CONTRIBUTION AND INDEMNITY AGREEMENT
This Agreement is entered into among Oregon Baking Company, dba Xxxxxx
Baking, an Oregon corporation ("Xxxxxx"), and Xxxxxx X. Xxxxxx ("Xxxxxx") and
Xxxx Xxxxxxxxx ("Xxxxxxxxx") (sometimes collectively referred to herein as the
"Guarantors").
Xxxxxx has applied for credit facilities from Silicon Valley Bank (the
"Bank"). The Bank is unwilling to lend money to Xxxxxx without personal
guarantees from the Guarantors. With guarantees, the Bank is willing to
establish a line of credit for Xxxxxx, represented by a $250,000 promissory note
(the "Bank Notes").
Guarantors are current shareholders of Xxxxxx and members of the Board
of Directors. Guarantors are willing to guarantee Xxxxxx'x line of credit in
consideration of a warrant to purchase additional shares of Xxxxxx'x Common
Stock.
In order to assist Xxxxxx in obtaining the credit facilities from Bank,
the Guarantors have on or about October 30, 1997, signed guarantees on the
Bank's standard forms jointly guaranteeing the aggregate of indebtedness owed to
the Bank by Xxxxxx (each a "Guaranty" and collectively the "Guarantees"). The
purpose of this Agreement is to set forth the agreement between the Guarantors
regarding their individual liability with respect to contribution and payment
liabilities under any of the Guarantees.
Accordingly, the parties agree as follows:
1. SHARING OF GUARANTY LIABILITY. It is the express agreement of the
parties that each Guarantor shall be responsible, on a several basis, for fifty
percent (50%) of any Guaranty Liability, as defined below. This percentage is
referred to in this Agreement as the Applicable Percentage. For purposes of this
Agreement, the term "Guaranty Liability" includes any amount, whether principal
or interest, and any and all collection costs, including attorney fees, that may
be paid or become payable to the Bank under the Guarantees, including any and
all advances, debts, obligations and liabilities of Xxxxxx heretofore, now, or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether direct or acquired by the Bank by assignment or
succession, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and all attorneys' fees, the allocated
costs of the Bank's in-house counsel, and all other costs and expenses which may
be incurred by the Bank in the enforcement of the Bank Notes in any legal action
(at trial, on appeal or on review). Upon any demand for payment under any of the
Guarantees, each of the Guarantors agrees to pay his Applicable Percentage of
any amount paid.
2. DEFINITION OF PRO RATA SHARE. The term "Pro Rata Share" means, with
respect to the Guarantors, the total amount, as the same may change from time to
time, that all of the Guarantors have paid under the Guarantees, multiplied by
the Applicable Percentage. In determining the total amount that all parties have
paid under the Guarantees, only amounts actually paid shall be counted. Amounts
reduced to a monetary judgment, but not yet paid, shall not be counted. If a
party delivers property to the Bank in partial or complete satisfaction of their
Guarantees, or if the Bank forecloses or otherwise seizes any property of a
party, the amount of Xxxxxx indebtedness discharged as a result of such property
transferred shall be counted. Any amounts received by a Guarantor under Section
3 below shall be deducted in computing the amount the Guarantor has paid under
their Guarantees.
3. RIGHT OF CONTRIBUTION. If at any time and from time to time, either
of the Guarantors have paid the Bank following any demand for payment under the
Guarantees more than their Pro Rata Share (the "Paying Guarantor"), the Paying
Guarantor shall have the right to collect from the other Guarantor ("Non-Paying
Guarantor") the amount by which the amount paid is in excess of the Paying
Guarantor's Pro Rata Share. Any deficiency owed by the Non-Paying Guarantor to
the Paying Guarantor is payable upon demand. Any unpaid demand following a
disproportionate payment under the Guarantees shall bear interest commencing ten
(10) days following receipt of the demand at the Bank's prime rate of interest
plus two (2) percentage points.
Contribution and Indemnity Agreement
Page 1
4. REMOVAL OF GUARANTEES. The Company agrees to use its best efforts to
remove the Guarantees by November 1, 2000.
5. INDEMNITY.
5.1. If at any time and from time to time, either of the Guarantors
have paid the Bank following any demand for payment under the Guarantees, upon
written notice from the Paying Guarantor, Xxxxxx shall indemnify the Paying
Guarantor against any and all losses, liability and expense (including
reasonable attorneys' fees) arising out of or caused by such payment to the
Bank.
5.2. Each party will defend, hold harmless, and indemnify the other
party from and against all loss, damage, injury or expense (including reasonable
attorney fees) arising out of or caused by any breach of any of the provisions
of this Agreement by such party.
6. MISCELLANEOUS.
6.1 NO OTHER GUARANTEES. This Agreement among the parties concerning
the sharing of guarantee liability is limited to the specifically-referenced
Guarantees. It does not apply to any other guarantees given previously or in the
future. No Guarantor shall enter into an agreement to guarantee any future
indebtedness of Xxxxxx'x without first notifying the other Guarantor of his
intention to do so.
6.2 WAIVERS AND AMENDMENTS. This Agreement may be amended, modified or
supplemented only by a written instrument executed by all parties hereto. The
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
6.3 NOTICES. All notices, requests, demands and other communications
which are required or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
first-class mail, postage prepaid:
If to Marsee: Xxxx X. Xxxxxxx, President and CEO
Oregon Baking Company
dba Xxxxxx Baking
XX Xxx 00000
Xxxxxxxx, XX 00000
With a copy to: Xxxxxxx X. XxXxxxxxx
Xxxxxx Xxxx LLP
XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
If to Xxxxxx: Xxxxxx X. Xxxxxx
XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
If to Durbetaki: Xxxx Xxxxxxxxx
XX Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
or such other address as any party shall have specified by notice in writing to
the other.
Contribution and Indemnity Agreement
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6.1 NOTICES REGARDING DEMANDS. No party will make any payment under any
of the guarantees unless and until a written demand for payment has been
received from the Bank. If any party receives a demand for payment under any of
the Guarantees, notice of such demand will be promptly sent to the other parties
to this Agreement. Xxxxxx shall promptly send to the Guarantors any notice of
default received from the Bank.
6.2 BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, legatees
or successors; nothing in this Agreement is intended to confer on any third
person any rights, remedies, obligations or a liability under or by reason of
this Agreement.
6.3 ATTORNEY FEES. If any action is brought with respect to this
agreement, or in any appeal therefrom, the prevailing party shall be entitled to
reasonable attorney fees as determined by the court or courts in which the
action or appeal is tried or heard.
6.4 GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with Oregon law without regard to its choice of law provisions.
6.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
EXECUTED as of the 23rd day of October, 1997.
OREGON BAKING COMPANY
dba Xxxxxx Baking
By: /s/ Xxxx Xxxxxxx
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Its: President/CEO
---------------------------------
GUARANTORS:
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx Xxxxxxxxx
--------------------------------------
Xxxx Xxxxxxxxx
Contribution and Indemnity Agreement
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