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EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 2nd day of December, 1997, between Packaged Ice, Inc.,
a Texas corporation (the "Company"), and Xxxxx Xxxxxxxxx, a resident of the
State of New York (the "Investor").
W I T N E S S E T H:
WHEREAS to obtain additional equity financing, the Company desires to
issue and sell 15,000 shares of its 10% Exchangeable Preferred Stock, par value
$.01 per share ("10% Preferred Stock"), 6 shares of its Series C Preferred
Stock, par value $.01 per share ("Series C Preferred Stock"), and warrants to
purchase 115,385 shares of common stock, par value $.01 per share ("Common
Stock"), at an exercise price of $13.00 per share (the "Warrants") to the
Investor, and the Investor desires to purchase such 10% Preferred Stock, Series
C Preferred Stock and Warrants at the price and 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 Issuance and Sale of Securities. At the Closing (as
defined below), 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 the Investor, and the Investor agrees to purchase
from the Company, 15,000 shares of the 10% Preferred Stock, 6 shares of the
Series C Preferred Stock and the Warrants for an aggregate purchase price of
$1,500,000. The 10% Preferred Stock, the Series C Preferred Stock and the
Warrants are sometimes collectively hereinafter referred to as the
"Securities."
1.2 Delivery and Payment. At the Closing, the Company
will execute and deliver to the Investor certificates evidencing the 15,000
shares of the 10% Preferred Stock and the 6 shares of Series C Preferred Stock
purchased
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hereunder and the Warrants in the form of Exhibit A attached hereto, against
payment, in immediately available funds, by the Investor to the Company of
$1,500,000.
1.3 Closing. The consummation of the issuance, sale and
purchase of the Securities shall be effected (the "Closing") at the offices of
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 300 Convent, 0000 XxxxxxxXxxx Xxxxx,
Xxx Xxxxxxx, Xxxxx 00000 commencing at 10:00 a.m. on December 2, 1997 ("Closing
Date") or at such other time or place as the Company and the Investor shall
mutually agree.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor 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, each as amended and restated as of the date hereof,
of the Company and each of its subsidiaries delivered to the Investor prior to
the execution of this Agreement are true and complete copies of the duly and
legally adopted Articles of Incorporation and bylaws, each as amended and
restated as of the date hereof, 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 4,127,750 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"), and all of the authorized shares of Series A
Preferred Stock 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
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"Series B Preferred Stock"), of which 124,831 shares are issued and
outstanding. The Company's Board of Directors has authorized the designation
of 500,000 shares of the preferred stock as the 10% Preferred Stock, of which
115,000 will be issued and outstanding upon the Closing. The Company's Board
of Directors has authorized the designation of 100 shares of the preferred
stock as the Series C Preferred Stock, of which 46 of the authorized shares of
Series C Preferred Stock will be issued and outstanding upon the Closing.
Except as set forth on Section 2.2 of the Disclosure Schedule, attached hereto
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 subsidiaries, 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 an exemption or exemptions from the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
(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 capital stock of the Company have been duly authorized, are validly
issued, fully paid and non-assessable. Upon issuance and delivery to the
Investor of the 15,000 shares of the 10% Preferred Stock and the 6 shares of
Series C Preferred Stock against payment of the purchase price therefor
pursuant to this Agreement, such shares will be validly issued, fully paid and
non-assessable, and free and clear of all claims, liens, pledges, options,
charges, security interests, mortgages, deeds of trust, encumbrances or rights
of any third party of any nature whatsoever. The issuance and sale of the 10%
Preferred Stock and the Series C Preferred Stock pursuant hereto will not give
rise to any preemptive rights or rights of first refusal and will not violate
any laws to which the Company or any of its assets are subject. The shares of
Common Stock issuable upon exercise of the Warrants have been reserved for
issuance, and when issued upon exercise, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable.
2.4 Authorization. This Agreement, the Warrants in the
form attached hereto as Exhibit A, the Registration Rights Agreement, dated
December 2, 1997,
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among the Company, the Investor and Culligan Water Technologies, Inc. (the
"Registration Rights Agreement") in the form attached hereto as Exhibit B, the
Preferred Stock Series Designation Certificate of Resolution of the Company,
dated December 2, 1997, providing for the issuance of the 10% Preferred
Stock (the "10% Preferred Stock Certificate of Resolution") in the form
attached hereto as Exhibit C, the Preferred Stock Series Designation
Certificate of Resolution of the Company, dated December 2, 1997, providing
for the issuance of the Series C Preferred Stock (the "Series C Preferred Stock
Certificate of Resolution" and, together with the 10% Preferred Stock
Certificate of Resolution, the "Certificates of Resolution") in the form
attached hereto as Exhibit D, 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 to perform its obligations hereunder.
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 furnished to the Investor the
financial statements described in Section 2.6 of the Disclosure
Schedule (collectively referred to herein as the "Financial
Statements"). 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
unaudited interim financial statements the Company's normal internal
accounting practices and year end adjustments.
(b) Except as set forth on Section 2.6 of the
Disclosure Schedule, since September 30, 1997, no event or condition
has occurred, and no event
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or condition is to the knowledge of the Company's executive 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.
2.7 Tax Returns. Each of the Company and its
subsidiaries has timely filed all Tax Returns (as defined below), required by
law and has paid all Taxes required to be paid, together with any penalties and
interest. The 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 its 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 34L(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 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
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of all mortgages, liens, claims and encumbrances except liens that do not
materially affect the operation of the business of the Company.
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
that 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 (1) of ERISA or a
tax imposed 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 (the "PBGC") (other than for the payment of current
premiums that 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
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"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 that 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 that 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 that 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(l) 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
Borrower, 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 ERISA.
(i) None 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.
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2.10 No Breach, Etc. 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 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.
Except as contemplated by Sections 5.8 and 5.10 hereof, neither the issuance
and sale of the Securities, the execution, delivery and performance by the
Company of this Agreement, the Warrants, the Registration Rights Agreement, the
License Agreement or the Certificates of Resolution, nor the consummation by
the Company of the transactions contemplated hereby or thereby requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official, or any other third party.
2.11 Litigation. 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, that if determined
adversely to the Company or its subsidiaries may reasonably be expected to have
a material adverse effect on the present or future operations or financial
condition of the Company.
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,
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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
been and are insured by financially sound and reputable insurers unaffiliated
with the Company in such amounts and against such risks as are sufficient for
compliance with law and as are adequate in the judgment of the Company to
protect the properties and businesses of the Company.
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 or applicable state securities laws.
2.16 Finders' Fees. 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, except the fee to Xxxxx X. Xxxxxx
and Xxxxxxxxx & Company, Inc., which shall each be a liability of the Company
and not of the Investor.
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 therewith, (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
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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 radius) (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 subsidiaries 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.
(c) The Disclosure Schedule identifies each
patent or registration that 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 that 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 that 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;
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(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 that challenges the legality,
validity, enforceability, use, or ownership of the item; and
(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 Investor
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 that 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;
(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,
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and foreign governments (and all agencies thereof) that 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, industrial, 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 to so 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 that 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 that does business with the
Company or its subsidiaries or (b) in any property, asset or right that 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 has received approval by the
National Sanitation Foundation. The ice making equipment manufactured by
Hoshizaki America, Inc. has received approval of the National Sanitation
Foundation.
2.22 Disclosure. The Company has not knowingly withheld
from the Investor any material facts relating to the assets, business,
operations, financial condition
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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 not misleading.
2.23 SEC Documents. The Company has provided to the
Investor its Registration Statement on Form S-4 (Registration No. 333-29357)
(the "Registration Statement"), which Registration Statement has been declared
effective by the U.S. Securities and Exchange Commission (the "Commission").
As of the date hereof, and as supplemented by the Disclosure Schedule, the
Registration Statement does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of the
Company included in the Registration Statement have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (except in the
case of interim period financial information for normal year-end adjustments).
The Company has included in the Registration Statement all material agreements,
contracts and other documents that it reasonably believes are required to be
filed as exhibits to the Registration Statement. As of the date hereof, and as
supplemented by the Disclosure Schedule, to the Company's knowledge, the
Company and its subsidiaries have in all material respects substantially
performed all obligations required to be performed by them and are not in
default in any material respect under any of such agreements, contracts or
other documents to which any of them is a party or by which any of them is
otherwise bound. As of the date hereof, and as supplemented by the Disclosure
Schedule, to the Company's knowledge, 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 that with notice or lapse of time or both, would constitute an event
of default thereunder. As of the date hereof, and as supplemented by the
Disclosure Schedule, to the Company's knowledge, 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.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company, as
follows:
3.1 Authorization. This Agreement has been duly executed
and delivered by the 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' right generally. The
Investor 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 its 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 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 LAWS 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.
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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 the
Investor has been permitted to have access to all information that it 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 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 the 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
its entire investment in the Securities.
3.6 Finder's 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.
ARTICLE 4
COVENANTS OF THE COMPANY
The Company covenants and agrees that, unless a written waiver
from the holders of a majority of the outstanding shares of 10% Preferred Stock
is first obtained, from and after the Closing Date, and so long as any shares
of the Series C Preferred Stock, the 10% Preferred Stock or the Exchange Notes
(as defined in the 10% Preferred Stock Certificate of Designation) are
outstanding, the Company will fully comply with each of the covenants set forth
in Sections 4.1 through 4.13 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
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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 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 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 the Investor:
(a) as soon as practicable, but in any event
within 30 days after the closing 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 of 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 90 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;
(c) 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;
(d) promptly after transmission thereof, copies
of all reports, proxy statements, registration statements and
notifications filed by it with the
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Commission pursuant to any act administered by the Commission or
furnished to shareholders of the Company or to any national securities
exchange;
(e) 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 Investor may reasonably request;
(f) promptly following the issuance of any
additional shares of Common Stock or 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
(g) 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; that 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 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 the Investor.
4.4 Inspection. The Company will permit the Investor, or
any designees 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.
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4.5 Directors' and Shareholders' Meetings. The Company
agrees, as a general practice, to hold a meeting of its Board of Directors at
least once every three months, and during each year to hold its annual meeting
of shareholders within 30 days of delivery of the audited financial statements.
4.6 Use of Proceeds. The Company will use the proceeds
of the investment made by the Investor to fund acquisitions and for general
corporate purposes.
4.7 Additional Warrants. In the event that the Company
makes any dividend payments on the 10% Preferred Stock in the form of
Additional Shares of 10% Preferred Stock (as defined in the 10% Preferred Stock
Certificate of Resolution) rather than in cash, the Company shall, on or prior
to the applicable dividend payment date, issue to the Investor additional
warrants to purchase a number of shares of Common Stock (including fractional
shares) in an amount equal to the liquidation preference of such Additional
Shares of 10% Preferred Stock divided by the per share exercise price of the
Warrants in effect immediately prior to such dividend payment date.
4.8 Change of Control, Etc. Upon any event, including
but not limited to the occurrence of a Change of Control or Asset Sale (each as
defined in Section 1.01 of each of the Indentures (as defined in the 10%
Preferred Stock Certificate of Resolution)), requiring the making of an offer
to repurchase the 12% Senior Notes of the Company, then the provisions
governing such event, including but not limited to the Change in Control Offer
(set forth in Section 4.16 of each of the Indentures) and the Asset Proceeds
Offer (set forth in Section 4.17 of each of the Indentures), shall apply to the
10% Preferred Stock and the Company shall make an offer to repurchase the
outstanding shares of 10% Preferred Stock at an offer price equal to 100% of
the aggregate liquidation preference thereof plus accrued and unpaid dividends
thereon to the date of purchase, and within the time periods and on the other
terms and conditions provided for in the Indentures. In the event of any
amendment, modification, supplement or termination of the Indentures,
notwithstanding such amendment, modification, supplement or termination, this
Section 4.8 shall continue to apply as an obligation of the Company.
4.9 Other Restrictions. Except as contemplated by the
Certificates of Resolution, 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
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Common Stock, and other than those payable on the 10% Preferred Stock
as provided in Section 4.10 hereof, 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:
(i) in the case of an Investment that 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 the traditional methods of
manufacturing and distributing ice) or to be used in or in
connection with the Company's business as currently conducted,
the
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Company and its subsidiaries may make such Investment to the
extent that the total expenditure for such Investment does not
exceed $500,000; and
(ii) in the case of any other Investment,
the Company and its subsidiaries may make such Investment only
to the extent permitted by the Indentures, as such agreements
are in effect on the date hereof, without giving effect to any
amendment, modification, or supplement thereto after the date
hereof;
(g) mortgage, pledge, or create a security
interest in all or substantially all of the Company's assets as
collateral except that the Company has pledged substantially all of
its assets as security for its $20,000,000 senior credit facility that
expires September, 2003, from Frost National Bank and Zions National
Bank; and
(h) become a party to a merger, consolidation or
reorganization with any other Person as a result of which at least 51%
of the voting power of the Company will not be held, directly or
indirectly, by persons or entities who held at least 51% of the voting
power before such merger, consolidation or reorganization, or sell
or otherwise dispose of, or enter into any agreement to sell or
otherwise dispose of, all or substantially all of the assets of the
Company to any other Person. For purposes hereof, "Person" shall mean
any individual, corporation, partnership, venture or proprietorship or
other enterprise or entity.
4.10 Compliance with Indentures. The Company will comply
with all of the covenants contained in each of the Indentures, in each case as
in effect on the date hereof and without giving effect to any amendment,
modification, supplement or termination thereof. Notwithstanding the
foregoing, (a) this Section 4.10 shall not apply to Sections 4.04(c) and (d) of
each of the Indentures, (b) this Section 4.10 shall not apply to Section 4.03
of each of the Indentures to the extent that such Sections prohibit payments
related to the repurchase of the 10% Preferred Stock and payments of principal
on Subordinated Indebtedness (as defined in the Indentures) of the Company,
provided, that with respect to such payments of principal, no default or Event
of Default (as defined below) shall have occurred or be continuing at the time
of such payment or as a result thereof, (c) this Section 4.10 shall not apply
to Section 4.22 of each of the Indentures to the extent that such Sections
prohibit the payment of dividends on the 10% Preferred Stock, (d) the ratios of
"2.0 to 1.0" and "2.50 to 1.0" in Section 4.04 (b) of each of the Indentures
shall, for purposes of this Section 4.10, be deemed to be replaced with
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the lesser of (i) "1.75 to 1.0" and "2.25 to 1.0", respectively, and (ii) the
highest analogous ratio test or tests contained in any amendment, modification
or supplement to either of the Indentures or in any indenture, agreement or
other instrument governing indebtedness the proceeds of which are used to
refinance or replace indebtedness outstanding under the Indentures, (e) the
amount "$15,000,000" in clause (ix) of the definition of "Permitted
Indebtedness" in each of the Indentures shall, for purposes of this Section
4.10, be deemed to be replaced with "$45,000,000" until Qualified Refinancing
Debt (as defined below) is issued, after which time such amount shall, for
purposes of this Section 4.10, be deemed to be replaced with the lesser of (i)
$75,000,000 and (ii) the lowest analogous debt basket contained in any
indenture governing Qualified Refinancing Debt and (f) the Company may incur
Qualified Refinancing Debt. "Qualified Refinancing Debt" means indebtedness of
the Company that meets all of the following conditions: (i) the aggregate
principal amount thereof (or, if issued with original issued discount, the
aggregate gross issue price thereof) does not exceed $200 million, (ii) the
proceeds from the issuance thereof are used to refinance in full all
outstanding indebtedness under the Indentures (as currently in effect), (iii)
the interest rate thereon (or, if issued with original issue discount, the
yield to maturity thereof) shall not exceed 12.0% per annum, (iv) no obligation
in respect of such indebtedness (including, but not limited to, principal,
interest, premium or fees, costs or expenses associated therewith) is secured
by any Lien (as defined in the Indentures as in effect on the date hereof) on
any properties or assets of the Company or any of its subsidiaries, (v) such
indebtedness is not convertible or exchangeable into, exercisable for, or
issued with or accompanied by, directly or indirectly, any right to acquire
(including, but not limited to, rights, warrants or options) any capital stock
or other equity interest in the Company or any of its subsidiaries and (vi)
none of the restrictive covenants contained in the Indentures or other
instrument governing such indebtedness is more restrictive to the Company and
its subsidiaries than the restrictive covenants contained in the Indentures as
in effect on the date hereof.
4.11 Additional Preferred Stock Issuances. Except as set
forth in the 10% Preferred Stock Certificate of Resolution, the Company shall
not issue preferred stock that ranks senior to or on a parity with the 10%
Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding-up or dissolution of the Company, or that matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to April 15, 2005.
4.12 No Reissuance or Further Issuance of Series A
Preferred Stock and Series B Preferred Stock. The Company shall not reissue
shares of its Series A Preferred Stock and Series B Preferred Stock acquired or
redeemed by the Company
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or issue any authorized shares of the Series A Preferred Stock and Series B
Preferred Stock that have not been issued as of the date hereof.
ARTICLE 5
CONDITIONS TO THE INVESTOR'S OBLIGATION
The obligation of the 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
such 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 Investor 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 Stock Certificates. The Company shall have delivered
to the Investor stock certificates evidencing the 15,000 shares of 10%
Preferred Stock and the 6 shares of Series C Preferred Stock purchased
hereunder.
5.4 Registration Rights Agreement. The Company shall
have executed and delivered the Registration Rights Agreement in the form of
Exhibit B attached hereto.
5.5 Warrants. The Company shall have executed and
delivered the Warrants in the form of Exhibit A attached hereto.
5.6 Opinion of Counsel. The Company shall have delivered
to the Investor the opinion of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. dated
the Closing Date substantially in the form of Exhibit E attached hereto.
5.7 Culligan Voting Agreement and the Voting Agreement
Amendment. The holders of at least 80% of the outstanding shares of Common
Stock and Series A
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Preferred Stock and Series B Preferred Stock calculated as a single class shall
have executed and delivered (i) the Voting Agreement, dated December 2, 1997,
by and among the Company, the Investor and the shareholders of the Company (the
"Culligan Voting Agreement") in the form attached as Exhibit F hereto, and (ii)
Amendment No. 3 to the Amended and Restated Voting Agreement, dated September
20, 1995, as amended, by and among the Company and the shareholders of the
Company (the "Voting Agreement Amendment") in the form attached hereto as
Exhibit G, and the Company warrants and covenants that the holders of at least
80% of such shares have executed the New Voting Agreement and the Voting
Agreement Amendment.
5.8 Waivers of Rights of First Refusal. The rights of
first refusal to purchase all or any part of any issue of specified securities,
which right could include the Securities, granted by the Company to each of the
shareholders set forth in Exhibit H attached hereto, (the "Consenting
Shareholders"), pursuant to Article 8 of each of certain stock purchase
agreements between the Company and the Consenting Shareholders shall be waived
by the Consenting Shareholders.
5.9 Parallel Exit Agreement. Xxxxx X. Xxxxxx, X. X.
Xxxxx, III, Xxxxxx X. Xxxxxxxxx, the Company and the Investor shall have
entered into the Parallel Exit Agreement in the form of Exhibit I attached
hereto (the "Parallel Exit Agreement").
5.10 Series A Preferred Stock and Series B Preferred Stock
Consents. The holders of the outstanding shares of the Series A Preferred
Stock and the Series B Preferred Stock set forth on Exhibit H attached hereto,
each voting as a separate class, by unanimous written consent or the
affirmative vote given in writing or by vote at a meeting, shall have approved
the issuance of the 10% Preferred Stock and all of its terms.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to issue and sell the Securities
to the Investor hereunder is subject to the fulfillment by the Investor, at or
before the Closing, of the following conditions:
6.1 Compliance with Representations and Warranties. The
representations and warranties of the Investor contained in Article 3 hereof
shall be
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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
Company specifically apply to conditions existing at a particular date).
6.2 Other Agreements. The Investor shall have entered
into the Culligan Voting Agreement, the Voting Agreement Amendment, the Parallel
Exit Agreement, the Registration Rights Agreement, the Transfer Restriction
Agreement, dated December 2, 1997, by and between the Company and the Investor
(the "Transfer Restriction Agreement") in the form attached as Exhibit L
hereto.
6.3 Voting Agreements. The Investor shall have entered
into the Amended and Restated Voting Agreement, dated September 20, 1995, as
amended, by and among the Company and the shareholders of the Company, and the
Voting Agreement, dated July 17, 1997, by and among the Company, SV Capital
Partners, L.P., and certain shareholders of the Company (the "SV Capital Voting
Agreement") in the form attached hereto as Exhibit K.
ARTICLE 7
INDEMNIFICATION
The Company shall indemnify and hold harmless the Investor,
and the Investor 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
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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
RIGHT TO PURCHASE ADDITIONAL SECURITIES
8.1 First Refusal Rights. Subject to the terms and
conditions of this Article 8, the Company hereby grants to the Investor
(referred to hereinafter in this Article as the "Offeree") a right of first
refusal to purchase all or any part of any issue of New Securities (as defined
below) that the Company (or any subsidiary whose capital stock will not be
wholly owned, directly or indirectly, by the Company upon completion of any
such issuance) may from time to time after the Closing Date propose to issue.
8.2 New Securities. "New Securities" shall mean any
capital stock, any rights, options or warrants to purchase or subscribe for
capital stock, and any securities or other instruments of any type whatsoever
that are, or may become, convertible into or exchangeable for capital stock,
which are issued for cash; provided, however, that "New Securities" shall not
include: (i) securities offered and sold by the Company pursuant to a Public
Offering (as hereinafter defined); (ii) shares of the Company's Common Stock
(or related options or rights) issued to the Company's employees and directors
pursuant to a plan adopted by the Board of Directors; (iii) Common Stock issued
by the Company upon the conversion of the Series A Preferred Stock or Series B
Preferred Stock of the Company; and (iv) shares of the Company's capital stock
issued in connection with any existing warrant, option or right listed on the
Disclosure Schedule, stock split or stock dividend by the Company.
8.3 Notice and Allocation Periods. For purposes of this
Section 8.3, the Investor shall be deemed to own the number of shares of Common
Stock theretofore issued upon exercise of the Warrants plus the number of
shares of Common Stock then underlying the Warrants. If the Company or, when
applicable, its subsidiary, proposes to undertake a bona fide issuance of New
Securities, then it shall give the Offeree written notice of its intention,
describing the type of New Securities, the price, the number of shares to be
offered, and the general terms upon which such securities are proposed to be
offered. Offeree shall be given at least 20 days' prior written notice within
which to agree to purchase all or any part of its Pro Rata Share (as
hereinafter defined) of such issuance of New Securities for the price and upon
the general terms specified in said notice by giving written notice to the
issuer within such period and stating therein the
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quantity of New Securities to be purchased by it. "Pro Rata Share" shall mean,
with respect to the Offeree, that portion of the number of shares of New
Securities proposed to be issued that equals the proportion that (a) the number
of shares of Common Stock held by the Offeree immediately prior to the proposed
issuance, plus the number of shares of Common Stock that would then be issuable
to the Offeree assuming that all securities of the Company convertible into or
exchangeable for Common Stock had been converted or exchanged, bears to (b) the
total number of shares of Common Stock issued and outstanding immediately prior
to the proposed issuance, assuming that all securities of the Company
convertible into or exchangeable for Common Stock had been converted or
exchanged.
8.4 Right of Company to Sell New Securities. If the
Offeree fails to exercise in full its right of first refusal within the
applicable period set forth above, then the Company or, when applicable, its
subsidiary shall have 120 days thereafter to sell the New Securities respecting
that the rights set forth herein were not exercised at a price and upon general
terms no more favorable to the purchaser thereof than specified in the notice
to the Offeree. If such New Securities have not been sold within such 120-day
period, then the Company or, when applicable, its subsidiary shall not
thereafter issue or sell any New Securities without first offering them to the
Offeree in the manner provided above.
8.5 Public Offering. Reference to the term "Public
Offering" in this Agreement shall mean a bona fide firm commitment underwritten
public offering of shares of the Company's Common Stock made 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 $7,500,000.
8.6 Termination. This Article 8 shall continue in effect
from the date of this Agreement until the Company has completed a Public
Offering.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests, demands and other
communications hereunder, and each other agreement 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
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duly given when actually received, or when mailed, first class postage prepaid,
certified mail, return receipt requested, to the addresses set forth below, or
to such other address as may be designated hereafter by prior written notice
from the recipient to the sender:
If to the Company: Packaged Ice, Inc.
Attention: Chief Executive Officer
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
With a copy to: Akin, Gump, Strauss,
Xxxxx & Xxxx, L.L.P.
Attention: Xxxx Xxxxxxxxxx, P.C.
0000 XxxxxxxXxxx Xxxxx
000 Xxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to the Investor: Xxxxx Xxxxxxxxx
c/o Xxxxxxx Xxxxxxxxx
0000 Xxxxxx xx Xxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
9.2 Intentionally Omitted.
9.3 Modification and Waiver.
(a) No amendment or modification to this
Agreement shall be made without the written approval of the Company
and the Investor.
(b) Approval, waiver and consent by the Investor
hereunder shall be in writing and shall be delivered to the Company in
the manner provided for in Section 9.1 herein.
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.
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9.5 Gender. Whenever 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
thereof and the consummation of the transactions contemplated 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 letter 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
THIS AGREEMENT, SHALL, EXCEPT AS MAY OTHERWISE BE SPECIFICALLY PROVIDED TO THE
CONTRARY THEREIN,
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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 St. Louis, Missouri and judgment upon the
award reentered 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 and the
Investor shall pay their respective expenses that are incurred by them 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.
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 provision 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
the Investor, their successors and assigns, any legal or equitable right,
remedy or claim under or with respect to this Agreement.
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(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:
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X.X. Xxxxx III, President
THE INVESTOR:
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XXXXX XXXXXXXXX
