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EXHIBIT 10.22
INDEMNIFICATION AND CONTRIBUTION AGREEMENT
This Agreement (the "Agreement") is made and entered into as of March
3, 1999, by and among Xxxxxxx X. Xxxx ("Bird"), Xxxx X. Xxxxx ("Feltl"), Xxxxxxx
X. Xxxx ("Xxxx"), Xxxxxxx X. Xxxxxxx ("Xxxxxxx"), and Xxxxx X. Xxxxx ("Xxxxx")
(each also a "Guarantor"), and Cafe Odyssey, Inc., a Minnesota corporation (the
"Company").
INTRODUCTION
A. The Company is a party to a Revolving Credit Agreement dated
____________, 1999 with BankWindsor (the "BankWindsor Agreement") providing for
the borrowing by the Company of up to $1,000,000 on a revolving basis (the
"BankWindsor Financing");
B. As a condition to the borrowing, BankWindsor required one or more
guarantors to execute Several Guarantees (each, a "Guaranty") of the BankWindsor
Financing. The Guarantors have executed Guarantees in the following amounts:
Bird, $50,000; Feltl, $175,000; King, $175,000; Maudlin, $100,000; and Xxxxx,
$500,000.
C. In consideration of the Guarantees, the Company wishes to issue to
the Guarantors five-year warrants to purchase an aggregate of 500,000 shares of
the Common Stock, $.01 par value (the "Common Stock"), of the Company
(individually a "Warrant" and collectively the "Warrants").
D. The Guarantors desire to remedy the inequities that may otherwise
result from other than pro rata payments on the Guarantees by providing for
appropriate indemnification and contribution rights and obligations among the
Guarantors.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Guarantors hereto agree as follows:
1. Issuance of Warrants. On the date hereof, the Company shall issue
Warrants to each of the Guarantors, in the form attached as EXHIBIT A hereto, in
the following denominations: Bird, 25,000 shares; Feltl, 87,500 shares; King,
87,500 shares; Maudlin, 50,000 shares; and Xxxxx, 250,000 shares.
2. Company Liability to Guarantors for Payments on Guarantees. Upon
any Guarantor's payment to BankWindsor under his Guaranty (a "Claim"),
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(a) the Company shall be obligated to immediately reimburse such
Guarantor for the full amount of such Claim, together with
18% annual interest accrued thereon from the date the Claim
was paid; or
(b) in lieu of such reimbursement, such Guarantor may elect to
convert the amount of the Claim (together with accrued
interest) into Common Stock at a conversion price equal to
50% of the average last sale price of the Common Stock for
the 30 consecutive trading days immediately preceding such
conversion. If any Guarantor makes such an election, the
Company shall file, as soon as practicable, a registration
statement on Form S-3 (the "Registration Statement") to
register the Common Stock under the Securities Act and such
Blue Sky Laws of those states as are reasonably selected by
the Guarantor. The Company shall use its best efforts to have
the Registration Statement declared effective by the
Securities and Exchange Commission (the "Commission") as soon
as practicable. The Company shall keep the Registration
Statement effective and current until all the Common Stock is
sold or the Common Stock may be sold under Rule 144(k) under
the Securities Act, whichever is earlier. The Company shall
bear all expenses and fees incurred in connection with the
preparation, filing, and amendment of the Registration
Statement, except that the Guarantor shall pay all fees,
disbursements and expenses of any counsel or expert retained
by the Guarantor and all underwriting discounts and
commissions, filing fees and any transfer or other taxes
relating to the Common Stock included in the Registration
Statement.
3. Indemnification.
(a) It is the intention of this Agreement that no Guarantor shall
be liable for more than his share of a Claim, as set forth in subsection (b) of
this Section. Accordingly, each Guarantor (in such capacity an "Indemnifying
Guarantor") hereby agrees to indemnify and hold harmless the other Guarantors
(in such capacity an "Indemnified Guarantor") from and against any Claim which
is not reimbursed by the Company pursuant to Section 2(a) hereof to the extent,
and only to the extent, that such Claim exceeds the Indemnified Guarantor's
share of such Claim. Upon any Guarantor's payment of a Claim, such Guarantor
shall deliver notice thereof (the "Notice of Claim") in reasonable detail to the
Company and the other Guarantors. Within five (5) business days following
receipt of the Notice of Claim, each Guarantor required to make an
indemnification payment pursuant to this Section shall deliver the same by
certified check to the Guarantor who paid such Claim. Each Indemnifying
Guarantor shall also reimburse the Indemnified Guarantor for all costs
(including, without limitation, attorneys' fees) of collecting amounts due the
Indemnified Guarantor pursuant to this Section from such Indemnifying Guarantor.
(b) Each Guarantor's share of a Claim shall be as follows: Bird,
5%; Feltl, 17.5%; King, 17.5%; Maudlin, 10%; and Xxxxx, 50%.
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4. Contribution.
(a) If and to the extent that the remedies provided in Section 3
to an Indemnified Guarantor are insufficient due to the Insolvency (as defined
in subsection (b) below) of any Indemnifying Guarantor, the Indemnified
Guarantor shall be entitled to a contribution from each solvent Indemnifying
Guarantor such that the aggregate of such contributions totals the excess of the
Indemnified Guarantor's payment of such Claim over such Indemnified Guarantor's
share of such Claim (for this purpose, such share shall be calculated by
allocating the amount of the Claim among the solvent Guarantors based upon the
percentage shares set forth in Section 3(b)). The Indemnified Guarantor shall
deliver a request for contribution (the "Contribution Request") in reasonable
detail to the Company and to the solvent Indemnifying Guarantors regarding his
or her right to contribution hereunder. Within five (5) business days following
receipt of the Contribution Request, each solvent Indemnifying Guarantor
required to make a contribution payment pursuant to this Section shall deliver
the same by certified check to such Indemnified Guarantor.
(b) An Indemnifying Guarantor shall be deemed "Insolvent" if such
Indemnifying Guarantor (i) applies for or consents to the appointment of a
receiver, trustee, or liquidator, (ii) is unable, or admits in writing his or
her inability to pay debts as they mature, (iii) makes a general assignment for
the benefit of creditors, (iv) is adjudicated bankrupt or insolvent; (v) files a
voluntary petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of any
insolvency law; or (vi) fails to successfully dismiss an involuntary petition
filed against him or her.
5. Draws under BankWindsor Financing. The Chairman of the Board of
the Company, in his or her sole discretion, shall determine the amount and
timing of draws to be made under the BankWindsor Financing, subject to the
maximum amount set forth in paragraph A. above.
6. Amendment, Waiver and Third Party Beneficiaries. This Agreement
may not be amended orally, but only by an instrument in writing signed by all of
the parties hereto. No delay or failure on the part of any Guarantor to exercise
any power or right hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof, or the exercise
of any other power or right. The Guarantors acknowledge and agree that this
Agreement is not intended to create any third party beneficiary rights.
7. Partial Invalidity. If any provision or application of this
Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not effect other provisions or applications which can be
given effect, and this Agreement shall be construed as if the lawful and
unenforceable provision or application had never been contained hereby or
prescribed hereby.
8. Governing Law, Submission to Jurisdiction. All question
concerning the construction, validity and interpretation of this Agreement will
be governed by and construed in accordance with the internal law, and not the
law of conflicts of law, of the State of Minnesota. Each
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of the parties hereto consents and agrees to the jurisdiction of any state court
sitting in the City of Minneapolis, State of Minnesota, or any federal court
sitting in the city of Minneapolis, State of Minnesota, and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein.
9. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
CAFE ODYSSEY, INC.
By /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------- XXXXXXX X. XXXXXXX
XXXXXXX X. XXXX
/s/ Xxxxx X. Xxxxx
------------------------------------- XXXXX X. XXXXX
XXXX X. XXXXX
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
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