Exhibit 10.11
KEEP-WELL AGREEMENT
THIS KEEP-WELL AGREEMENT (this "Agreement") is made and entered into this
19th day of August, 1994 by and among X. X. XXXXXXXX, INC., a Minnesota
corporation ("Xxxxxxxx"), WAGONMASTER TRANSPORTATION COMPANY, a Minnesota
corporation ("Wagonmaster"), and AT&T COMMERCIAL FINANCE CORPORATION, a Delaware
Corporation ("AT&T") with respect to the following facts:
RECITALS
X. Xxxxxxxx is the sole shareholder of all of the issued and outstanding
stock of Wagonmaster.
B. Wagonmaster has requested that AT&T lease to Wagonmaster, pursuant to
the terms of that certain lease between AT&T and Wagonmaster of even date
herewith (the "Lease"), certain equipment (the "Equipment") described more
particularly in the Lease.
C. AT&T has agreed to lease the Equipment to Wagonmaster on the
condition, among other things, that Xxxxxxxx and Wagonmaster execute and deliver
this Agreement.
X. Xxxxxxxx and Wagonmaster anticipate that the Equipment may from time
to time be used by Xxxxxxxx and affiliates of Xxxxxxxx, pursuant to the terms of
written subleases.
E. As sole shareholder of Wagonmaster, and because the Equipment may from
time to time be used by Xxxxxxxx and affiliates of Xxxxxxxx, Xxxxxxxx
acknowledges that it will receive substantial benefit if AT&T agrees to lease
the Equipment to Wagonmaster.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by all the parties, the parties agree as follows:
AGREEMENT
1. Representations and Warranties. Xxxxxxxx and Wagonmaster hereby
represent and warrant that, as of the date hereof:
x. Xxxxxxxx owns one hundred percent (100%) of the issued and
outstanding stock of Wagonmaster;
b. Wagonmaster has tangible net worth of not less than Two Million
Dollars ($2,000,000);
c. The ratio of Wagonmaster's total cash flow (as hereinafter
defined) to its fixed charges (as hereinafter defined) is not less than 1.1 to
1; and
d. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action, this Agreement has been
duly executed and delivered by Xxxxxxxx and Wagonmaster, and this Agreement
constitutes a legal, valid and binding obligation of Xxxxxxxx and Wagonmaster,
enforceable against them in accordance with its terms in all pertinent
jurisdictions.
2. Financial Covenants. For and during the term of the Lease and any
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renewals and extensions thereof, Xxxxxxxx and Wagonmaster agree to comply with
the following covenants, and Xxxxxxxx specifically agrees to take such actions
with respect to Wagonmaster as are required for such covenants to be met:
x. Xxxxxxxx shall at all times continue to own one hundred percent
(100%) of the issued and outstanding stock of Wagonmaster;
b. Wagonmaster shall have a minimum tangible net worth of not less
than Two Million Dollars ($2,000,000); and
c. Wagonmaster shall maintain a ratio of total cash flow to fixed
charges of not less than 1.1 to 1. Compliance with the covenant set forth in
the preceding sentence shall be tested on an annual basis as of the end of each
fiscal year of Wagonmaster; provided, however, that after and during the
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continuance of any event of default under the Lease, such compliance shall be
tested on a quarterly basis beginning with the fiscal quarter ending immediately
prior to the occurrence of such event of default. The term "total cash flow"
shall mean, for any relevant fiscal period, net after tax income as reflected in
the relevant quarterly or annual financial statements, plus depreciation
expense, plus capital infusions from Xxxxxxxx, plus rental expense, minus
stockholder dividends. The term "fixed charges" shall mean, for any fiscal
quarter or year, as applicable, the sum of all obligations payable during such
fiscal period for (i) principal on borrowed money repayable over a period in
excess of one (1) year; and (ii) any other obligations under leases which shall
have been or, under generally accepted accounting principles, should be recorded
as capital leases; and (iii) rental expenses.
3. Officer's Certificates. (a) Wagonmaster shall deliver to AT&T, as
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soon as available but in any event not later than thirty (30) days following the
end of each fiscal quarter, copies of the quarterly or annual (as the case may
be) financial statements of Wagonmaster for such fiscal quarter or year,
together with a certificate in the form attached hereto as Exhibit A executed
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within thirty (30) days following
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the end of such fiscal quarter or year, by a vice president of Wagonmaster,
indicating the status of each of the covenants set forth in Section 2.
(b) Xxxxxxxx shall deliver to AT&T, (i) as soon as available but in
any event not later than thirty (30) days following the end of each of the first
three fiscal quarters of each fiscal year, copies of the quarterly consolidated
and consolidating financial statements of Xxxxxxxx and its subsidiaries for such
fiscal year, certified by Xxxxxxxx'x Chief Financial Officer, and (ii) as soon
as available but in any event not later than ninety (90) days following the end
of each fiscal year, copies of the audited annual consolidated and consolidating
financial statements of Xxxxxxxx and its subsidiaries for such fiscal year,
certified by an independent accounting firm.
4. Events of Default. Each of the following shall constitute an event of
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default (an "Event of Default") under this Agreement:
a. Wagonmaster shall fail to deliver the financial statements and
officer's certificates required to be delivered under, and within the time
period set forth in, Section 3(a), and such failure shall continue for five (5)
days after Wagonmaster's receipt of notice from AT&T of such failure.
x. Xxxxxxxx shall fail to deliver the financial statements required
to be delivered under, and within the time period set forth, in Section 3(b),
and such failure shall continue for five (5) days after Xxxxxxxx'x receipt of
notice from AT&T of such failure.
c. Any of the representations and warranties set forth in Section 1
shall prove to have been false.
x. Xxxxxxxx shall own less than one hundred percent (100%) of the
issued and outstanding stock of Wagonmaster, and such failure shall continue for
ten (10) days after Xxxxxxxx'x receipt of notice from AT&T of such failure.
e. The tangible net worth of Wagonmaster shall be less than Two
Million Dollars ($2,000,000), and such tangible net worth shall not be increased
to at least Two Million Dollars ($2,000,000) within ten (10) days after
Xxxxxxxx'x receipt of notice from AT&T.
f. The ratio of Wagonmaster's total cash flow to Wagonmaster's fixed
charges shall fall below 1.1 to 1, and such ratio shall not be increased to at
least 1.1 to 1 within ten (10) days after Xxxxxxxx'x receipt of notice from
AT&T.
g. Wagonmaster makes an assignment for the benefit of creditors or
any proceeding under any bankruptcy, reorganization, arrangement of debts,
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insolvency or receivership law is filed by or against Wagonmaster or Wagonmaster
takes any action to authorize any of the foregoing matters.
5. Remedies. Upon the occurrence of an Event of Default, Xxxxxxxx shall
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have the option to purchase the Equipment at Lessor's Return (as defined in the
Lease) on an "as-is, where-is" basis without any obligation on the part of AT&T
to deliver possession of the Equipment to Xxxxxxxx and without any warranty,
express or implied from AT&T, other than the absence of any liens by, through or
under AT&T; provided that Xxxxxxxx shall purchase such Equipment on such basis
within ten (10) days of Xxxxxxxx'x receipt from AT&T of written notice of the
Event of Default. The purchase price for the Equipment shall include, in
addition to an amount equal to the then Lessor's Return, an amount equal to all
expenses incurred by AT&T in pursuing its remedies hereunder, including
reasonable attorneys' fees. If Xxxxxxxx fails to deliver to AT&T an amount equal
to the then Lessor's Return for the Equipment plus the other amounts set forth
above within such time period, AT&T may, at its option, take any of the
following actions:
a. Proceed by appropriate court action or actions, either at law or
in equity, either before or after resorting to its remedies set forth in Section
5(b), to (i) require Xxxxxxxx to take such actions as are necessary to comply or
cause compliance with the covenants set forth herein, and Xxxxxxxx acknowledges
and agrees that specific performance is an appropriate remedy, or (ii) recover
from Xxxxxxxx damages for the breach of the covenants contained herein; and/or
b. By written notice to Xxxxxxxx and Wagonmaster terminate Xxxxxxxx
and Wagonmaster's right of possession of the Equipment, whereupon all rights of
Xxxxxxxx and Wagonmaster or their permitted assigns to use the Equipment shall
absolutely cease and terminate, but Wagonmaster and Xxxxxxxx shall remain liable
as herein provided. Upon such a termination, Xxxxxxxx shall cause Wagonmaster,
at its expense, to redeliver the Equipment to AT&T. If Wagonmaster shall fail
to do so, AT&T may retake possession of the Equipment by entering upon any
premises at any reasonable time and thereafter AT&T may hold, possess, sell,
upgrade, lease to others or enjoy the same, free from any right of Wagonmaster,
Xxxxxxxx or their respective successors or assigns, and Xxxxxxxx hereby waives
the right to object to the amount that may be bid by AT&T or any other person at
any foreclosure sale. If AT&T is required to retake possession, Xxxxxxxx shall
upon demand reimburse AT&T for all costs and expenses relating thereto.
Notwithstanding such redelivery or retaking, AT&T shall have the right to
recover from Xxxxxxxx and Wagonmaster or either of them its damages for loss of
a bargain and not as a penalty, an amount equal to the Lessor's Return with
respect to the Equipment as of the rent payment date on or next preceding the
date of the Event of Default, less:
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(i) the amount AT&T in fact receives from the sale of the Equipment,
after deduction of all estimated expenses of such sale (Equipment
which AT&T is unable to recover shall at AT&T's option be deemed
worthless); or
(ii) at AT&T's election, the present value of the noncancellable
regularly scheduled rentals receivable from a subsequent lease of all
or part of the Equipment entered into by AT&T (discounted at a rate
equal to five (5) percentage points above the prime rate then in
effect), and taking into account only the rentals receivable from the
commencement date of such subsequent lease until the end of the term
of the Lease. In addition, Xxxxxxxx shall be liable to AT&T for all
costs and expenses incurred by AT&T by reason of Xxxxxxxx'x breach or
default. In addition to the foregoing, Xxxxxxxx shall be liable for
interest on any of the above referenced amounts from and after the due
date at the rate of five (5) percentage points above the prime rate
then in effect, or the legal limit, whichever is smaller. AT&T's
costs and expenses incurred by reason of breach or default shall
include, without limitation, costs and expenses of receiving or
retaking possession of the Equipment, storing, holding, transporting,
insuring, caring for, servicing, maintaining and renting the Equipment
and collecting rents and professional fees and expenses with respect
to or incurred by reason of the breach or default, including legal
fees and expenses for advice and legal services in any actions or
proceedings which AT&T may commence or in which AT&T may appear or
participate to exercise or enforce any rights or remedies or to
protect or preserve any rights or interests, and in all reviews of and
appeals from any such actions or proceedings.
6. AT&T's Rights. Xxxxxxxx and Wagonmaster acknowledge and agree that
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(a) Xxxxxxxx'x obligations to AT&T under this Agreement are primary, (b) AT&T
may pursue any and all of its remedies hereunder in any order it may choose, (c)
AT&T shall have no obligation to pursue its remedies with respect to Wagonmaster
or the Equipment under the terms of the Lease before pursuing Xxxxxxxx or the
Equipment under the terms of this Agreement, (d) if an Event of Default under
this Agreement has occurred and is continuing, AT&T may pursue its remedies
under this Agreement even if Wagonmaster is then in full compliance with the
terms of the Lease, and (e) AT&T's rights and remedies hereunder shall not be
affected by any bankruptcy or insolvency of Wagonmaster or Xxxxxxxx except to
the extent that AT&T's right to repossess the Equipment may be lawfully stayed
subsequent to the filing of a bankruptcy petition. Xxxxxxxx hereby consents and
agrees that AT&T may at any time, or from time to time, in its discretion, and
without affecting Xxxxxxxx'x obligations under this Agreement:
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a. extend or change the time of payment, and/or the manner, place,
currency or terms of payment of all or any of Wagonmaster's obligations under
the Lease or any related document, or otherwise agree with Wagonmaster to amend
the terms of the Lease or any related document;
b. waive any of the terms of the Lease or any related document; and
x. xxxxxx or compromise with Wagonmaster any and all of its
obligations under the Lease or any related document and/or subordinate the
payment of the same, or any part thereof, to the payment of any other debts or
claims which may at any time be due or owing to AT&T or any other person, all in
such manner and upon such terms as AT&T may deem proper, and without notice to
or further assent from Xxxxxxxx, it being hereby agreed that Xxxxxxxx shall be
and remain bound under this Agreement, irrespective of the existence, value or
condition of the Equipment or any collateral or other security, and
notwithstanding any such change, exchange, settlement compromise, surrender,
release, sale, application, renewal or extension.
7. Waiver. (a) Subrogation. Xxxxxxxx hereby irrevocably waives all
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claims it has or may acquire, if any, against Wagonmaster in respect of the
obligations set forth above, including rights of exoneration, reimbursement,
contribution and subrogation. Wagonmaster hereby irrevocably waives all claims
it has or may acquire, if any, against Xxxxxxxx in respect of the obligations
set forth above, including rights of exoneration, reimbursement, contribution
and subrogation.
(b) Defenses. Xxxxxxxx hereby irrevocably waives:
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(i) promptness, diligence, all presentments and demands for
performance or payment, any notices that payment or performance of all
or any of Wagonmaster's obligations under the Lease or any related
document are due and any other notice of any kind whatsoever with
respect to any of Wagonmaster's obligations under the Lease or any
related document or under this Agreement (other than notices expressly
contemplated by the terms of this Agreement);
(ii) all notices of the existence, creation or incurring of new or
additional obligations of Wagonmaster and notices of any and all
proceedings against Wagonmaster, any endorser, any guarantor, or any
other person with respect to all or any part of Wagonmaster's
obligations under the Lease or any related document, and, to the
extent permitted by law, notices of exchange, sale, surrender or other
handling of the Equipment or any collateral or other security given to
secure
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payment or performance of all or any part of Wagonmaster's obligations
under the Lease or any related document;
(iii) any defense based on non-amenability to suit of Xxxxxxxx,
including the defenses of any type of immunity and inconvenient forum;
and
(iv) any other circumstance whatsoever which might otherwise
constitute a legal, equitable, admiralty or maritime discharge,
release or defense of any guarantor or surety or which might otherwise
limit recourse against Xxxxxxxx.
8. No Waiver Rights Cumulative, Reasonable Notice. No delay in making
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demand for satisfaction of the obligations set forth herein shall prejudice
AT&T's right to enforce such satisfaction. All of AT&T's rights and remedies
shall be cumulative, and any failure of AT&T to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any
other right at any time and from time to time hereafter. If AT&T, in its sole
discretion, elects to give notice of any action with respect to the sale of the
Equipment, Xxxxxxxx and Wagonmaster agree that ten (10) days prior written
notice shall be deemed reasonable notice of any matters contained in such
notice.
9. Governing Law. This Agreement shall be governed by and construed in
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accordance with the internal laws of the State of New Jersey without regard to
the conflicts of laws rules thereof.
10. Assignment. This Agreement shall inure to the benefit of AT&T and its
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successors and assigns. AT&T may at any time assign or otherwise transfer all
or any part of its interest under this Agreement and to the extent of such
assignment, the assignee shall have the same rights and benefits against
Xxxxxxxx and Wagonmaster and otherwise under this Agreement (including any right
of setoff) as if such assignee were an original party hereto. This Agreement
shall be binding upon Xxxxxxxx and Wagonmaster, and neither Xxxxxxxx nor
Wagonmaster shall assign or otherwise transfer all or any part of their
respective rights or obligations hereunder without the prior written consent of
AT&T, and any such assignment or transfer purported to be made without such
consent shall be ineffective.
11. Severability. Any provision of this Agreement which is prohibited or
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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,
Xxxxxxxx and Wagonmaster each hereby waives any provision of law which renders
any provision of this Agreement prohibited or unenforceable in any respect.
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12. WAIVER OF JURY TRIAL. XXXXXXXX, WAGONMASTER AND AT&T EACH IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY
OTHER LITIGATION OR PROCEEDING UPON, ARISING OUT OF, OR RELATED TO THIS
AGREEMENT, ANY OTHER FUNDAMENTAL AGREEMENT, OR THE DEALINGS OR RELATIONSHIP
BETWEEN OR AMONG XXXXXXXX, WAGONMASTER AND AT&T OR ANY OTHER PERSON.
13. Entire Agreement. This Agreement contains the entire agreement of the
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parties with respect to the subject matter hereof, and there are no
understandings or agreements, written or oral, outside of this Agreement with
respect to the subject matter hereof. This Agreement may only be amended in a
writing executed by all parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first set forth
above.
X.X. XXXXXXXX, INC.
By /s/ Xxxx X. Xxxxxx
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Title Vice President, CFO and Treasurer
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WAGONMASTER TRANSPORTATION
COMPANY
By /s/ Xxxxxx X. Xxxxxx
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Title Vice President
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AT&T COMMERCIAL FINANCE
CORPORATION
By /s/ Xxxxxx X. Xxxxxx
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Title Vice President
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EXHIBIT A
TO
KEEP-WELL AGREEMENT
Form of Officer's Certificate
The undersigned, being a duly elected or appointed vice president of
Wagonmaster Transportation Company, does hereby certify, as of the date set
forth below, for the benefit of AT&T Commercial Finance Corporation, that the
following is true and correct:
1. X.X. Xxxxxxxx, Inc. is presently, and has been since the date of the
last Officer's Certificate delivered to AT&T Commercial Finance Corporation, the
sole owner of all of the issued and outstanding stock of Wagonmaster
Transportation Company.
2. As reflected in the attached [insert "quarterly" or "annual", as
applicable] financial statements of Wagonmaster Transportation Company, which
financial statements are true and correct, Wagonmaster Transportation Company,
has a tangible net worth of [insert the correct amount of the tangible net
worth, or if it is at least $2 Million, insert "not less than Two Million
Dollars ($2,000,000)"].
[3. The ratio of Wagonmaster's total cash flow to Wagonmaster's fixed
charges, each as defined in that certain Keep Well Agreement dated ________,
1994, is not less than 1.1 to 1.]/*/
IN WITNESS WHEREOF, the undersigned Vice President has executed this
certificate this ___ day of _________, 1994.
________________________________________
Xxxxxx X. Xxxxxx, Vice President
________________________
/*/To be included when applicable.
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