Exhibit 10.13
KEEP-WELL AGREEMENT
THIS KEEP-WELL AGREEMENT (this "Agreement") is made and entered into this
day ___ of April, 1994 by and among X.X. XXXXXXXX, INC., a Minnesota corporation
("Xxxxxxxx"), WAGONMASTER TRANSPORTATION COMPANY, a Minnesota corporation
("Wagonmaster"), and METLIFE CAPITAL, LIMITED PARTNERSHIP ("MetLife") 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 MetLife lease to Wagonmaster, pursuant
to the terms of that certain lease between MetLife and Wagonmaster of even date
herewith (the "Lease"), certain equipment (the "Equipment") described more
particularly in the Lease.
C. MetLife 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 MetLife 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. 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. The term "total cash flow" shall mean net
after tax income as reflected in annual financial statements, plus depreciation,
plus capital infusions from Xxxxxxxx, plus rental expense, minus stockholder
dividends. The term "fixed charges" shall mean the sum of all obligations
payable during any period of twelve (12) consecutive months 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.
2. Officer's Certificates. Wagonmaster shall deliver to MetLife, as soon
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as available but in any event not later than thirty (30) days following the end
of each fiscal quarter, copies of the quarterly financial statements of
Wagonmaster together with a certificate in the form attached hereto as Exhibit
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A, executed within thirty (30) days following the end of such fiscal quarter, by
a vice president of Wagonmaster, indicating the status of each of the covenants
set forth in Section 1 above.
3. 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 2, and such failure shall continue for five (5)
days after Wagonmaster's receipt of notice from MetLife of such failure.
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 MetLife of such failure.
c. 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 MetLife.
d. 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
MetLife.
4. Remedies. Upon the occurrence of an Event of Default, Xxxxxxxx shall
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have the option to purchase the Equipment at its then Stipulated Loss Value (as
defined in the Lease); provided that Xxxxxxxx shall purchase such Equipment
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within ten (10) days of Xxxxxxxx'x receipt from MetLife of written notice of the
Event of Default. The purchase price for the Equipment shall include, in
addition to the Stipulated Loss Value, (i) the past due noncancellable rents
remaining unpaid under the Lease plus all late fees assessed under the terms of
the Lease, each as of the date on which Xxxxxxxx pays the purchase price, and
(ii) reimbursement of all expenses incurred by MetLife in pursuing its remedies
hereunder, including reasonable attorneys' fees. If Xxxxxxxx fails to deliver to
MetLife the Stipulated Loss Value for the Equipment plus the other amounts set
forth above within such time period, MetLife 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
4(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 MetLife. If Wagonmaster shall
fail to do so, MetLife may retake possession of the Equipment by entering upon
any premises at any reasonable time and thereafter MetLife 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 MetLife or
any other person at any foreclosure sale. If MetLife is required to retake
possession, Xxxxxxxx shall upon demand reimburse MetLife for all costs and
expenses relating thereto. Notwithstanding such redelivery or retaking, MetLife
shall have the right to recover from Xxxxxxxx and Wagonmaster or either of them
any and all amounts which under the terms of the Lease may be then due or which
may have accrued to the date of such termination, and also to recover forthwith
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 Stipulated Loss Value of
the Equipment (as defined in the Lease) as of the rent payment date on or next
preceding the date of the Event of Default, less:
(i) the amount MetLife in fact receives from the sale of the
Equipment, after deduction of all estimated expenses of such sale (Equipment
which MetLife is unable to recover shall at MetLife's option be deemed
worthless) or
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(ii) at MetLife'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 MetLife (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 specified in the Request
to Purchase for such Equipment, as defined in the Lease. In addition, Xxxxxxxx
shall be liable to MetLife for all costs and expenses incurred by MetLife 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 effect, or the legal limit, whichever is smaller. MetLife'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 MetLife may commence or in which MetLife 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.
5. MetLife's Obligations. Xxxxxxxx and Wagonmaster acknowledge and agree
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that (a) Xxxxxxxx'x obligations to MetLife under this Agreement are primary, (b)
MetLife may pursue any and all of its remedies hereunder in any order it may
choose, (c) MetLife 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, MetLife may pursue
its remedies under this Agreement even if Wagonmaster is then in full compliance
with the terms of the Lease, and (e) MetLife's rights and remedies hereunder
shall not be affected by any bankruptcy or insolvency of Wagonmaster or Xxxxxxxx
except to the extent that MetLife's right to repossess the Equipment may be
lawfully stayed subsequent to the filing of a bankruptcy petition.
6. Waiver. Xxxxxxxx hereby irrevocably waives all claims it has or may
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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.
7. 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
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MetLife's right to enforce such satisfaction. All of MetLife's rights and
remedies shall be cumulative, and any failure of MetLife 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 MetLife, 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.
8. Governing Law. This Agreement shall be governed by and construed in
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accordance with the internal laws of the State of Washington without regard to
the conflicts of laws rules thereof.
9. Assignment. This Agreement shall inure to the benefit of MetLife and
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its successors and assigns. MetLife 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
MetLife, and any such assignment or transfer purported to be made without such
consent shall be ineffective.
10. 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.
11. 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.
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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 and CFO
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WAGONMASTER TRANSPORTATION COMPANY
By: /s/ Xxxxxxx Xxxxx
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Title: President
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METLIFE CAPITAL, LIMITED PARTNERSHIP
By_______________________________________________
Title:___________________________________________
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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 MetLife Capital, Limited Partnership, 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 MetLife, the sole owner of all of the
issued and outstanding stock of Wagonmaster Transportation Company.
2. As reflected in the attached quarterly 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.
__________________________
______________ Vice President
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