EXHIBIT 10.4
XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
December 23, 2005
(VIA TELECOPIER)
----------------
Xxxx X. Steinbrun
Chief Financial Officer
Overhill Farms, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Letter Agreement Re: Liquidated Damages
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Dear Mr. Steinbrun:
Reference is made to a Stock Purchase Agreement dated as of December
22, 2005 (the "PURCHASE Agreement"), by and among Overhill Farms, Inc., a Nevada
corporation (the "COMPANY"), Xxxxxx Xxxxxxxxx Capital Partners II, L.P., a
California limited partnership ("SELLER"), and the "Purchasers" identified
therein pursuant to which, on the date hereof, Seller is selling to the
Purchasers 5,771,661 shares of Common Stock (the "SELLER SHARES"), all on the
terms and subject to the conditions set forth therein.
Reference is further made to a Registration Rights Agreement dated as
of December 23, 2005 (the "REGISTRATION RIGHTS AGREEMENT"), by and between the
Company and each of the Purchasers pursuant to which, among other things, the
Company has agreed to use its best efforts to file with the Commission on or
prior to the Filing Deadline Date a Shelf Registration Statement covering the
offer and sale of the Registrable Securities and use its best efforts to cause
such Shelf Registration Statement to be declared effective by the Commission
under the Securities Act on or prior to the Effectiveness Deadline Date. In
addition, pursuant to Section 2(c) of the Registration Rights Agreement, if
Events occur, the Company will become obligated to pay to each Electing Holder
certain amounts in cash, characterized therein as "liquidated damages"
("LIQUIDATED DAMAGES"). Unless otherwise indicated, all capitalized terms used
herein without limitation have the meanings ascribed to them in the Stock
Purchase Agreement or the Registration Rights Agreement, as the case may be.
Xxxx X. Steinbrun
December 23, 2005
Page 2
In connection with the closing of the sale of the Seller Shares, the
parties have agreed that if, and only if, the Company becomes obligated to pay
Liquidated Damages to Electing Holders under Section 2(c) of the Registration
Rights Agreement as a result of the occurrence of the Event described in clause
(ii) thereof and, thereafter, the Effective Time shall not have occurred prior
to January 1, 2007, then, and only then, Seller agrees to reimburse the Company
for fifty percent (50.0%) of Liquidated Damages actually paid by the Company to
Electing Holders which accrued solely during the period commencing on January 1,
2007 and ending on the earlier to occur of (i) the date the Shelf Registration
Statement shall have been declared effective by the Commission and (ii) June 30,
2007; PROVIDED, HOWEVER, that Seller shall have no obligation whatsoever with
respect to any Liquidated Damages accruing prior to or after such period; and
PROVIDED FURTHER, HOWEVER, that notwithstanding anything to the contrary
contained herein or otherwise, Seller shall not be so obligated to reimburse
Seller for any Liquidated Damages if:
1. The Company is obligated to pay Liquidated Damages as a result
of the matters described in clause (i) or (iii) of Section
2(c) of the Registration Rights Agreement;
2. The Company fails to fully perform in a complete and timely
basis each of its covenants and obligations under the
Registration Rights Agreement (including, without limitation,
responding to and cooperating with the Commission in a full
(in the Company's reasonable judgment) and timely manner);
3. The Shelf Registration Statement is not declared effective by
the Commission prior to January 1, 2007, as a result of the
Company's utilization or exercise of any "black-out" or
"suspension" right which delays the registration process; or
4. The Shelf Registration Statement is not declared effective by
the Commission prior to January 1, 2007, as a result of any
material misstatement or omission therein, or any restatements
or other accounting issues with respect to the Company's
financial statements (other than the Commission's disagreement
with the Company's good faith interpretation of generally
accepted accounting principles), or the gross negligence, bad
faith or willful misconduct by the Company or any of its
representatives.
The Company hereby represents and warrants to Seller as of the date
hereof that it is not aware of any fact, event or circumstance that would impede
or otherwise adversely affect the Company's ability to cause the Shelf
Registration Statement to be declared effective by the Commission in accordance
with the terms of the Registration Rights Agreement. The Company agrees to
provide to Seller copies of all notices or other correspondence provided (or
required to be provided) by it to the Electing Holders (including, without
limitation, copies of all correspondence with the Commission).
Xxxx X. Steinbrun
December 23, 2005
Page 3
In addition, in no event shall the Company amend the Registration
Rights Agreement without the prior written consent of Seller if such amendment
would adversely affect Seller's obligations under this letter agreement. If the
Registration Rights Agreement is so amended without the prior written consent of
Seller, or any of the Company's representations and warranties contained in this
letter agreement is false or misleading, Seller's obligations hereunder shall
automatically and immediately terminate and shall be void ab initio.
Nothing in this letter agreement shall adversely affect any of the
indemnification rights Seller has under or relating to the Securities Purchase
Agreement or any other Investment Document.
This letter agreement may be executed in any number of counterparts and
by facsimile transmission, each of which shall be deemed an original but all of
which, taken together, shall constitute one and the same instrument. The letter
agreement shall be governed by and construed and enforced in accordance with the
laws of the State of California (other than its conflicts or choice of law
principles). The parties acknowledge and agree that there are no third party
beneficiaries of this letter agreement.
Please acknowledge your acceptance of and agreement with the terms of
this letter agreement by signing it in the space indicated below and returning a
signed copy to us as soon as possible.
XXXXXX XXXXXXXXX CAPITAL PARTNERS,
INC., a California corporation
On behalf of Xxxxxx Xxxxxxxxx Capital Partners II,
L.P., a California limited partnership
By: /S/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Vice President
ACKNOWLEDGED, AGREED AND
ACCEPTED as of the first date written above:
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OVERHILL FARMS, INC., a Nevada corporation
By: /S/ XXXX X. STEINBRUN
-----------------------
Xxxx X. Steinbrun
Chief Financial Officer
cc: Xxxxx Xxxxx, Esq.
Xxxxxxxx Xxxxx, Esq.
