Galaxy Foods Company
0000 Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
June 15, 1999
Xxxxxx X. Xxxxxx
c/o 0000 Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
RE: LOAN AGREEMENT
Dear Xx. Xxxxxx:
This letter is in reference to that certain Amended and Restated Employment
Agreement, dated as of the date hereof, between Xxxxxx X. Xxxxxx ("Morini") and
Galaxy Foods Company ("Galaxy") (the "Employment Agreement").
Pursuant to the Employment Agreement, Galaxy and Morini have agreed to
enter into this Loan Agreement pursuant to which two promissory notes previously
delivered to Galaxy by Morini shall be modified and consolidated. The two notes,
in the amounts of $1,200,000 (the "1994 Note") and $11,572,200 (the "1995
Note"), represented the purchase price for certain Galaxy common stock purchases
made by Morini in 1994 and 1995, respectively. This Loan Agreement shall
supersede the two notes and shall govern the loan arrangement between Galaxy and
Morini.
The definitive terms of this Loan Agreement are as follows:
1. LOAN.
a. AMOUNT. Upon the execution and delivery of this Loan Agreement, the
delivery of an executed Promissory Note (in substantially the form attached
hereto as EXHIBIT A) with regard to the amount specified, and the execution and
delivery of the Stock Pledge Agreement (in the form attached hereto as EXHIBIT
B), Galaxy agrees to cancel the 1994 Note and the 1995 Note (forgiving any
accrued interest thereunder), and lend Morini the amount specified in the
Promissory Note (the "Loan"), subject to the terms and conditions contained
herein.
b. INTEREST. The outstanding principal amount of the Loan shall not
bear any interest unless and until the occurrence of an Event of Default (as
discussed below).
c. TERM AND REPAYMENT. The outstanding principal balance of this Loan
shall be due and payable in full on that date which is seven (7) years
subsequent to the date first written above; provided, that the Loan has not been
forgiven pursuant to the terms of the Employment Agreement.
2. SECURITY FOR THE LOAN. Morini does hereby affirm, acknowledge, ratify,
grant and assign in favor of Galaxy a first, prior, sole lien and security
interest in 2,571,429 shares of Galaxy common stock, par value $0.01,
beneficially owned by Morini and issued to Morini Investments Limited
Partnership, a Delaware limited partnership owned and controlled by Morini (the
"Partnership"), and represented by certificate number _____ (the "Galaxy
Shares") and in all accessions, substitutions, replacements and proceeds
thereof, including without limitation, whether by law, merger or exchange, to
secure the outstanding principal balance of the Loan. Such security interest
shall be evidenced by the Partnership's execution and delivery of the Stock
Pledge Agreement attached hereto as EXHIBIT B and the Partnership's compliance
with the terms and conditions contained therein.
3. REPRESENTATIONS AND WARRANTIES BY MORINI AND THE PARTNERSHIP. Morini and
the Partnership (collectively referred to as the "Borrower") each hereby
represent and warrant to Galaxy the following:
a. The execution, delivery and performance of this Agreement, the
Promissory Note, and the Stock Pledge Agreement will not:
(i) violate any provision of law, any governmental rule or
regulation, any order of any court or other agency of government, or any
provision of any indenture, agreement (including the agreement by which the
Partnership was established and is governed, referred to herein as the
"Partnership Agreement") or other instrument to which Borrower is a party or by
which Borrower or any of Borrower's properties or assets are bound, or
(ii) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon the Galaxy Shares, other than as
provided herein.
b. Borrower is not a party to any contract or agreement (including the
Partnership Agreement) which restricts or otherwise limits Borrower from
incurring the debt described herein. Neither the execution nor delivery of this
Agreement, the Promissory Note or the Stock Pledge Agreement, nor the
fulfillment of nor the compliance with the terms and provisions hereof or
thereof will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of any
agreement, instrument, order, judgment, decree, statute, law, rule or regulation
to which Borrower is subject.
c. The Partnership is the owner of the Galaxy Shares free and clear of
all liens, charges and encumbrances, and the Partnership and Morini, as
authorized representative, have the full power and authority, and the legal
right, to grant a security interest in the Galaxy Shares as provided hereby.
d. By virtue of this Agreement and the perfection of the security
interest in the Galaxy Shares in accordance with the provisions of the Stock
Pledge
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Agreement, Galaxy has a valid, enforceable, perfected and first priority
security interest in the Galaxy Shares.
e. Borrower has not and will not, without the consent of Galaxy, grant
to any person other than Galaxy a security interest or any other interest or
claim in the Galaxy Shares.
f. The Partnership is duly formed and validly existing under the laws
of the state of Delaware.
4. REPRESENTATIONS BY GALAXY. Galaxy hereby represents and warrants to the
following to Borrower:
a. The execution, delivery and performance of this Agreement by Galaxy
will not violate any provision of Galaxy's Certificate of Incorporation or
Bylaws, or any law, governmental rule or regulation, any order of any court or
other agency of government, or any provision of any indenture, agreement or
other instrument to which Galaxy is a party or by which Galaxy or any of its
properties or assets are bound.
b. Galaxy is duly formed, validly existing and in good standing under
the laws of the state of Delaware, and has all requisite power and authority to
enter into and deliver this Agreement. This Agreement is a valid and binding
obligation of Galaxy, enforceable against Galaxy in accordance with its terms.
5. EVENTS OF DEFAULT. Each of the following shall be considered an Event of
Default hereunder:
a. MONETARY DEFAULT. If any outstanding balance of the Loan shall not
be paid at maturity;
b. NON-MONETARY DEFAULT. If Borrower shall default in the performance
of or compliance with any material term or covenant contained in any of this
Agreement, the Promissory Note, or the Stock Pledge Agreement, and such default
is not cured within ten (10) days of the date from which notice of such default
is delivered to Borrower by Galaxy;
c. FALSE REPRESENTATION. If any representation or warranty made in
writing by or on behalf of Borrower herein, in the Promissory Note or in the
Stock Pledge Agreement shall prove to have been false or incorrect in any
material respect; or
d. BANKRUPTCY OR INSOLVENCY. If Borrower shall make an assignment for
the benefit of creditors, file a petition in bankruptcy, petition or apply to
any tribunal for the appointment of a custodian, receiver or trustee, or shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or if there shall have been
filed any such petition or application, or any such proceeding shall have been
commenced against Borrower in which an order for relief is
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entered or which remains undismissed for a period of sixty (60) days or more, or
Borrower, by any act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application, or proceeding or order for
relief or the appointment of a custodian, receiver or any trustee, or shall
suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of sixty (60) days or more.
6. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default and
during the continuation thereof, Galaxy may, at its option, thereupon or
thereafter, without notice to or demand upon Borrower, declare the Promissory
Note (notwithstanding any provisions thereof), immediately due and payable
without notice or demand and the same shall immediately become and be due and
payable without notice or demand, and further, the outstanding principal balance
of the Loan shall thereafter bear interest at the rate of ten percent (10%)
until paid in full (or, until such Event of Default is cured, if earlier). In
such event, Galaxy's sole recourse shall be to foreclose against the Galaxy
Shares and exercise its rights under the Stock Pledge Agreement of even date,
between Galaxy, as Secured Party and the Partnership, as Pledgor, in accordance
with the terms thereof.
7. GOVERNING LAW; VENUE. This Agreement shall be governed by and construed
in accordance with the laws of the state of Florida applicable to contracts made
and to be performed wholly within that state. Venue for any action hereunder
shall be in Orange County, Florida and Borrower hereby agrees to submit to such
jurisdiction.
8. CONTINUING SECURITY INTEREST. This Agreement shall create a continuing
security interest in the Galaxy Shares and shall (i) remain in full force and
effect until payment and performance in full of the obligations hereunder, and
(ii) be binding upon and shall inure to the benefit of and be enforceable by,
Borrower and Galaxy and their respective successors, transferees and assigns.
Upon the payment in full of the obligations described herein, Galaxy shall
release its security interest in the Galaxy Shares, at its sole cost and
expense. Anything herein to the contrary notwithstanding, neither Borrower nor
another person or entity shall have any liability or responsibility with respect
to the repayment of the Loan, accrued interest (if any) thereon, or any other
expenses incurred by Galaxy to collect the same.
9. ASSIGNMENT. The rights and obligations of Borrower set forth in this
Agreement (and the Exhibits attached hereto) may be assigned by Borrower upon
thirty thirty (30) days written notice to Galaxy; provided, that Galaxy does not
object in writing to such assignment within fifteen (15) days of its receipt of
such notice.
10. NONWAIVER. No covenant or condition of this Agreement may be waived
except by the written consent of the parties hereto. Forbearance or indulgence
by a party in any regard whatsoever shall not constitute a waiver of the
covenant or condition to be performed by the other party to which the same may
apply, and, until complete performance by the other party of any covenant or
condition, the other party shall be
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entitled to invoke any remedy available under this Agreement or by law or in
equity despite said forbearance or indulgence.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with regard to the subject matter hereof and supersedes all
prior agreements, representations, warranties, statements, promises and
understandings not delivered in connection herewith. Neither party has in any
way relied, nor shall in any way rely, upon any oral or written agreements,
representations, warranties, statements, promises or understandings not
specifically set forth in this Agreement or in such other documents as shall be
executed in connection herewith.
12. ATTORNEYS' FEES. If either party hereto is required to engage in
litigation against any other party hereto, either as plaintiff or as defendant,
in order to enforce or defend any of its rights under this Agreement, and such
litigation results in a final judgment in favor of such party (the "Prevailing
Party"), then the party or parties against whom said final judgment is obtained
shall reimburse the Prevailing Party for all direct, indirect or incidental
expenses incurred by the Prevailing Party in so enforcing or defending its
rights hereunder, including, but not limited to, all reasonable attorneys' fees
and court costs and other expenses incurred throughout all negotiations, trials
or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder.
If Borrower is in agreement with the above, please execute this Agreement
where indicated. Thank you.
Sincerely,
GALAXY FOODS COMPANY,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------------
Its: Chief Financial Officer
-------------------------------
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Agreed to and Accepted this 15th day of June, 1999, by:
MORINI INVESTMENTS
LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Morini Investments, LLC
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------
Its: General Partner
-------------------------------
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, individually
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