AGREEMENT TO PROVIDE GUARANTY
This Agreement to Provide Guaranty (this "Agreement") is entered into
between Oregon Baking Company, dba ▇▇▇▇▇▇ Baking, an Oregon corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Guarantor").
The Company has applied for an expansion of its credit facilities from
Silicon Valley Bank (the "Bank"). The Bank is unwilling to expand the Company's
line of credit without an additional personal guaranty from the Guarantor. With
an additional guaranty, the Bank is willing to expand its line of credit for the
Company by up to $750,000.
Guarantor is a current shareholder of the Company and a member of the
Board of Directors. Guarantor is willing to guaranty an additional $750,000 of
the Company's line of credit in consideration of the issuance to Guarantor of
150,000 shares of the Company's Common Stock.
In order to assist the Company in obtaining an expansion of its line
of credit from the Bank, Guarantor has agreed to sign a guaranty on the Bank's
standard form guaranteeing up to an additional $750,000 of indebtedness owed to
the Bank by ▇▇▇▇▇▇ (a "Guaranty"). The purpose of this Agreement is to set forth
the agreement between the Guarantor and the Company regarding Guarantor's
compensation for the Guaranty, the conditions of the Guaranty and the Company's
indemnity obligation in the event the Guaranty is enforced by the Bank.
Accordingly, the parties agree as follows:
1. AGREEMENT TO PROVIDE GUARANTY. Guarantor hereby agrees to provide a
personal guaranty of up to $750,000 to Silicon Valley Bank as security for the
Company's line of credit with the Bank. Guarantor shall have the right to assign
his rights and delegate his duties under this Agreement, to a qualified person
or persons, approved by the Company, which approval shall be at the Company's
sole discretion, who provides a personal guaranty on the Company's behalf for a
portion of the $750,000 line of credit with the Bank. Guarantor's right of
assignment is subject to the requirements of state and federal securities laws.
2. CONSIDERATION FOR GUARANTEES. In consideration of the Guaranty to
be provided by the Guarantor, and based upon the representations of the
Guarantor contained in Section 3 below, the Company hereby agrees to issue to
Guarantor One Hundred Fifty Thousand (150,000) shares of the Company's Common
Stock (the "Shares") which the Company and the Guarantor agree have a fair
market value of $0.50 per share.
3. INVESTMENT INTENT; INFORMED DECISION. Guarantor hereby acknowledges
and represents to the Company that Guarantor is acquiring the Shares for his own
account and not with a view to their resale or distribution and that Guarantor
is prepared to hold the Shares for an indefinite period and has no present
intention to sell, distribute or grant any participating interests in the
Shares. Guarantor hereby acknowledges that the Shares have not been registered
under the Securities Act of 1933, as amended, or the securities act of any
state, and that the Company is issuing the Shares to Guarantor in reliance on
the representations made herein by Guarantor. Guarantor represents to the
Company that, in his capacity as consultant and/or director of the Company, he
is familiar with the business of the Company, and has been afforded the
opportunity to meet with the management of the Company and to ask questions of,
and receive answers from, such management about the business and affairs of the
Company, and to obtain any additional information, to the extent that the
Company possessed such information or could acquire it without unreasonable
effort or expense, necessary to verify the accuracy of the information otherwise
obtained by or furnished to Guarantor. Guarantor acknowledges that the Company
has furnished to him all information that Guarantor considered necessary to form
a decision concerning the purchase of the Shares, including the Company's
business plan (and the risk factors therein contained), and no valid request to
the Company by Guarantor for information of any kind about the Company has been
refused or denied by the Company or remains unfulfilled as of the date hereof.
Guarantor represents that he is a sophisticated investor who, acting alone or
with a professional advisor who is unaffiliated with and who is not compensated
Agreement to Provide Guaranty
Page 1
by the Company directly or indirectly, is familiar with the risks inherent in
speculative investments such the one undertaken hereby, and has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of the investment in the shares, and is able to
bear the economic risk of the loss of the entire investment.
4. RESTRICTED SECURITIES. Guarantor hereby confirms that he has been
informed that the Shares may not be resold or transferred unless the Shares are
first registered under applicable federal and state securities laws or unless an
exemption from such registration is available. Accordingly, Guarantor hereby
acknowledges that he is prepared to hold the Shares for an indefinite period and
that he is aware that Rule 144 promulgated under the Securities Act is not
presently available to exempt the sale of the Shares from the registration
requirements of the Securities Act. If Rule 144 subsequently becomes available,
Guarantor is aware that any sale of the Shares effected pursuant to the Rule
may, depending upon the status of Guarantor as an "affiliate" or "non-affiliate"
under the Rule, be made only in limited amounts in accordance with the
provisions of the Rule, and that in no event may any Shares be sold pursuant to
the Rule until Guarantor has held the Shares for the requisite holding period.
5. RESTRICTIVE LEGEND. In order to reflect the restrictions on
transfer of the Shares, the stock certificates for the Shares will be endorsed
with the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
ACT OF ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT AND ANY
APPLICABLE STATE LAWS, (B) A `NO ACTION' LETTER OF THE SECURITIES AND
EXCHANGE COMMISSION AND APPROPRIATE STATE AUTHORITIES WITH RESPECT TO
SUCH SALE OR OFFER, OR (C) SATISFACTORY ASSURANCES TO THE CORPORATION
(WHICH MAY INCLUDE AN OPINION OF COUNSEL ACCEPTABLE TO THE
CORPORATION) THAT REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
LAWS IS NOT REQUIRED WITH RESPECT TO SUCH SALE OR OFFER."
"THE SHARES REPRESENTED BY THIS CERTIFCATE ARE SUBJECT TO A RIGHT OF
ASSIGNMENT IN FAVOR OF THE COMPANY AS SET FORTH IN THAT CERTAIN
AGREEMENT TO PROVIDE GUARANTY BETWEEN THE COMPANY AND THE HOLDER
HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY WITHOUT
CHARGE."
6. MARKET STAND-OFF. (a) In connection with any underwritten public
offering by the Corporation of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company's
initial public offering, Guarantor shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any Shares without the prior written consent of
the Company or its underwriters. Such limitations shall be in effect for a
period of fourteen months from and after the effective date of the final
prospectus for the Company's initial public offering.
(b) In the event of any stock split, stock dividend,
recapitalization, combination of shares, exchange or conversion of shares or
other change affecting the Company's outstanding Common Stock effected as a
class without the Company's receipt of consideration, then any new, substituted
or additional securities distributed with respect to the Shares shall be
immediately subject to the provisions of this Section 6, to the same extent the
Shares are at such time covered by such provisions.
Agreement to Provide Guaranty
Page 2
(c) In order to enforce the limitations of this Section 6, the
Company may impose stop-transfer instructions with respect to the Shares until
the end of the applicable stand-off period.
7. ASSIGNMENT OF SHARES BACK TO THE COMPANY. In the event that
Guarantor does not provide a Guaranty in the full amount of $750,000 by July 31,
1999, and no other qualified person has provided a guaranty pursuant to
Guarantor's right of assignment under Section 1 of this Agreement, which
guaranty, together with the Guaranty provided by Guarantor equals $750,000,
Guarantor shall immediately assign to the Company, without cost to the Company,
that number of Shares determined by the following formula: For each $5.00
increment for which Guarantor (including his assignees) does not provide a
Guaranty, Guarantor shall assign one share of Common Stock to the Company.
8. REMOVAL OF GUARANTY. The Company shall remove the Guaranty upon the
consummation of a private or public equity financing raising in excess of
$5,000,000. Further, the Company agrees to use its best efforts to remove the
Guaranty by November 1, 2000.
9. INDEMNITY. If at any time and from time to time, Guarantor has paid
the Bank following any demand for payment under the Guaranty, upon written
notice from the Guarantor, the Company shall indemnify Guarantor against any and
all losses, liability and expense (including reasonable attorneys' fees) arising
out of or caused by such payment to the Bank. Each party will defend, hold
harmless, and indemnify the other party from and against all loss, damage,
injury or expense (including reasonable attorney fees) arising out of or caused
by any breach of any of the provisions of this Agreement by such party.
10. FURTHER UNDERTAKING. The Company and Guarantor hereby agree to
take whatever additional action and execute whatever additional documents the
Company may in its judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed pursuant to the
express provisions of this Agreement.
11. WAIVERS AND AMENDMENTS. This Agreement may be amended, modified or
supplemented only by a written instrument executed by all parties hereto. The
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
12. NOTICES. All notices, requests, demands and other communications
which are required or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
first-class mail, postage prepaid:
If to Marsee: ▇▇▇ ▇▇▇▇▇▇▇▇▇, President and CEO
Oregon Baking Company
dba ▇▇▇▇▇▇ Baking
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agreement to Provide Guaranty
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If to ▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SW 72nd Avenue
Portland, OR 97224
or such other address as any party shall have specified by notice in writing to
the other.
13. NOTICES REGARDING DEMANDS. Guarantor will not make any payment
under the Guaranty unless and until a written demand for payment has been
received from the Bank. If Guarantor receives a demand for payment under the
Guaranty, notice of such demand will be promptly sent to the Company. The
Company shall promptly send to Guarantor any notice of default received from the
Bank.
14. BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
legatees or successors; nothing in this Agreement is intended to confer on any
third person any rights, remedies, obligations or a liability under or by reason
of this Agreement.
15. ATTORNEY FEES. If any action is brought with respect to this
agreement, or in any appeal therefrom, the prevailing party shall be entitled to
reasonable attorney fees as determined by the court or courts in which the
action or appeal is tried or heard.
16. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with Oregon law without regard to its choice of law provisions.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
EXECUTED as of the 29th day of April, 1999.
OREGON BAKING COMPANY
dba ▇▇▇▇▇▇ Baking
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Its: Pres. CEO
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GUARANTOR:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Agreement to Provide Guaranty
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