KEEP WELL AGREEMENT
THIS AGREEMENT, dated as of May 31, 2000 (this "Agreement"), among OUR
FOOD PRODUCTS GROUP, INC., f/k/a Xxxxxx Food Products Group, Inc., a Texas
corporation (the "Borrower"), XXXXXX XXXX GROUP, INC., a Delaware corporation
(the "Investor"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation
(the "Lender").
BACKGROUND:
Lender has agreed, on the terms and conditions set forth in that
certain Credit and Security Agreement by and between the Borrower and the Lender
dated as of May 31, 2000 (as the same may be further amended, supplemented or
otherwise modified from time to time the "Credit Agreement"), to make loans and
to extend credit to Borrower. Investor will derive substantial economic benefits
from the extensions of credit provided to Borrower pursuant to the Credit
Agreement.
To induce Lender to enter into the Credit Agreement and to make any
loans under the Credit Agreement, Investor has agreed to execute and deliver
this Agreement, pursuant to which Investor agrees to infuse funds into Borrower
to offset any Net Losses (as hereafter defined) incurred by Borrower for any
calendar month commencing with the month beginning on May 31, 2000. The infusion
of funds will take the form of subordinated loans to Borrower from Investor or
equity contributions to Borrower by Investor.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINED TERMS. As used in this Agreement, capitalized terms defined
in the Credit Agreement and not otherwise defined herein shall have the meanings
ascribed to them in the Credit Agreement, terms defined in the preamble and
recitals hereto shall be used herein as so defined, and the following terms
shall have the following meanings, unless the context otherwise requires:
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended from time to time.
"CAPITAL CONTRIBUTION" shall have the meaning ascribed to such term in
subsection 2(c).
"CONSOLIDATED" shall mean the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
"KEEP WELL PERIOD" shall mean the period commencing on May 31, 2000
and continuing until and including the calendar month end on which the Borrower
has achieved a positive Net Income for six (6) consecutive months.
"PAYMENT" shall have the meaning ascribed to such term in subsection
2(c).
"PAYMENT AMOUNT" shall have the meaning given to it in Section 2(b).
"PAYMENT EVENT" shall have the meaning given to it in Section 2(a).
"NET INCOME" shall mean for any fiscal period of Borrower and its
Subsidiaries, the Consolidated net income of Borrower and its Subsidiaries
determined in accordance with GAAP provided that there shall be excluded
therefrom any extraordinary or unusual gains during such fiscal period.
"NET LOSS" shall mean for any fiscal period of Borrower and its
Subsidiaries, the Consolidated net deficit or loss of Borrower and its
Subsidiaries determined in accordance with GAAP provided that there shall be
excluded therefrom any extraordinary or unusual gains during such fiscal period.
"PROCEEDING" shall mean any case or proceeding, voluntary or
involuntary, under the Bankruptcy Code, or any similar existing or future law of
any jurisdiction, state or federal, relating to bankruptcy, insolvency,
reorganization or relief of debtors.
"SUBORDINATED NOTES" shall have the meaning given to it in Section
2(c).
2. PAYMENTS. (a) Investor shall make Payments, whether before or after
the commencement of a Proceeding, upon the occurrence of a Net Loss for any
calendar month during the Keep Well Period (a "Payment Event").
(b) Upon a Payment Event, Investor shall make a Payment in an amount
equal to the Net Loss (the "Payment Amount") not later than ten (10) business
days following the date on which Borrower delivers the monthly financial
statements of Borrower and its Subsidiaries to Lender, provided that such
statements are delivered in the time periods set forth in the Credit Agreement.
If such financial statements are not delivered to Lender within the time periods
set forth in the Credit Agreement, the Payment shall be made on the tenth (10th)
calendar day after the end of the calendar month immediately following the
calendar month in which the Net Loss occurred. Nothing herein contained shall
affect any of the other rights Lender may have as a result of the failure of
delivery of such financial statements, including, without limitation, the rights
of Lender under the Credit Agreement and under paragraph 4 hereof.
(c) (i) Investor shall satisfy its obligations to make Payments
hereunder by, at its option, either (x) purchasing at par from Borrower,
subordinated notes (the "Subordinated Notes") of Borrower containing such terms
and provisions as are satisfactory to Lender in its sole discretion,
including, without limitation, subordination terms as set forth in a written
subordination agreement (the "Subordination Agreement") executed by the Investor
in favor of the Lender in form and substance acceptable to Lender and
substantially in the form of EXHIBIT A attached hereto, in an aggregate
principal amount equal to the relevant Payment Amount or (y) contributing to the
capital of Borrower or purchasing common stock of Borrower ("Capital
Contribution") in an amount equal to the relevant Payment Amount. Any such
purchase of Subordinated Notes or Capital Contribution by Investor shall
constitute a "Payment" hereunder.
(ii) All Payments shall be made directly by Investor to Borrower in
immediately available funds. Borrower shall promptly issue the Subordinated
Notes or common stock, if applicable, and take all necessary action to
effectuate such issuance.
(iii) The commencement of a Proceeding shall not affect the
obligations of Investor to make Payments under this Agreement.
(d) If, upon delivery by Borrower to Lender of the audited annual
financial statements of Borrower and its Subsidiaries required pursuant to the
Credit Agreement, the amount of the Net Loss (if any) as reported on such
financial statements for the period then ended exceeds the amount of Net Loss as
reported on the monthly financial statements delivered by Borrower to Lender
theretofore, Investor shall make a Payment in the amount of such excess not
later than ten (10) business days after the date on which Borrower is required
to deliver such financial statements to Lender pursuant to the Credit Agreement.
3. REPRESENTATIONS AND WARRANTIES. Investor hereby represents and
warrants as follows:
(a) Investor is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and it has all requisite
power and authority to enter into this Agreement and all other documents to be
executed by it in connection herewith and to carry out the terms hereof and
thereof.
(b) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on its part, will not result in any
violation of, or be in conflict with or constitute a default under, any
agreement or under any law, statute, regulation or ordinance applicable to it or
result in the creation of any Lien upon any of its properties or assets. This
Agreement has been duly executed and delivered on behalf of Investor and
constitutes a legal, valid and binding obligation of Investor, enforceable
against Investor in accordance with its terms.
(c) No consent or authorization of, filing with or other act by or in
respect of, any governmental authority and no consent of any other Person
(including, without limitation, any stockholder or creditor of Investor) is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
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4. PURCHASE BY INVESTOR OF LENDER'S INTEREST. If, for any reason
whatsoever (including, without limitation, the commencement of a Proceeding with
respect to Borrower) (i) Investor has not made a Payment within five (5)
calendar days after such payment was required pursuant to Section 2 or (ii)
Borrower shall have failed to deliver to Lender its monthly, quarterly or annual
financial statements within the applicable time periods provided for in the
Credit Agreement, Lender shall have the option, which may be exercised in its
sole discretion upon ten (10) calendar days prior written notice (the "Notice")
to Investor, to cause Investor to purchase from Lender all of the Obligations of
Borrower to Lender at a purchase price equal to the then outstanding principal
balance of the Advances together with all interest, charges and fees payable
thereon in immediately available funds on the date specified in the Notice. The
obligation of Investor to purchase the Obligations shall be performed on or
prior to the date specified in the Notice, and upon receipt of the purchase
price Lender shall assign the Obligations and Collateral to Investor without
recourse, warranty or representation of any kind. The provisions of this Section
4 are in addition to and not in limitation of any remedies of Lender set forth
herein or in the Credit Agreement.
5. UNCONDITIONAL OBLIGATIONS; WAIVERS OF DEFENSES. The obligations of
Investor under this Agreement shall be absolute and unconditional under any and
all circumstances, and shall not be to any extent or in any way discharged,
impaired or otherwise affected except by performance in full. Without limiting
the generality of the foregoing, such obligations shall not be affected by: (i)
any lack of validity or enforceability of the Credit Agreement, the Notes or any
other Loan Document, (ii) any amendment of or addition or supplement to, or any
waiver or consent with respect to, the Credit Agreement, the Notes, or any other
Loan Document, (iii) any exercise or nonexercise of any right, power or remedy
under or in respect of the Credit Agreement, the Notes, or any other Loan
Document (iv) any exchange, release or nonperfection of any Collateral or any
other action or omission to act with respect to any Collateral, or any release
or amendment or waiver of or consent to departure from any guaranty, for all or
any of the Obligations or any other release, extension, settlement, compromise,
indulgence or other action, inaction, change, waiver or omission under or in
respect of the Credit Agreement, the Notes, or any other Loan Document, (v) the
value of the Collateral regardless of the manner of determining such value, (vi)
the subordination of the payment of the Notes or any part thereof to the payment
of any other debts or claims which may at the time be due or owing by Borrower
to Lender or to any other Person, (vii) any Proceeding involving Borrower or
Investor, (viii) any Event of Default under the Credit Agreement whether or not
the indebtedness evidenced by the Notes shall have become due and payable, (ix)
any claim, abatement, reduction, limitation, impairment, termination, set-off,
defense, counterclaim or recoupment whatsoever or any right to any thereof
(including, but not limited to, claims, abatements, reductions, limitations,
impairments, terminations, set-offs, defenses, counterclaims or recoupment for
or on account of any past, present or future indebtedness of Borrower to
Investor or which may be asserted by Borrower against Lender, whether or not
arising under this Agreement and whether or not arising out of any action or
nonaction on the part of Borrower or Lender, including any disposition of the
assets of Borrower or any part thereof pursuant to requirements of any
governmental authority, actions of judicial receivers or trustees or otherwise
and whether or not arising from wilful or negligent acts or omissions), (x) any
failure on the part of Borrower to perform its respective duties
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and obligations under this Agreement, (xi) any other circumstance which
constitutes or might be construed to constitute, an equitable or legal discharge
of Borrower for the Obligations, or of Investor under this Agreement, in
bankruptcy or in any other instance, or (xii) any other circumstance, happening,
condition or event whatsoever, whether or not similar to any of the foregoing;
whether or not Investor shall have notice or knowledge of any of the foregoing
or shall have consented to any of the foregoing. Investor hereby irrevocably
waives, to the extent that it may do so under applicable law, any defense based
on the adequacy of a remedy at law which may be asserted as a bar to the remedy
of specific performance in any action brought against Investor for specific
performance of this Agreement by Borrower or Lender or for its benefit by a
receiver or trustee appointed for Borrower or in respect of all or a substantial
part of Borrower's assets under the bankruptcy or insolvency laws of any
jurisdiction to which Borrower is, or its assets are, subject. Anything in this
Section 5 to the contrary notwithstanding, Investor shall not be precluded from
asserting as a defense against any claim made against it upon any of its
obligations hereunder that it has fully performed such obligation in accordance
with the terms of this Agreement.
6. REINSTATEMENT. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is invalidated, declared to be fraudulent or
preferential, set aside, rescinded or must otherwise be restored or returned by
Lender upon the insolvency, bankruptcy, liquidation, dissolution or
reorganization of Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
Borrower or any substantial part of its property, or otherwise, all as though
such payment had not been made.
7. LENDER AS BENEFICIARY, ENFORCEMENT ACTION. The agreements contained
herein have been made for the benefit of Lender, as well as Borrower. If at any
time Investor shall fail to fulfill its obligations hereunder, Lender may
proceed to protect and enforce the rights of Lender under this Agreement by suit
in equity, action at law or other appropriate proceedings, whether for the
specific performance of any covenant or agreement contained in this Agreement or
otherwise. Each and every remedy of Lender shall, to the extent permitted by
law, be cumulative and shall be in addition to any other remedy given hereunder
or now or hereafter existing at law or in equity or by statute.
8. NO WAIVER, CUMULATIVE REMEDIES. No failure to exercise nor any
delay in exercising, on the part of Lender, any right, power or privilege
hereunder or by statute or at law or in equity shall operate as a waiver thereof
nor shall any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof, or the exercise of any other
power or right. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law or in any other Loan
Documents.
9. NOTICES. All notices, requests and demands to or upon the parties
may be given by (a) hand delivery, (b) registered or certified mail return
receipt requested, (c) telex or telegram, subsequently confirmed by registered
or certified mail, or (d) telefaxed (with communication to a duly authorized
officer of the recipient confirming its receipt), subsequently confirmed by
registered or
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certified mail, addressed to Investor, Borrower and Lender at the respective
addresses or transmission numbers set forth under its signatures below, and
shall be effective (i) in the case of mail, on the business day deposited in the
mail and (ii) in the case of telex or facsimile transmissions, when delivered to
the transmission number as provided in this Section.
10. WAIVERS, AMENDMENTS. No provision of this Agreement shall be
waived, amended or supplemented except by a written instrument executed by
Investor, Borrower and Lender. This Agreement and all obligations of Investor
and Borrower hereunder shall be binding upon its respective successors and
assigns, and shall together with the rights and remedies of Lender hereunder,
inure to the benefit of Lender and its successors and assigns; provided,
however, that no assignment or purported assignment by Investor of any of its
rights or obligations hereunder shall be effective to relieve Investor of its
obligations hereunder unless such assignment is consented to in writing by
Lender. Lender may assign its rights under this Agreement in whole or in part
and, if it does so, shall notify Investor and Borrower thereof (provided that
the failure by Lender to give such notice shall not have any adverse effect on
the validity or enforceability of such assignment).
11. GOVERNING LAW. This Agreement shall be governed by and be
construed and interpreted in accordance with the laws of the State of Minnesota.
12. 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. SUBMISSION TO JURISDICTION; WAIVER.
(a) Investor and Borrower hereby irrevocably and unconditionally
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect hereof, to the
nonexclusive general jurisdiction of the District Court of
Hennepin County, Minnesota, or the United States District
Court, District of Minnesota, Fourth Division and appellate
courts from any thereof;
(ii) consents that any such action or proceeding may be brought
in such courts, and waives any objection that it may, now or
hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or
claim the same;
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(iii)agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form and mail), postage prepaid, to Investor or Borrower at
its address set forth under its signature below or at such
other address of which Lender shall have been notified
pursuant hereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction.
(b) INVESTOR AND BORROWER AND LENDER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING REFERRED
TO IN SECTION 13(a).
14. COUNTERPARTS. This Agreement may be executed by the parties hereto
in any number of counterparts and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the undersigned have caused this Keep Well
Agreement to be duly executed and delivered by its duly authorized officers on
the date and year first above written.
Address for Notices: BORROWER:
#0 Xxxxxxxx Xxxxx OUR FOOD PRODUCTS GROUP, INC.
Xxxx, Xxxxx 00000 By: /s/ Xxxxx Xxxxxxx
Telecopier: 000-000-0000 ------------------------------------
Attention: Xxxxx X. Xxxxxxx, CFO Name: XXXXX XXXXXXX
Title: Chief Financial Officer
Address for Notices: INVESTOR:
-------------------------- XXXXXX XXXX GROUP, INC.
-------------------------- By: /s/ Xxxxxxx X. Xxxxx
-------------------------- -----------------------------------
Telecopier: Name: XXXXXXX X. XXXXX
--------------- Title: Chairman
Attn:
---------------------
Address for Notices: LENDER:
Norwest Center N9312-040 XXXXX FARGO BUSINESS CREDIT, INC.
Sixth Street and Marquette Avenue By: /s/ Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 ------------------------------------
Telecopier: 612/341-2472 Name: XXXXXXXX XXXXXXXXX
Attn: Xxxxxxxx Xxxxxxxxx Title: Vice President
and to:
Xxxxx Fargo Business Credit, Inc.
0000 Xxxxxxx Xxxx
Xxxxx XX000
Xxx Xxxxxxx, Xxxxx 00000
Telecopier: 210/856-8989
Attention: Xxxxxxxx Xxxxxxxxx
EXHIBIT A
(Attach Form of Subordination Agreement)
