Third Forbearance Agreement
Exhibit
10.22
This
Third Forbearance Agreement is made by and between Summit Financial Resources,
L.P., a Hawaii limited partnership ("Summit"), Artisanal Cheese, LLC, a New York
limited liability company ("Client"), American Home Food Products, Inc., a New
York corporation ("AFP"), and Xxxxxx X. Xxxx, an individual ("Xxxx") (AFP and
Xxxx are collectively referred to as "Guarantors").
RECITALS
1. Summit
and Client have entered into a Financing Agreement dated February 19, 2009, and
an Addendum to Financing Agreement (Inventory Financing) dated February 19, 2009
(collectively, the "Financing Agreement").
2. Pursuant
to the Financing Agreement, Summit has been granted a security interest in,
among other things, the accounts, inventory, and equipment of Client to secure
the obligations of Client under the Financing Agreement.
3. AFP
guaranteed the obligations of Client under the Financing Agreement pursuant to a
certain Guarantee executed by AFP on or about February 19, 2009 (the "AFP
Guarantee").
4. Xxxx
guaranteed certain obligations of Client under the Financing Agreement pursuant
to a certain Guarantee executed by Xxxx on or about February 19, 2009 (the "Xxxx
Guarantee") (the AFP Guarantee and the Xxxx Guarantee are collectively referred
to as the "Guarantees").
5. Events
of Default occurred under the Financing Agreement, and on or about June 3, 2009,
Summit, Client, and Guarantors entered into a Forbearance Agreement (the "First
Forbearance Agreement").
6. Pursuant
to the terms of the First Forbearance Agreement, Summit agreed to forbear from
exercising its rights and remedies under the Financing Agreement until July 3l,
2009, subject to the terms and conditions set forth in the First Forbearance
Agreement.
7. Events
of Default continued to exist under the Financing Agreement after July 31, 2009,
and events of default occurred under the First Forbearance Agreement; and on or
about August 13, 2009, Summit, Client, and Guarantors entered into a Second
Forbearance Agreement (the "Second Forbearance Agreement").
8. Pursuant
to the terms of the Second Forbearance Agreement, Summit agreed to forbear from
exercising its rights and remedies under the Financing Agreement until November
9, 2009, subject to the terms and conditions set forth in the Second Forbearance
Agreement.
9. As
of the date hereof, Events of Default under the Financing Agreement continue to
exist and events of default have occurred under the Second Forbearance
Agreement. Summit, Client, and Guarantors have reached an agreement wherein, in
exchange for the considerations provided herein, Summit has agreed to further
forbear from exercising its rights and remedies under the Financing Agreement
and the Guarantees until February 15, 2010. This Third Forbearance Agreement
sets forth the terms and conditions of that agreement.
Artisanal
Cheese, LLC
11/12/2009
AGREEMENT
For good
and valuable consideration, receipt of which is hereby acknowledged, Summit,
Client, and Guarantors agree as follows:
1.
Definitions.
Capitalized terms used in this Third Forbearance Agreement which are defined in
the Financing Agreement shall have the same meaning as provided in the Financing
Agreement, except as otherwise expressly provided herein. Terms defined in the
singular shall have the same meaning when used in the plural and vice
versa.
2.
Acknowledgments.
Client and Guarantors acknowledge and agree:
a. The
Financing Agreement, the Guarantees, and all other agreements and documents
executed in connection with the Financing Agreement (collectively, the
"Financing Documents") have been duly executed and delivered by all parties
thereto and are legal, valid, and binding obligations of Client and Guarantors,
as the case may be, enforceable in accordance with their respective
terms.
b. The
following Events of Default have occurred and are existing (the "Existing Events
of Default"): Client has failed to provide satisfactory evidence to Summit that
the Client Affiliate Past Due Taxes have been paid in full or otherwise
subordinated to Summit in a manner acceptable in Summit's sole
discretion.
c. As
of November 9, 2009, the outstanding balance owing pursuant to the Financing
Agreement is the sum of (i) three hundred twenty-one thousand six hundred twenty
and 09/100 dollars ($321,620.09) for Outstanding Advances on Accounts, plus (ii)
eight hundred sixty-four and 14/100 dollars ($864.14) for accrued interest on
Outstanding Advances on Accounts, plus (iii) three thousand six hundred
seventy-four and 86/100 dollars ($3,674.86) for accrued fees related to Advances
on Accounts, plus (iv)"one “hundred thirty-six thousand three hundred ninety-two
dollars ($136,392.00) for outstanding advances on Acceptable Inventory, plus (v)
four hundred forty-six and 12/100 dollars ($446.12) for accrued interest on
outstanding advances on Acceptable Inventory, plus (vi) two thousand five and
38/100 dollars ($2,005.38) for accrued fees related to advances on Acceptable
Inventory.
d. The
aforesaid outstanding balance, together with other expenses of Summit,
including, without limitation, reasonable attorneys fees, as provided in the
Financing Documents, (collectively, the "Balance Owing") are due and owing, and
there is no defense to or offset against payment of such amounts.
e. AFP
is jointly and severally liable for the aforesaid amounts pursuant to the AFP
Guarantee.
x. Xxxx
is jointly and severally liable for the aforesaid amounts so far as such amounts
are owing by Xxxx pursuant to the Xxxx Guarantee.
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Cheese, LLC
11/12/2009
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3.
Terms of
Forbearance. Summit hereby agrees that it will continue to forbear and
not exercise its rights and remedies under the Financing Documents and at law
against Client and Guarantors until February 15, 2010, subject to the following
terms and conditions:
a. Post Default
Advances. Client and Guarantors hereby acknowledge and agree that the
Financing Agreement provides that the obligation of Summit to advance any
additional funds pursuant to the Financing Agreement shall, at the sole
discretion of Summit, terminate upon the occurrence of an Event of Default.
Client and Guarantors further acknowledge and agree that Summit may, in its sole
discretion and without any obligation to do so, elect to continue to make
advances pursuant to the Financing Agreement ("Post-Default Advances") and that
(i) Summit may terminate making Post-Default Advances at any time, in Summit's
sole discretion, and without any notice to Client, (ii) Client has no right to
receive Post-Default Advances, (iii) any Post-Default Advance made shall not be
construed as a course of dealing or conduct between Summit and Client creating
any further obligation of Summit to make additional Post-Default Advances, and
(iv) all Post-Default Advances shall be subject to the terms and conditions of
the Financing Agreement as modified herein.
b. Forbearance Fee. Upon
the execution and delivery of this Third Forbearance Agreement, Client shall pay
to Summit a forbearance fee in the amount of twenty thousand dollars ($20,000)
(the "Forbearance Fee"). Summit is hereby authorized and directed to Advance
sufficient funds under the Financing Agreement to pay the Forbearance Fee in
full.
c. Inventory Financing.
Section 2 Inventory
Advances of the Addendum to Financing Agreement (Inventory Financing) is
hereby amended and modified to provide that, in addition to any other
limitations on advances based upon Acceptable Inventory, the dollar limit that
outstanding advances based upon Acceptable Inventory cannot exceed shall equal
the amount of advances based upon Acceptable Inventory that are outstanding as
of the date of this Third Forbearance Agreement, and such dollar limit shall be
reduced hereafter by eleven thousand five hundred dollars ($11,500) each week
commencing on Monday, November 23, 2009, and on each Monday thereafter until
February 15, 2010.
d. Payment of Balance
Owing. Client and/or Guarantors shall pay to Summit the full amount of
the Balance Owing, including all interest, fees, and attorneys fees hereafter
accruing, by no later than February 15, 2010.
e. Alternative
Financing. By no later than December 31, 2009, Client shall provide
evidence satisfactory to Summit, in Summit's sole discretion, that Client has
obtained a bona fide proposal for financing alternative to the financing
provided by Summit under the Financing Documents (the "Alternative Financing").
By no later than January 31, 2010, Client shall provide evidence satisfactory to
Summit, in Summit's sole discretion, that Client has obtained an approval or
commitment for the Alternative Financing.
f. Amended and Restated Xxxx
Guarantee. Upon the execution and delivery of this Third Forbearance
Agreement, Xxxx shall execute and deliver to Summit the Amended and Restated
Guarantee attached hereto as Exhibit A (the "Amended and Restated Xxxx
Guarantee"), absolutely and unconditionally guaranteeing the obligations of
Client owing under the Financing Documents.
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Cheese, LLC
11/12/2009
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4.
Financing Documents.
Except as expressly amended or modified by this Third Forbearance Agreement, the
Financing Documents remain in full force and effect. Client hereby confirms that
the security interest granted in the Financing Agreement also secures the
Financing Agreement as amended by this Third Forbearance Agreement. Guarantors
hereby confirm that they guarantee, pursuant to their respective Guarantees, the
obligations of Client under the Financing Agreement as amended by this Third
Forbearance Agreement and as set forth in their respective
Guarantees.
5.
Termination of
Forbearance. Summit's agreement to forbear shall automatically terminate,
without any notice to Client or Guarantors or any right to cure, upon the
earlier of (i) February 15, 2010, or (ii) upon the occurrence of any of the
following:
a. Breach of Third Forbearance Agreement.
A breach or default by Client or Guarantors of any of the covenants or
agreements set forth in this Third Forbearance Agreement.
b. New Event of Default. The occurrence
of any new Event of Default, or the occurrence of any event, which, with the
passage of time or giving of notice or both, would constitute a default, breach,
or event of default under the Financing Agreement.
c. False Representation. Any
representation or warranty by Client or Guarantors made hereunder is materially
false, incorrect, or misleading as of the date made.
d. Solvency. Client makes a general
appointment of a trustee, receiver, or other custodian for Client's property or
any part thereof, or in the absence of such application, consent, or
acquiescence, a trustee, receiver, or other custodian is appointed for Client or
its property or any part thereof, except as otherwise provided in this Third
Forbearance Agreement.
e. Bankruptcy. Commencement of any case
under the Bankruptcy Code, Title 11 of the United States Code, or commencement
of any other bankruptcy arrangement, reorganization, liquidation, receivership,
custodianship, or similar proceeding under any federal, state, or foreign law by
or against either Client or Guarantors.
f. Repudiation of Third Forbearance
Agreement. Client or Guarantors take any
action to repudiate this Third Forbearance Agreement or this Third Forbearance
Agreement shall otherwise cease to be in full force and effect other than in
accordance with its terms.
g. Third Party Exercise of Remedies; Termination
of Forbearance. Any other lender or creditor, secured or unsecured,
initiates the exercise of remedies against Client, Guarantors, or their
affiliates to collect or enforce any obligation or indebtedness of such party,
or commences any collection or foreclosure action, or alleges in writing the
breach of any obligation of any Client, Guarantors, or their affiliates to such
lender or creditor.
6.
Release and Waiver of
Claims. Client and Guarantors each hereby release and waive any and all
claims, demands, actions, causes of action, damages, costs, expenses, and other
rights of any nature whatsoever, whether known or unknown, whether or not
accrued, presently existing, against Summit arising out of or in any way
relating to the Financing Documents, the First Forbearance Agreement, the Second
Forbearance Agreement, and/or this Third Forbearance Agreement.
Artisanal
Cheese, LLC
11/12/2009
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7.
No Waiver of
Default. Execution and delivery of this Third Forbearance Agreement and
the actions contemplated herein, including, without limitation, the failure of
Summit to exercise any rights and remedies at this time, do not constitute a
waiver of the Existing Events of Default. Summit reserves the right to exercise,
upon termination of this forbearance as provided in Section 5, any and all of
its rights and remedies under the Financing Documents, at law, or in equity. Any
future re-occurrence of the Existing Events of Default or any other existing or
future event of default shall not be subject to or governed by this Third
Forbearance Agreement. No course of dealing or delay or failure to assert any
event of default shall constitute a waiver of the event of default or of any
prior or subsequent event of default. Client and Guarantors should not assume or
infer that Summit will waive any future event of default. Summit may, at any
time hereafter, regardless of any prior course of conduct or waiver, require
strict compliance with all terms and conditions of the Financing
Documents.
8.
Default Under Third Forbearance
Agreement. Failure of Client and/or Guarantors to timely perform any
agreement or covenant provided herein or in the event any representation or
warranty by Client or Guarantors provided herein is materially false or
misleading, such event shall constitute a default under this Third Forbearance
Agreement and an Event of Default under the Financing Agreement.
9.
Indemnification. Client and Guarantors
shall jointly and severally indemnify Summit for any and all claims and
liabilities, and for damages which may be awarded against or incurred by Summit,
and for all reasonable attorneys fees, legal expenses, and other out-of-pocket
expenses incurred in defending such claims, arising from or related in any
manner to the negotiation, execution, or performance by Summit of this Third
Forbearance Agreement or any of the agreements, documents, obligations, or
transactions contemplated by this Third Forbearance Agreement, but excluding any
such claims based upon breach or default by Summit or gross negligence or
willful misconduct of Summit.
Summit
shall have the sole and complete control of the defense of any such claims.
Summit is hereby authorized to settle or otherwise compromise any such claims as
Summit in good faith determines shall be in its best interests.
10. Revival. If any payment of any money
to Summit by or on behalf of Client and/or Guarantors should for any reason
subsequently be determined to be "voidable" or "avoidable" in whole or in part
within the meaning of any state or federal law (collectively "voidable
transfers"), including, without limitation, fraudulent conveyances or
preferential transfers under the United States Bankruptcy Code or any other
federal or state law, and Summit is required to repay or restore any voidable
transfers or the amount or any portion thereof, or upon the advice of counsel
for Summit is advised to do so, then, as to any such amount or property repaid
or restored, including, without limitation, all reasonable costs, expenses, and
attorneys fees of Summit related thereto, the liability of Client and Guarantors
shall automatically be revived, reinstated, and restored and shall exist as
though the voidable transfers had never been made.
11. Authority. Each of the representatives
signing this Third Forbearance Agreement on behalf of Summit, Client, and
Guarantors, as the case may be, hereby represents and warrants that said
representative has the authority to execute and deliver this Third Forbearance
Agreement and that this Third Forbearance Agreement shall be valid, binding and
enforceable in accordance with its terms as to the company, if any, for whom
said representative has signed.
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Cheese, LLC
11/12/2009
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12. Ownership of Claims. Client and
Guarantors each represent and warrant that it, he or she is the sole owner of
the claims and actions which are waived and/or settled by this Third Forbearance
Agreement, that there has been no prior assignment or transfer of those claims
and actions, and that those claims and actions are not subject to any security
interest, lien, or other encumbrance.
13. Binding Effect. This Third Forbearance
Agreement shall be binding upon, extend to, and inure to the benefit of the
heirs, successors, and assigns of the parties hereto, to the officers,
directors, employees, partners, agents and representatives of the parties
hereto, and to all persons or entities claiming by, through or under any of the
parties hereto.
14. General. This Third Forbearance
Agreement is made for the sole and exclusive benefit of Summit, Client, and
Guarantors and is not intended to benefit any third party. No such third party
may claim any right or benefit or seek to enforce any term or provision of this
Third Forbearance Agreement.
This
Third Forbearance Agreement shall be governed by and construed in accordance
with the laws of the State of Utah.
Any
provision of this Third Forbearance Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction only, be
unenforceable without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
All
references in this Third Forbearance Agreement to the singular shall be deemed
to include the plural if the context so requires and vice versa. References in
the collective or conjunctive shall also include the disjunctive unless the
context otherwise clearly requires a different interpretation.
Client
and Guarantors each acknowledge that by execution and delivery of this Third
Forbearance
Agreement, the Financing Agreement, and the Guarantees, Client and Guarantors
have transacted business in the State of Utah and voluntarily submit to, consent
to, and waive any defense to the jurisdiction of the courts located in the State
of Utah as to all matters relating to or arising from this Third Forbearance
Agreement, the Financing Agreement, and the Guarantees. THE STATE AND FEDERAL
COURTS LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION
OF ANY AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER OR RELATING TO
THE FINANCING AGREEMENT, THE GUARANTEES, THIS THIRD FORBEARANCE AGREEMENT AND/OR
THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREBY. NO LAWSUIT, PROCEEDING, OR ANY
OTHER ACTION RELATING TO OR ARISING UNDER THE FINANCING AGREEMENT, THE
GUARANTEES, THIS THIRD FORBEARANCE AGREEMENT, AND/OR THE TRANSACTIONS
CONTEMPLATED THEREBY OR HEREBY MAY BE COMMENCED OR PROSECUTED IN ANY OTHER FORUM
EXCEPT AS EXPRESSLY AGREED IN WRITING BY SUMMIT.
Artisanal
Cheese, LLC
11/12/2009
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CLIENT
AND GUARANTORS EACH HEREBY IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR IN TORT, AT
LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS THIRD FORBEARANCE
AGREEMENT.
This
Third Forbearance Agreement constitutes the entire agreement between the parties
hereto concerning the subject matter hereof and may not be altered or amended
except by written agreement signed by Summit, Client, and Guarantors. All prior
and contemporaneous agreements concerning the subject matter hereof, other than
the Financing Documents, are merged herein.
Dated:
November __, 2009.
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Summit
Financial Resources, L.P.
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By:
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Name:
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Title:
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Artisanal
Cheese, LLC
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By:
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Xxxxxx
X. Xxxx
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Title:
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President
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Name:
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Xxxxxx
X. Xxxx
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By:
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Xxxxxx
X. Xxxx
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Title:
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President
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Name:
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Xxxxxx
X. Xxxx
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/s/
Xxxxxx X. Xxxx
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Xxxxxx
X. Xxxx
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Artisanal
Cheese, LLC
11/12/2009
