Exhibit 10.16
AGREEMENT
This agreement (the "Agreement"), dated as of March 20, 1997, is among
Fieldbrook Farms Ice Cream, Inc., a Delaware corporation ("Fieldbrook"), Mike's
Original, Inc., a Delaware corporation (the "Company"), and Xxxxxxx Xxxxx (the
"Guarantor").
WHEREAS, Fieldbrook manufactures ice cream products for the Company
(the "Products") at its facility in Dunkirk, New York;
WHEREAS, as of the date hereof, the Company owes Fieldbrook One-Hundred
Twenty-Five Thousand Six Hundred Seventeen Dollars ($125,617.00), subject to
adjustments, if any, to be mutually agreed upon by the parties hereto in their
sole discretion (the "Accounts Receivable") for Products delivered to the
Company prior to this date;
WHEREAS, the Accounts Receivable are past due;
WHEREAS, the Company has not made any profit since its inception and
its accountants have qualified their reports on the financial statements of the
Company with respect to the Company's ability to continue as a going concern;
WHEREAS, the Guarantor is the founder, Chief Executive Officer and a
stockholder of the Company and will benefit from the execution and delivery of
this Agreement;
WHEREAS, Fieldbrook is unwilling to continue to manufacture the
Company's Product unless the Company and the Guarantor agree to enter into this
Agreement; and
WHEREAS, the Company and the Guarantor are willing to enter into this
Agreement in order to induce Fieldbrook to continue the production of the
Product until the termination of this Agreement pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises set forth above and
the terms and conditions contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company, the
Guarantor and Fieldbrook hereby agree as follows:
SECTION 1 - Supply Agreement
(a) The Company hereby agrees that Fieldbrook shall be the exclusive
supplier all Products manufactured by Fieldbrook and distributed by the Company
east of the Mississippi River for a period of twenty-four (24) months from the
date hereof. Fieldbrook will supply such Product on the same terms and
conditions as set forth in paragraphs 1 though 15 of that certain Manufacturing,
Delivery and Pricing Agreement, dated September 11, 1996 (the "Supply
Agreement") presently in effect between Fieldbrook and the Company, except as
set forth in the following sentence. Notwithstanding the foregoing, all Products
sold by Fieldbrook to the Company shall be sold at the prices specified in the
Supply Agreement, plus additional adjustments, if any, related to increases or
decreases in the costs of processing the Products.
(b) Fieldbrook shall be obligated to sell Products to the Company
pursuant to SECTION 1(a) hereof and the Supply Agreement. Nothing in this
Agreement or otherwise, however, shall obligate Fieldbrook to manufacture, sell
or produce any new or different products or class or line of products that the
Company wishes to distribute that Fieldbrook does not choose to manufacture,
sell or produce for the Company, notwithstanding the fact that Fieldbrook may
manufacture, sell or produce such products for one or more of its other
customers. If Fieldbrook declines to manufacture, sell and produce any new
product, the Company shall be free to obtain such product from another supplier.
SECTION 2 - Raw Materials
As of the date hereof, certain raw materials or packaging used in the
manufacture of the Product are owned by and stored at Sani Dairy and are
described on Schedule A attached hereto. As soon as possible, but in no case
later than March 25, 1997, all such raw materials and packaging shall be
delivered to Fieldbrook in one or more shipments. Upon delivery; Fieldbrook
shall receive good title to such raw materials and packaging. The cost of
delivery shall be borne by the Company. The raw materials shall be of commercial
marketable quality, and shall be valued as set forth on Schedule A. Fieldbrook
will credit the Company at the time such raw material and packaging is received
by Fieldbrook in an amount equal to its value as stated on Schedule A. In
addition, Fieldbrook will credit the Company for packaging valued at Twenty
Thousand Ninety-Nine Dollars ($20,099) heretofore delivered to Fieldbrook.
Fieldbrook will examine all such raw material delivered to it on the date of
delivery and will immediately notify the Company if, in the exercise of its
reasonable judgment, any such raw material does not meet the standards set forth
herein.
SECTION 3 - Outstanding Indebtedness
(a) On or before the earlier of (i) the initial public offering of
securities (the "Units") of the Company or (ii) April 23, 1997, the Company
shall pay to Fieldbrook One Hundred Fifty Thousand Dollars ($150,000) with
respect to outstanding accounts receivable. If the Company shall fail to pay
such amount in full by April 30, 1997, the Company shall sell to Fieldbrook
30,000 additional fully paid and non assessable shares of the Company's common
stock, $.001 par value (the "Common Stock"), for a purchase price of $300.00 and
Fieldbrook agrees to purchase such Common Stock from the Company. The Company
agrees to register all such Common Stock as part of the initial public offering.
(b) All accounts receivable due and owing to Fieldbrook arising from
the date hereof to and including the date of consummation of the proposed
initial public offering of Units shall be paid no later than the consummation of
such offering. If the Company is unable to consummate the initial public
offering of the Units on or prior to May 15, 1997, Fieldbrook may terminate this
Agreement and the Company shall pay to Fieldbrook upon such termination on all
amounts outstanding for Products delivered to the Company.
SECTION 4 - Common Stock
Within one day of the execution of this Agreement, the Company shall
sell, convey and transfer to Fieldbrook 35,000 fully paid and nonassessable
shares of the Company's Common Stock, for a purchase price of $350.00 and
Fieldbrook agrees to purchase such Common Stock from the Company and execute a
letter indicating its investment interest. The. Company agrees to register all
of such Common Stock as part of the initial public offering discussed in SECTION
3 above. Fieldbrook agrees that it will not publicly sell any shares of Common
Stock received pursuant to this Agreement for a period of six (6) months after
the date of the initial public offering; provided that if the National
Association of Security Dealers, Inc. shall require Fieldbrook to hold such
shares for a longer period, which shall not exceed twelve (12) months,
Fieldbrook will agree to not sell such shares until such later date. All such
restrictions are subject to earlier release by the underwriter of the initial
public offering. The Company shall use its reasonable efforts to cause the
underwriter to release Fieldbrooks' shares from the lock up if Fieldbrook
desires to sell such shares as least as early as any other stockholder of the
Company.
SECTION 5 - Maximum Accounts Receivable
The Company agrees that prior to the earlier of (i) the initial public
offering or (ii) April 30, 1997, Fieldbrook shall not be obligated to deliver
any additional Product to the Company at any time that the accounts receivable
of the Company to Fieldbrook, whether or not overdue, exceed an aggregate of Two
Hundred Fifty Thousand Dollars ($250,000). Subsequent to the earlier of the
initial public offering or April 30, 1997, Fieldbrook shall determine the
maximum amount of outstanding accounts receivable available to the Company band
upon an evaluation of the Company's creditworthiness and the Company's
compliance with the terms and conditions herein.
SECTION 6 - Default
Upon the failure of the Company to comply with the provisions herein,
Fieldbrook may terminate providing Products to the Company upon ten (10) days'
prior written notice to the Company (a "default"), provided that the Company
does not cure such noncompliance within such ten (10) day period. Any amounts
owed hereunder or under any prior agreement between Fieldbrook and the Company
shall remain due and owing.
On the occurrence of a default, Fieldbrook may exercise any rights and
remedies available to it and require the Company, and the Company hereby agrees,
to pay all reasonable costs and expenses incurred by Fieldbrook in connection
with the enforcement of any obligations owed to Fieldbrook by the Company.
Without limiting the foregoing, upon the occurrence of a default hereunder,
Fieldbrook shall have the Immediate right to sell liquidation and dispose of all
Product, raw materials and packaging held by Fieldbrook with respect to which
title has not yet passed to the Company, and such sale, liquidation or disposal
may take place in any manner deemed appropriate by Fieldbrook in its sole
discretion.
SECTION 7 - Guaranty
The Guarantor hereby unconditionally and irrevocably guarantees the
punctual payment when due, whether on the due date, by acceleration or
otherwise, of all obligations of every kind and character now or hereinafter
existing, whether matured or unmatured, contingent or liquidated, of the Company
to Fieldbrook, including any interest accrued thereon (including interest at the
applicable rate after the filing of a petition initiating and case or proceeding
in bankruptcy with respect to the Company). The Guarantor hereby acknowledges
that this is a guaranty of payment and not of collection. The Guarantor hereby
waives notice of acceptance of this guaranty and notice of any liability to
which it may apply, and waives diligence, presentment, demand of payment,
protest and notice of dishonor or nonpayment of any the obligations of the
Company to Fieldbrook. The Guarantor irrevocably waives any and all rights to
which he may be entitled, by operation of law or otherwise, to be subrogated to
the rights of Fieldbrook against the Company.
The guaranty set forth in this SECTION 7 shall terminate upon the
consummation of the initial public offering referred to above, provided that all
monies due and owing to Fieldbrook at the time of the offering are paid in full.
SECTION 8 - Termination by the Company
This Agreement may be terminated by the Company upon the occurrence and
continuance of any of the following events:
(i) Any proceeding shall be instituted by or against Fieldbrook seeking
to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, adjustment, protection or relief under any law relating to
bankruptcy, insolvency or reorganization of relief of debtors, or seeking the
entry of an order for relief or the appointment of a trustee, or similar
official for it, and if such proceeding is instituted against Fieldbrook such
proceeding shall not have been stayed within sixty (60) days;
(ii) Any person or entity (other than an affiliate of such person or
entity) other than the stockholders of all the issued and outstanding common
stock of Fieldbrook on the date hereof shall obtain beneficial ownership (as
defined under Section 13(d) of the Securities Exchange Act of 1934, amended) of
more than fifty-one percent (51%) of such stock, or represent more than fifty
percent (50%) of the Company's Board of Directors; and
(iii) Fieldbrook shall be in material breach of any of the terms and
provisions of this Agreement, which breach shall remain uncured for a period of
thirty (30) days after written notice to Fieldbrook thereof.
SECTION 9 - Amendments
This Agreement may not be amended or waived by any party without the
prior written consent of the others. No failure on the part of Fieldbrook to
exercise and no delay in exercising any right hereunder shall operate as a
waiver or preclude Fieldbrook from exercising any remedy or any other right
permitted by law. The remedies herein are cumulative and not exclusive.
SECTION 10 - Assignment
The rights and obligations of the parties hereto may not be assigned to
any other person or entity with out the written consent of all the other parties
hereto, which consent shall be in each such party's sole discretion.
SECTION 11 - Governing Law
This Agreement shall be, governed by and interpreted and construed in
accordance with the laws of the State of New York.
SECTION 12 - Jurisdiction
The Company hereby irrevocably submits to the jurisdiction of any court
in the State of New York or any United States Federal Court sitting in the State
of New York over any action or proceeding arising out of or relating to this
Agreement. The Company irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to the Company at its address set forth on the signature page hereof.
The Company further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum
nonconveniens. The Company hereby waives any right it may have to jury trial.
SECTION 13 - Notices
All notices given hereunder shall be in writing and delivered by
facsimile, confirmation received, mailed or delivered by overnight courier,
confirmed by signed receipt at the address set forth on the signature page
hereof, or to such other address as any party hereto shall specify to the other
parties in writing. AD notices shall be effective upon receipt.
SECTION 14 - Counterparts
Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any party hereto
may execute this Agreement by signing each counterpart.
SECTION 15 - Legal Fees
On the earlier of the consummation of the initial public offering or
May 15, 1997, the Company agrees to pay Fieldbrook all costs and expenses of
Fieldbrooks legal counsel Incurred in preparing this Agreement; provided,
however, that such fees and expenses shall not exceed Eight Thousand Dollars
($8,000) and shall not be included in determining the outstanding accounts
receivable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written above.
FIELDBROOK FARMS ICE CREAM, INC.
By______________________________
Title
Address:_________________________
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Telephone No.____________________
Facsimile No._____________________
MIKE'S ORIGINAL, INC.
By_____________________________
Title
Address:________________________
--------------------------------
Telephone No.____________________
Facsimile No._____________________
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XXXXXXX XXXXX, as guarantor
Address:________________________
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Telephone No. ___________________
Facsimile No. ____________________
