1
Exhibit 10.11 EXECUTION COPY
GUARANTY AGREEMENT
dated as of
April 18, 1996
between
KFC NATIONAL PURCHASING COOPERATIVE, INC.,
d/b/a FOODSERVICE PURCHASING COOPERATIVE
as Guarantor
and
NATIONAL CONSUMER COOPERATIVE BANK
as Buyer
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms............................................ 1
ARTICLE II
GUARANTOR AND GUARANTY
SECTION 2.01 Guarantor's Guaranty..................................... 2
SECTION 2.02 Reserve Account.......................................... 2
ARTICLE III
GUARANTOR REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Guarantor Representations and Warranties................. 3
ARTICLE IV
COVENANT OF GUARANTOR
ARTICLE V
GUARANTOR DEFAULTS
SECTION 5.01 Guarantor Defaults....................................... 4
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Further Assurances....................................... 5
SECTION 6.02 Indemnities.............................................. 5
SECTION 6.03 No Waiver; Remedies Cumulative........................... 6
SECTION 6.04 Governing Law............................................ 6
SECTION 6.05 Consent to Jurisdiction: Waiver of Immunities........... 6
SECTION 6.06 Notices.................................................. 6
SECTION 6.07 Assignment............................................... 7
SECTION 6.08 Capital Markets Funding.................................. 7
SECTION 6.09 Severability............................................. 7
SECTION 6.10 Attorney's Fees.......................................... 7
SECTION 6.11 Setoff................................................... 7
SECTION 6.12 Limitation on Third Party Beneficiaries.................. 8
i
3
Page
----
SECTION 6.13 Term of the Agreement; Termination; Renewal.............. 8
SECTION 6.14 Entire Agreement; Amendment.............................. 8
SECTION 6.15 Headings................................................. 8
SECTION 6.16 Counterparts............................................. 8
ii
4
GUARANTY AGREEMENT
This GUARANTY AGREEMENT is executed as of April 18, 1996 between KFC
NATIONAL PURCHASING COOPERATIVE, INC., d/b/a FOODSERVICE PURCHASING COOPERATIVE,
a Delaware corporation, as guarantor (the "Guarantor" or "FoodService") and
NATIONAL CONSUMER COOPERATIVE BANK, a financial institution organized under the
laws of the United States ("Buyer" or "NCB").
WHEREAS, FoodService, as seller, and NCB, as Buyer, entered into a certain
Loan Origination and Purchase Agreement dated as of April 18, 1996 (the "Loan
Agreement") which provides for NCB to underwrite, process and originate, as
agent for, and in the name of, FoodService, Loans as described in the Loan
Agreement, which Loans will be immediately sold by FoodService to NCB and
thereafter serviced by NCB pursuant to the terms and conditions set forth in the
Loan Agreement; and
WHEREAS, in order to induce the Buyer to enter into the Loan Agreement, the
Guarantor has agreed to provide certain guaranties with respect to the Loans;
and
WHEREAS, the parties have determined to enter into this Guaranty Agreement
(this "Agreement") in which the Guarantor's guaranties for the benefit of the
Buyer will be set out.
NOW, THEREFORE, for full and fair consideration, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. Terms used herein and not otherwise defined
shall have the meanings given in Article I of the Loan Agreement. In addition,
the following terms, as used herein, have the following meanings:
"Guaranty" shall mean the first loss guaranty of Liquidation Losses
provided by Guarantor in accordance with Section 2.01 of this Agreement.
"Guaranty Amount" shall mean, for each Loan, at any time, an amount
equal to (a) if such Loan is a Preferred Loan or a Superior Loan, ten percent
(10%) of the Principal Balance of such Loan, (b) if such Loan is a Standard
Loan, twenty-five percent (25%) of the Principal Balance of such Loan, and (c)
if such Loan is a Large Loan, $100,000 per each Large Loan, provided that the
aggregate Guaranty Amount for all Large Loans shall in no event exceed $500,000.
"Guaranty Payments" shall mean (i) the amounts paid by Guarantor to the
Buyer pursuant to the Guaranty and (ii) the amounts transferred from the Reserve
Account to the Buyer in payment of the Guaranty.
5
ARTICLE II
GUARANTOR AND GUARANTY
SECTION 2.01 Guarantor's Guaranty. In order to induce Buyer to purchase
the Loans, Guarantor hereby agrees to provide to the Buyer a Guaranty of
Liquidation Losses with respect to each Loan, equal at any time to the then
current Guaranty Amount for each such Loan. Following (i) the earlier of (A)
the collection of all Liquidation Proceeds and other amounts with respect to a
Defaulted Loan and (B) a Defaulted Loan being deemed to be a Liquidated Loan,
and (ii) determination of Liquidation Loss thereon (which in the case of a
Defaulted Loan deemed to be a Liquidated Loan may be the full Principal Balance
of such Loan), the Buyer shall notify Guarantor of the amount of Liquidation
Loss. Within five (5) Business Days of receipt of such notice, Guarantor shall
make a Guaranty Payment to the Buyer in the amount of such Liquidation Loss
from either or both of the following sources, at the Guarantor's option: one,
funds available in the Reserve Account and/or two, payment by the Guarantor;
provided, however, that in the event the Guarantor does not make a Guaranty
Payment when due, the Buyer shall withdraw such Guaranty Payment from the
Reserve Account; and provided further, however, that Guarantor's obligation to
make a Guaranty Payment with respect to any Loan shall be limited to the then
available Guaranty Amount for such Loan and, in the case of a Large Loan which
is a Defaulted Loan, shall be further limited such that the Guaranty Amount to
be paid with respect to such Large Loan would not exceed $100,000.
Notwithstanding anything to the contrary herein, the Guaranty Amount to be paid
with respect to all Loans (excluding Large Loans) shall not exceed $2,750,000
or with respect to Large Loans, shall not exceed $500,000. The maximum Guaranty
Amount shall be increased if the Maximum Purchase Amount is increased pursuant
to the terms of the Loan Purchase Agreement.
SECTION 2.02 Reserve Account. The Guarantor and Buyer acknowledge that the
Reserve Account has been established pursuant to Section 5.02 of the Loan
Agreement, will be maintained for the benefit of the Guarantor, and will be
applied as provided herein and in Section 5.02 of the Loan Agreement. The
parties also acknowledge that moneys in the Reserve Account are the functional
equivalent of the Guaranty and that amounts in the Reserve Account will, unless
the Guarantor notifies the Buyer that it will make the Guaranty Payment and the
Guarantor makes such Guaranty Payment when due, be first applied to make any
Guaranty Payment for Liquidation Loss demanded of the Guarantor. Subject to the
provisions of this Agreement, the Guarantor hereby pledges to the Buyer any and
all of its right, title and interest in and to the Reserve Account, including
any and all moneys, instruments and securities therein to secure its payment
2
6
of the Guaranty.
ARTICLE III
GUARANTOR REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Guarantor Representations and Warranties. The Guarantor
hereby represents and warrants to, and agrees as follows as of each Closing
Date and as of the date of execution of this Agreement:
(a) The execution, delivery and performance of Guarantor's obligations
under this Agreement, and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of Guarantor or any of its Subsidiaries pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement or other agreement (other than this
Agreement) or instrument to which it or any of its Subsidiaries is a party or by
which it or any of its subsidiaries is bound or to which any of its property or
assets is subject, nor will such action result in any violation of the
provisions of its Certificate of Incorporation or By-Laws or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over it or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental agency or body is required for
the consummation of the other transactions contemplated by this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
Guarantor and this Agreement is the valid and legally binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting creditors' rights and to
general principles of equity.
(c) Except as described in Reports on Form 10-K, 10-Q or 8-K filed by
the Guarantor with the Securities and Exchange Commission, there are no actions,
proceedings, investigations, or claims against or affecting Guarantor now
pending before any court, arbitrator or other Governmental Authority (nor to the
knowledge of Guarantor has any thereof been threatened nor does any basis exist
therefor) which if determined adversely to the Guarantor would be likely to have
a material adverse effect on the financial condition or operations of Guarantor
or on Guarantor's ability to perform its obligations under this Agreement. With
respect to the litigation described in the
3
7
reports filed by the Guarantor with the Securities and Exchange Commission, a
determination in such litigation that is materially adverse to the Guarantor
would not have a material adverse effect on the financial condition or
operations of Guarantor or on Guarantor's ability to perform its obligations
under this Agreement.
ARTICLE IV
COVENANT OF GUARANTOR
At all times prior to the later of (i) the Termination Date or (ii) the
date on which all obligations of the Seller under the Loan Agreement and
Guarantor under this Agreement have been performed in full, Guarantor agrees to
obtain and promptly furnish to Buyer, from time to time, evidence of all such
Government Approvals as may be required, if any, to enable the Guarantor to
comply with its obligations under this Agreement.
ARTICLE V
GUARANTOR DEFAULTS
SECTION 5.01 Guarantor Defaults. Any of the following acts or occurrences
shall constitute "Guarantor Defaults" under this Agreement.
(a) Guarantor Default. Guarantor shall fail to make any payment due
under its Guaranty and such failure shall remain unremedied for five (5)
Business Days after written notice thereof shall have been given to Guarantor by
Buyer; or
(b) Performance Default. Guarantor shall fail to perform or observe any
other obligation, covenant or term of this Agreement and such failure shall
remain unremedied for thirty (30) days after written notice thereof shall have
been given to Guarantor by Buyer; or
(c) Voluntary Bankruptcy, Etc. Guarantor shall: (1) file a petition
seeking relief for itself under Title 11 of the United States Code, as now
constituted or hereafter amended, or file an answer consenting to, admitting the
material allegations of or otherwise not controverting, or fail timely to
controvert a petition filed against it seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended; or (2) file such
petition or answer with respect to relief under the provisions of any other now
existing or future applicable bankruptcy, insolvency, or other similar law of
the United States of America or any State thereof or of any other country or
jurisdiction providing for the reorganization, winding-up or
4
8
liquidation of corporations or an arrangement, composition, extension or
adjustment with creditors; or
(d) Involuntary Bankruptcy, Etc. An order for relief shall be entered
against Guarantor under Title 11 of the United States Code, as now constituted
or hereafter amended, which order is not stayed; or upon the entry of an order,
judgment or decree by operation of law or by a court having jurisdiction in the
premises which is not stayed adjudging it a bankrupt or insolvent under, or
ordering relief against it under, or approving as properly filed a petition
seeking relief against it under the provisions of any other now existing or
future applicable bankruptcy, insolvency or other similar law of the United
States of America or any State thereof or of any other country or jurisdiction
providing for the reorganization, winding-up or liquidation of corporations or
any arrangement, composition, extension or adjustment with creditors, or
appointing a receiver, liquidator, assignee, sequestrator, trustee or custodian
of the or Guarantor, or of any substantial part of the property of Guarantor or
ordering the reorganization, winding-up or liquidation of its affairs, or upon
the expiration of one hundred twenty (120) days after the filing of any
involuntary petition against it seeking any of the relief specified in Section
5.01(c) or this Section 5.01(d) without the petition being dismissed prior to
that time; or
(e) Insolvency, Etc. Guarantor shall (i) make a general assignment for
the benefit of its creditors or (ii) consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, or custodian of all or
a substantial part of the property of Guarantor, or (iii) admit its insolvency
or liability to pay its debts generally as they become due, or (iv) fail
generally to pay its debts as they become due, or (v) take any action (or suffer
any action to be taken by its directors or shareholders) looking to the
dissolution or liquidation of Guarantor;
then, in the event of any Guarantor Default, the Buyer shall have the right to
pursue all legal remedies available to it and to terminate the Guarantor's
rights under this Agreement or the Loan Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Further Assurances. Each party hereto agrees to execute and
deliver to the other party and to perform all such other acts as the other
party may reasonably request to carry out the transactions contemplated by this
Agreement.
SECTION 6.02 Indemnities. Guarantor will defend and
5
9
hereby indemnify Buyer and its successors, assigns, servants and agents
(hereinafter "Indemnitees") against and agree to protect, save and keep harmless
and make whole each thereof, from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs, expenses and disbursements,
including reasonable attorneys' fees, of whatever kind and nature imposed on,
incurred by or asserted against any Indemnitee in any way relating to or arising
out of (i) any breach or alleged breach of any covenant, agreement or other
obligation by the Guarantor under this Agreement or by the Seller under the Loan
Agreement and (ii) any representation or warranty made by the Guarantor under
this Agreement or the Seller under the Loan Agreement which was untrue or
allegedly untrue when made or delivered. Any indemnity payments required under
this Section 6.02 shall be paid within thirty (30) days following notice thereof
from the Indemnitee to Guarantor (which notice shall describe in reasonable
detail the matter with respect to which indemnification is required and shall
set forth the computation used in determining the amount of the indemnity
payment). All of the rights and privileges of each Indemnitee under this Section
6.02, and the rights, privileges and obligations of Guarantor hereunder, shall
survive the expiration or other termination of this Agreement.
SECTION 6.03 No Waiver; Remedies Cumulative. No failure by the Guarantor
or Buyer to exercise, and no delay in exercising, any right, power or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or remedy under this Agreement preclude
any other or further exercise thereof or the exercise of any other right,
power, or remedy. The rights and remedies provided herein are cumulative and
not exclusive of any right or remedy provided by law.
SECTION 6.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6.05 Consent to Jurisdiction: Waiver of Immunities. Guarantor and
Buyer hereby irrevocably submit to the jurisdiction of any state or federal
court sitting in the District of Columbia in any action or proceeding brought
to enforce or otherwise arising out of or relating to this Agreement and
irrevocably waive to the fullest extent permitted by law any objection which
they may now or hereafter have to the laying of venue in any such action or
proceeding in any such forum, and hereby further irrevocably waive any claim
that any such forum is an inconvenient forum. The parties agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
6
10
SECTION 6.06 Notices. All notices and other communications provided
for in this Agreement shall be in writing or (unless otherwise specified) by
telex, telegram or cable and shall be sent for next Business Day delivery to
each party at the address set forth under its name on the signature page hereof,
or at such other address as shall be designated by such party in a written
notice to the other party. Except as otherwise specified, all such notices and
communications if duly given or made shall be effective upon receipt.
SECTION 6.07 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective Successors and assigns.
Notwithstanding the foregoing, the Guarantor may not assign or otherwise
transfer all or any part of its rights or obligations hereunder without the
prior written consent of the other parties, and any such assignment or transfer
purported to be made without such consent shall be ineffective. Buyer may,
however, sell, assign or transfer its rights hereunder, the Loans and related
Property and the guaranties provided herein, including any sale or assignment
to achieve a capital markets funding, without the consent of the Guarantor.
Further, the Guarantor agrees to recognize any such buyers or assignees as
Successors and assigns of the Buyer hereunder, with all rights of the Buyer
hereunder.
SECTION 6.08 Capital Markets Funding. Guarantor hereby agrees to cooperate
with Buyer in making such reasonable modifications to this Agreement, in
executing such other documents and certificates, in causing to be prepared and
delivered such opinions, certificates, financial reports and letters, and in
taking such other actions, as are reasonably necessary to achieve capital
markets funding of the Loans and the related Property or to improve the
execution of such funding. The Buyer shall be responsible for all fees and
expenses incurred in connection with a capital markets funding of the Loans,
except for any fees and expenses incurred by FoodService or its legal counsel
or agents up to $2,500. The Buyer shall be responsible for any fees and
expenses of Seller's counsel in excess of $2,500, provided that the Seller
shall be responsible for the cost of obtaining a New York law opinion with
respect to the enforceability of this Agreement and the Loan Agreement from a
law firm of the Guarantor's choice resonably acceptable to the Buyer.
SECTION 6.09 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
7
11
SECTION 6.10 Attorney's Fees. In the event it is necessary for any party
hereto or its Successors or assigns to institute suit in connection with this
Agreement or the breach thereof, the prevailing party in such suit shall be
entitled to reimbursement for its reasonable costs, expenses and attorney's
fees incurred including fees incurred on any appeal.
SECTION 6.11 Setoff. In addition to any rights now or hereafter
granted under applicable law, upon the occurrence of any Termination Event,
Buyer is hereby authorized by Guarantor at any time, with notice to Guarantor,
to set off and to appropriate and to apply to the amounts then owed by Guarantor
to Buyer hereunder, any and all deposits (general or special, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured, but not including trust accounts) and any other indebtedness at
any time held or owing by Buyer to Guarantor.
SECTION 6.12 Limitation on Third Party Beneficiaries. No provision,
warranty, representation, or agreement herein, whether express or implied, is
intended to or shall be construed as conferring upon any Person not a party
hereto (including, without limitation, any Obligor) any rights or remedies
whatsoever.
SECTION 6.13 Term of the Agreement; Termination; Renewal. This Guaranty
Agreement shall remain in full force and effect until, and shall terminate on
the earlier of (i) the day following the date on which the Loan Agreement is
terminated or (ii) June 1, 2000; provided, however, that termination of this
Agreement on such termination date shall not affect in any manner the liability
of the Guarantor with respect to (a) any Guaranty Amount due and owing prior to
such termination date, (b) any other rights accrued to the Buyer prior to such
termination date under this Agreement or the Loan Agreement, (c) the
indemnification rights set forth in Section 6.02 hereof (clauses (a), (b) and
(c) collectively referred to as the "Prior Obligations"), or (d) extension or
renewals of, interest accruing on, or the fees, costs or expenses incurred with
respect to, such Prior Obligations prior to, on or after such termination date.
The Guarantor and the Buyer may agree in writing to extend or renew this
Guaranty Agreement for additional 3-year periods or such other period as is
reasonably acceptable to both parties.
SECTION 6.14 Entire Agreement; Amendment. This Agreement comprises the
entire agreement of the parties and may not be amended or modified except by
written agreement of the parties hereto. No provision of this Agreement may be
waived except in writing and then only in the specific instance and for the
specific purpose for which given.
SECTION 6.15 Headings. The headings of the various provisions of this
Agreement are for convenience of reference
8
12
only, do not constitute a part hereof, and shall not affect the meaning or
construction of any provision hereof.
SECTION 6.16 Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by the parties hereto shall be
deemed to constitute a complete, executed original for all purposes.
9
13
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty Agreement
to be executed by their respective officers or agents thereunto duly authorized
as of the date first above written.
KFC NATIONAL PURCHASING COOPERATIVE, INC.,
d/b/a FOODSERVICE PURCHASING COOPERATIVE,
as Guarantor
By ___________________________________
Its _______________________________
Notice Address:
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
NATIONAL CONSUMER COOPERATIVE BANK,
as Buyer
By ___________________________________
Its _______________________________
Notice Address:
0000 Xxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
10
