EX-10.20
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ex10_20.htm
EXHIBIT 10.20
Exhibit 10.20
Second
Forbearance Agreement
This
Second 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 31, 2009, subject to the terms and conditions set forth in the First
Forbearance Agreement.
7.
As of the date hereof, Events of Default under the Financing Agreement continue
to exist and events of default have occurred under the First 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 November 9, 2009. This
Second Forbearance Agreement
sets forth the terms and conditions of that agreement.
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
Second 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.
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2.
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Acknowledgments.
Client and Guarantors acknowledge and
agree:
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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 August 10, 2009, the outstanding balance owing pursuant to the Financing
Agreement is the sum of (i) two hundred sixty-eight thousand two hundred forty-
seven and 77/100 dollars ($268,247.77) for Outstanding Advances on Accounts,
plus (ii) eight hundred thirteen dollars ($813) for accrued interest on
Outstanding Advances on Accounts, plus (iii) three thousand one hundred
twenty-six and 11/100 dollars ($3,126.11) for accrued fees related to Advances
on Accounts, plus (iv) one hundred sixty thousand dollars ($160,000) for
outstanding advances on Acceptable Inventory, plus (v) two hundred forty-two and
08/100 dollars ($242.08) for accrued interest on outstanding advances on
Acceptable Inventory, plus (vi) eight hundred two and 33/100 dollars ($802.33)
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 of 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.
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 November 9, 2009, 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 Surnrnit 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.
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b.
Forbearance
Fee. Upon the execution and delivery of this
Second Forbearance
Agreement, Client shall pay to Summit a forbearance fee in the amount of ten
thousand dollars ($10,000) (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.
Client Affiliate Past
Due Taxes. On or before November 9, 2009, Client shall provide
satisfactory evidence to Summit, in Summit's sole discretion, 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.
d.
Amendment to Financing
Documents. Effective as of August 1, 2009, the Financing Documents are
hereby amended and modified as follows:
i.
The definition of “Daily Funds Rate” contained in Section 1 Definitions of the
Financing Agreement is hereby amended and restated in its entirety as
follows:
““Daily
Funds Rate” means the prime rate as announced in the Wall Street Journal plus
Eight Percent (8%) divided by 360. The initial prime rate shall be the prime
rate in effect on the date of this Agreement. The Daily Funds Rate may be
adjusted from time to time as of the date of any change in the prime
rate.”
ii.
The second paragraph of Section 2 Inventory Advances of
the Addendum to Financing Agreement (inventory Financing) is hereby amended and
restated in its entirety as follows:
“Advances
based upon Acceptable Inventory may be made upon request of Client so long as
the aggregate amount of all advances based upon Acceptable Inventory outstanding
and unpaid does not exceed the lesser of: (a) Fifty Percent (50%) of the lower
of cost or market value, as determined by Summit, of the Acceptable Inventory,
(b) Eighty Percent (80%) of the net orderly liquidation value (NOLV) of
Acceptable Inventory as determined by an independent appraiser acceptable to
Summit, (c) One Hundred Seventy-Five Thousand Dollars ($175,000), (d) Fifty
Percent (50%) of Client's outstanding Acceptable Accounts, and (e) together with
the aggregate amount of all other outstanding advances, the Maximum Credit
Line.”
iii.
Section 3 Terms of Inventory
Advances of the Addendum to Financing Agreement (Inventory Financing) is
hereby amended and modified to provide that the “Daily Funds Rate” for purposes
of calculating interest owing on outstanding Advances based upon Acceptable
Inventory shall mean the prime rate, as published in the Wall Street Journal, in
effect from time to time as may be adjusted as of the date of any change in the
prime rate, plus Eight Percent (8%), and to provide that all accrued interest on
outstanding Advances based upon Acceptable Inventory shall be due and payable
monthly in arrears.
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iv. The
definition of “Payment Conversion Fee” contained in Section 1 Definitions of the
Financing Agreement is hereby amended and restated in its entirety as
follows:
““Payment
Conversion Fee” means Fifteen Percent (15%) of any payment received by Client on
a Purchased Account which is not tendered to Summit as required in this
Agreement.”
Summit
and Client hereby confirm their mutual intent and understanding that the Payment
Conversion Fee applies to all payments received by Client on any Purchased
Account, including any credit card or other electronic payments received by
Client, that are not tendered to Summit within Five (5) Banking Business Days of
its receipt by Client.
4.
Financing
Documents. Except as expressly amended or modified by this
Second
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
Second
Forbearance Agreement. Guarantors hereby confirm that they guarantee, pursuant
to then-
respective Guarantees, the obligations of Client under the Financing Agreement
as amended by this
Second 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) November 9,2009, or (ii) upon the occurrence of any of the
following:
a.
Breach of
Second
Forbearance Agreement. A breach or default by Client or Guarantors of any
of the covenants or agreements set forth in this
Second Forbearance
Agreement.
b.
New Event
of Default. 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 Second 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.
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f.
Repudiation of
Second Forbearance Agreement. Client or Guarantors take any action to
repudiate this Second Forbearance Agreement or this Second 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,
and/or this Second Forbearance Agreement.
7.
No Waiver
of Default. Execution and delivery of this Second 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 Second
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 Second
Forbearance Agreement. Failure of Client and/or Guarantors to “timely
perform any agreement or covenant provided herein of 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 Second
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 Second Forbearance Agreement or any of the agreements, documents,
obligations, or transactions contemplated by this Second Forbearance Agreement,
but excluding any such claims based upon breach or default by Summit or gross
negligence or willful misconduct of Summit.
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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 Second 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
Second Forbearance Agreement and that this Second 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.
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 Second 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 Second 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 Second
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 Second Forbearance Agreement.
This
Second Forbearance Agreement shall be governed by and construed in accordance
with the laws of the State of Utah.
Any
provision of this Second 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.
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All
references in this Second 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 Second
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 Second
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 SECOND 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 SECOND 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.
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 SECOND
FORBEARANCE AGREEMENT.
This
Second 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.
[Remainder
of Page Intentionally Left Blank]
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Dated:
August 13, 2009.
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Summit
Financial Resources, L.P.
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By:
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/s/ Xxxx X. Xxxxxxx
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Name:
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Xxxx X. Xxxxxxx
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Title:
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SVP
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Artisanal
Cheese, LLC
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By:
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/s/ 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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American
Home Food Products, Inc.
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By:
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/s/ 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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Xxxxxx
X. Xxxx
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