(c) deliver $100,000 to the Escrow Agent;
(d) deliver to Sellers executed counterparts of the
Noncompetition Agreement and the Escrow Agreement.
VIII. CONDITIONS TO CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
complete the transactions contemplated at the Closing shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) Performance. Each agreement and obligation of Sellers to
be performed or complied with on or before the Closing Date shall have
been duly performed or complied with in all material respects and
Sellers shall deliver to Buyer a certificate signed by an officer of
Sellers to such effect.
(b) Representations and Warranties True; No Material Adverse
Change. The representations and warranties of Sellers contained herein
shall be true and correct on the
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Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date, and
since the date hereof there shall have occurred no material adverse
change in the Business, and Sellers shall deliver to Buyer a
certificate signed by an officer of Sellers to such effect.
(c) No Violation of Statutes, Orders, etc. There shall not be
in effect any decree or judgment enjoining Buyer from consummating the
transactions contemplated hereby.
(d) Third Party Creditors. All third party creditors of the
Business will be paid in full, and all Encumbrances against the Stock
and Assets, including all Owned Real Property, will be paid or
discharged.
(e) Capital Leases. All Capital Leases shall be paid in full
and the personal property subject thereto shall be conveyed to the
Company free and clear of Encumbrances.
(f) Opinion of Counsel for Sellers Buyer shall have received
the opinion of Clark, Partington, Xxxx, Xxxxx, Bond, Xxxxxxxxxx & Xxxxx
dated as of the Closing Date, in form and substance satisfactory to
Buyer and Buyer's counsel, subject to reasonable qualifications and
exceptions, as set forth on Exhibit 8.1(f).
(g) Due Diligence Inspection. Buyer's obligation to consummate
this Agreement is expressly conditioned on Buyer's satisfaction of its
due diligence investigation of the Company and Sellers.
8.2 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligation of Sellers to
complete the transactions contemplated at the Closing shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) Performance. Each agreement and obligation of Buyer to be
performed or complied with on or before the Closing Date shall have
been duly performed or complied with in all material respects and Buyer
shall deliver to Sellers a certificate signed by an officer of Buyer to
such effect.
(b) Representations and Warranties True; No Material Adverse
Change. The representations and warranties of Buyer contained herein
shall be true and correct on the Closing Date with the same force and
effect as though such representations and covenants had been made on
the Closing Date, and Buyer shall deliver to Sellers a certificate
signed by an officer of Buyer to such effect.
(c) No Violation of Statutes, Orders, etc. There shall not be
in effect any decree or judgment enjoining Sellers from consummating
the transactions contemplated hereby.
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IX. INDEMNIFICATION
9.1 INDEMNIFICATION OF BUYER BY SELLERS. Sellers agree to indemnify,
defend and hold harmless Buyer and Buyer's employees, agents, heirs, legal
representatives, and assigns from and against any and all claims, suits, losses,
expenses (legal, accounting, investigation and otherwise), damages and
liabilities, including, without limitation, tax liabilities (hereinafter,
collectively "Damages"), arising out of or relating to (i) any liability or
obligation of the Company assumed by Sellers at the Closing Date hereunder
pursuant to the Undertaking Agreement, (ii) any inaccuracy of any representation
or warranty set forth in this Agreement or the breach of any covenant made by
Sellers in or pursuant to this Agreement. Notwithstanding anything in this
Section 9.1 to the contrary, prior to any amounts being paid by Sellers to Buyer
under this Section 9.1 the aggregate amount of the indemnified amounts must
first exceed $25,000 exclusive of any indemnified amounts relating to any taxes
or any questions of title to the Assets.
9.2 INDEMNIFICATION OF SELLERS BY BUYER. Buyer agrees to indemnify,
defend and hold harmless Sellers from and against only those Damages arising out
of or relating to any inaccuracy or any representation or warranty of Buyer set
forth in this Agreement or the breach of any covenant made by Buyer in or
pursuant to this Agreement. Notwithstanding anything in this Section 9.2 to the
contrary, Prior to any amounts being paid by Buyer to Sellers under this Section
9.2 the aggregate amount of the indemnified amounts must first exceed $25,000
before Buyer shall become liable to Sellers under this Section.
9.3 CLAIMS FOR INDEMNIFICATION. Whenever any claim arises for
indemnification hereunder, the indemnified party (hereafter the "Indemnified
Party") shall notify the indemnifying party (hereafter the "Indemnifying Party")
in writing by registered or certified mail promptly after the Indemnified Party
has actual knowledge of the facts constituting the basis for such claim (the
"Notice of Claim"). Such notice shall specify all material facts known to the
Indemnified Party giving rise to such indemnification right, and to the extent
practicable, the amount or an estimate of the amount of the liability arising
therefrom. The failure of any Indemnified Party to promptly notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligation to
indemnify in respect to such action and shall not relieve the Indemnifying Party
of any other liability which they may have to any Indemnified Party unless such
failure to notify the Indemnifying Party prejudices the rights of the
Indemnifying Party. In addition to all other remedies provided hereunder or by
law, Buyer shall specifically have the right to make a claim against the Escrow
Amount for any of Buyer's Damages. All claims for Damages, other than those
liabilities of Sellers that are assumed by Sellers under the Undertaking
Agreement, must be made no later than two years from the date hereof.
9.4 RIGHT TO DEFEND. If the facts giving rise to any such claim for
indemnification involve any actual or threatened claim or demand by any third
party against the Indemnified Party, the Indemnifying Party shall be entitled
(without prejudice to the right of the Indemnified Party to participate in the
defense of such claim or demand at its expense through counsel of its own
choosing) to assume the defense of such claim or demand in the name of the
Indemnified Party at the Indemnifying Party's expense and through counsel of its
own choosing, which counsel shall be
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reasonably satisfactory to the Indemnified Party, if it gives written notice to
the Indemnified Party within forty-five (45) days after receipt of the Notice of
Claim that the Indemnifying Party intends to assume the defense of such claim
and acknowledges its liability to indemnify the Indemnified Party for any losses
resulting from such claim; provided, however, that if the Indemnifying Party
does not elect to assume the defense of any claim, then (a) the Indemnifying
Party shall have the right to participate in the defense of such claim or demand
at its expense through counsel of its own choosing, provided the Indemnified
Party shall control the defense of such claim, (b) the Indemnified Party may
settle any such claim without the consent of the Indemnifying Party, however,
the Indemnifying Party may not settle any such claim without the prior written
consent of the Indemnified Party; and (c) Section 9.5 hereof shall be
inapplicable. Whether or not the Indemnifying Party does choose to so defend
such claim, the parties hereto shall cooperate in the defense thereof and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be requested in
connection therewith. To the extent Sellers are the Indemnified Parties for any
actual or threatened claim or demand by any third party, Sellers shall have the
right to control the prosecution of any counterclaim or right related to such a
claim or demand, provided that Sellers agree to reasonably cooperate with Buyer
with respect to the prosecution of such counterclaim or right.
9.5 SETTLEMENT. Except as provided in Section 9.4, (i) the Indemnified
Party shall make no settlement of any claim that would give rise to liability on
the part of the Indemnifying Party under an indemnity contained in this Article
IX without the written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld and (ii) the Indemnifying Party can settle without
the consent of the Indemnified Party only if the settlement involves only the
payment of money for which the Indemnifying Party will be fully liable. No other
settlement of any claim may be made without the consent of both the Indemnified
Party and the Indemnifying Party, which consent shall not be unreasonably
withheld.
9.6 EFFECT OF TERMINATION. Without limiting any other rights the
parties may have, the parties specifically agree that the covenants contained in
this Article will continue to be enforceable following termination of this
Agreement.
X. TERMINATION
10.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date by any of the
following:
(a) Mutual Consent. By mutual written consent of Sellers and
Buyer;
(b) Misrepresentation or Breach. By Sellers or Buyer, if there
has been a material misrepresentation or a material breach of a
warranty or covenant herein or in any agreement required to be
delivered pursuant hereto on the part of the other party hereto;
(c) Failure of Condition to Buyer's Obligations. By Buyer, if
all of the conditions set forth in Section 8.1 have not been satisfied;
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(d) Failure of Condition to Sellers' Obligations. By Sellers,
if all of the conditions set forth in Section 8.2 have not been
satisfied;
(e) Court Order. By Sellers or Buyer if consummation of the
transactions contemplated hereby shall violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction;
(f) Material Adverse Change. By Buyer if any event has
occurred after the date hereof which is, or will result in a material
adverse change in the prospects, business or condition of the Assets.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 10.1(a), all further obligations of Sellers and Buyer under this
Agreement shall terminate without further liability of Sellers or Buyer. If
Sellers fail to consummate the transactions contemplated on its part to occur on
the scheduled Closing Date, in circumstances whereby all conditions of the
Closing set forth in Section 8.2 have been satisfied in all material respects or
waived, Buyer's sole remedy shall be to (i) to require Sellers to consummate and
specifically perform the transactions contemplated hereby, in accordance with
the terms of this Agreement, and to obtain from Sellers any attorney fees
incurred in connection with procuring such specific performance or (ii)
terminate this Agreement and obtain reimbursement of its out-of-pocket expenses
incurred directly in connection with the negotiation, preparation and
performance of this Agreement. If Buyer fails to consummate the transactions
contemplated on its part to occur on the Closing Date, in circumstances whereby
all conditions of the Closing set forth in Section 8.1 have been satisfied in
all material respects or waived, Sellers' sole remedy shall be to (i) to require
Buyer to consummate and specifically perform the transactions contemplated
hereby, in accordance with the terms of this Agreement, and to obtain from Buyer
any attorney fees incurred in connection with procuring such specific
performance or (ii) terminate this Agreement and obtain reimbursement of its
out-of-pocket expenses incurred directly in connection with the negotiation,
preparation and performance of this Agreement.
10.3 RIGHT TO PROCEED. Notwithstanding anything in this Agreement to
the contrary, if any condition specified in Section 8.1 or Section 8.2 has not
been satisfied, Sellers or Buyer, in addition to any other rights which may be
available to it, shall have the right to waive any such condition that is for
its benefit and to require the other party hereto to proceed with the Closing.
XI. TAX MATTERS.
11.1. TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Federal Tax" means any Tax imposed under Subtitle A of the Code.
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"Final Determination" shall mean (i) with respect to Federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870AD and, with respect to Taxes other than
Federal Taxes, any final determination of liability in respect of a Tax that,
under applicable law, is not subject to further appeal, review or modification
through proceedings or otherwise (including the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns or
appeals from adverse determinations) or (ii) the payment of Tax by the Company
or Sellers, whichever are responsible for payment of such Tax under applicable
law, with respect to any item disallowed or adjusted by a Taxing Authority,
provided that such responsible party determines that no action should be taken
to recoup such payment and the other party agrees.
"Post-Closing Tax Period" means any Tax period (or portion thereof)
beginning on or after the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts (including gross receipts tax in respect of any franchise
operation), royalty, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding on amounts paid to or by the Company, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other governmental fee,
assessment or charge of any kind whatsoever, together with any interest,
penalty, addition to tax or additional amount imposed by any governmental
authority (a "Taxing Authority") responsible for the imposition of any such tax
(domestic or foreign).
"Tax Indemnification Period", means with respect to any Tax, any
Pre-Closing Tax Period of the Company.
11.2 FILING OF SHORT PERIOD RETURNS. Buyer and Sellers shall treat and
cause the Company to treat the day before to the Closing Date as the last day of
the taxable period in which the Company is an S corporation, as defined under
the Code. All Tax returns of the Company, which are required and/or permitted by
the authorized taxing authorities (herein collectively referred to as the "S
Short Year Returns"), shall be filed accordingly. In accordance with Section
1362(e)(6)(D) of the Code and related regulations, the books of the Company
shall be closed effective the Closing Date. Sellers will cause their accounting
firm to prepare, at Sellers' expense, the S Short Year Returns.
11.3. COVENANTS.
(a) Without the prior written consent of Buyer, Sellers shall
not cause the Company to make or change any tax election, change any annual tax
accounting period, adopt or change any method of tax accounting, file any
amended Return, enter into any closing agreement, settle any Tax claim or
assessment, surrender any right to claim a Tax refund, consent to any extension
or waiver of the limitations period applicable to any Tax claim or assessment or
take or
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omit to take any other action, if any such action or omission would have the
effect of increasing the Tax liability of the Company or Buyer.
(b) All Returns not required to be filed on or before the date
hereof (including any applicable extensions) will be filed when due in
accordance with all applicable laws.
(c) All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees incurred in connection
with this Agreement (including any real property transfer Tax and any similar
Tax) shall be accrued by the Company on the Closing Date Balance Sheet and be
paid by the Sellers, in accordance with this Agreement, when due (including any
applicable extensions), and the Company will, at Sellers' expense, file all
necessary Tax returns and other documentation with respect to all such Taxes and
fees.
11.4. COOPERATION ON TAX MATTERS.
(a) Buyer and Sellers shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
preparation and filing of any Tax return, statement, report or form (including
any report required pursuant to Section 6043 of the Code and all Treasury
Regulations promulgated thereunder), any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention and (upon
the other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding. Buyer
shall cause the Company to: (i) to retain all books and records with respect to
Tax matters pertinent to the Company relating to any Pre-Closing Tax Period, and
to abide by all record retention requirements of any Taxing Authority or any
record retention agreements entered into with any Taxing Authority, and (ii) to
give Sellers reasonable written notice prior to destroying or discarding any
such books and records and, if Sellers so request, Buyer shall allow Sellers to
take possession of such books and records.
(b) Buyer and Sellers further agree, upon request, to use all
reasonable efforts to obtain any certificate or other document from any
governmental authority or any other person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
11.5. TAX INDEMNIFICATION. Sellers hereby jointly and severally
indemnify Buyer against and agree to hold Buyer harmless from any loss,
liability or expense attributable to (i) any Tax with respect to income
(including, to the extent based on income, state franchise Taxes), transfer Tax,
employment or withholding Tax related to employee tips income (actual and
allocated) and related reporting requirements, and gross receipts or royalty Tax
in respect of any franchise operation and any other Tax of the Company related
to the Tax Indemnification Period, (ii) any Tax resulting from a breach of the
provisions of Section 11.3, and (iii) any liabilities, costs, expenses
(including, without limitation, reasonable expenses of investigation and
attorneys' fees and expenses), losses, damages, assessments, settlements or
judgments arising out of or incident to the imposition, assessment or assertion
of any Tax described in (i) or (ii), including those incurred in the contest in
good faith in appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax, and any liability as transferee or successor (the sum
of (i), (ii), and (iii) being referred to herein
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as a "Loss"). Buyer shall give Sellers ten days notice of any claim of Loss, and
Sellers shall have the opportunity to defend Buyer in accordance with Section
9.4 hereof.
Buyer shall indemnify Sellers for any Taxes that accrue
against the Company as a result of any action or election made by Buyer that
occur after the Closing Date.
11.6 PURCHASE PRICE ADJUSTMENT. Any amount paid by Sellers, Buyer or
the Company under Section 11.5 will be treated as an adjustment to the relevant
purchase price for all Tax purposes unless a Final Determination causes any such
amount not to constitute an adjustment to the relevant purchase price. In the
event of such a Final Determination, Buyer, the Company or Sellers, as the case
may be, shall pay an amount that reflects the hypothetical Tax consequences of
the receipt or accrual of such payment, using the maximum statutory rate (or
rates, in the case of an item that affects more than one Tax) applicable to the
recipient of such payment for the relevant year, reflecting for example, the
effect of deductions available for interest paid or accrued and for Taxes such
as state and local income Taxes. Any payment required to be made by Buyer or
Sellers under this Agreement that is not made when due shall bear interest at
the rate per annum determined, from time to time, under the provision of Section
6621(a)(2) of the Code for each day until paid.
11.7. SURVIVAL. The provisions of this Article XI with respect to
income (including to the extent based on income, state franchise Taxes),
transfer Taxes, employment or withholding Taxes and related reporting
requirements, shall survive for the full period of all applicable statutes of
limitations (giving effect to any waiver, mitigation or extension thereof).
XII. MISCELLANEOUS
12.1 EXPENSES. Legal, accounting and other costs and expenses incurred
in connection with this transaction shall be paid by the party incurring such
expenses.
12.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained in or made in connection with this Agreement shall
survive the Closing.
12.3 INUREMENT; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and, if properly assigned, assigns. This
Agreement may not be assigned by any party without the written consent of the
other parties hereto.
12.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Schedules and
Exhibits hereto, and the related agreements referred to herein embody the entire
agreement of the parties hereto, and supersede all prior agreements and
understandings, with respect to the subject matter hereof.
12.5 SEVERABILITY. Any provision of this Agreement which is invalid,
unenforceable or illegal in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such invalidity, unenforceability or
illegality without affecting the remaining provisions hereof and
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without affecting the validity, enforceability or legality of such provision in
any other jurisdiction.
12.6 INCORPORATION OF EXHIBITS AND SCHEDULES. All Exhibits and
Schedules referenced in this Agreement, and any statements contained therein or
in any certificate or instrument delivered pursuant hereto, constitute an
integral part of this Agreement and shall be deemed made in this Agreement as if
set forth in full herein.
12.7 CAPTIONS AND HEADINGS; USE OF TERM "PERSON". Captions and headings
used herein are for convenience only, do not constitute a part of this
Agreement, and shall not be considered in construing this Agreement. Unless the
context otherwise requires, all article, section or subsection cross-references
are to articles, sections and subsections within this Agreement. As used herein,
the term "person" shall mean any corporation, limited liability company,
partnership, venture, proprietorship, trust, benefit plan or other entity or
enterprise.
12.8 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
12.9 NOTICES. All notices of requests, demands or other communications
required or to be given hereunder shall be delivered by hand, overnight courier,
facsimile transmission (with facsimile generated confirmation), or by United
States Mail, postage prepaid, by registered or certified mail (return receipt
requested), to the addressed indicated below and shall be deemed given when
received by the addressee thereof:
to Sellers: Xxxxxxx X. Xxxxxxxxxx, Xx.
--------------------------------
--------------------------------
Xxxx Xxxxxx Xxxxxxxxx, Xx.
--------------------------------
--------------------------------
to Buyer: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx, Chief Executive Officer
with a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxxx, P.C.
or such other address or addresses as may be expressly designated by
either party by notice given in accordance with the foregoing provision.
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12.10 AGENTS OR BROKERS. Sellers and Buyer mutually represent and agree
with each other that no agents or brokers have been utilized in the solicitation
or negotiation of the sale of the Business and no fees, commissions or expenses
of any type shall be due or payable out of the proceeds of the purchase price by
either party to this Agreement.
12.11 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, including without limitation any
alleged violations of securities laws, shall be settled by binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association in Pensacola, Florida, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof, and shall
not be appealable. Judicial proceedings may be commenced only to enforce this
arbitration agreement or to enforce the results of arbitration; provided that
such prohibition shall not apply in the event that a court ordered injunction is
an appropriate remedy for a breach of this Agreement.
12.12 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.
(STOCK PURCHASE AGREEMENT SIGNATURE PAGE FOLLOWS)
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[STOCK PURCHASE AGREEMENT SIGNATURE PAGE]
Executed on the date first written above.
PACKAGED ICE, INC.
By: /s/ XXXXX X. STUDENT
------------------------------------------
Print Name: XXXXX X. STUDENT
-----------------------------
Print Title: C.E.O.
----------------------------
SELLERS:
/s/ XXXXXXX X. XXXXXXXXXX, XX.
---------------------------------------------
XXXXXXX X. XXXXXXXXXX, XX.
/s/ XXXX XXXXXX XXXXXXXXX, XX.
---------------------------------------------
XXXX XXXXXX XXXXXXXXX, XX.
