EXHIBIT 10.5
AMENDMENT
AND
FORBEARANCE AGREEMENT
DATED JANUARY 8, 2002
AMENDMENT AND FORBEARANCE AGREEMENT
This Amendment and Forbearance Agreement ("Amendment" or "Agreement") is
entered into on this ___ day of_________, 2002, at Reno, Nevada, by and between
____________, referred to in this Amendment as "Creditor," and Chapeau, Inc.,
d/b/a BluePoint Energy Products, Inc., of Reno, Nevada, referred to in this
Amendment as "Company."
The foregoing individuals and / or entities may be referenced by the term
"party" or "parties" in this Agreement where and whenever necessary.
R E C I T A L S:
1. WHEREAS, Company executed a promissory note ("Note") dated ___________, in
favor of Creditor in the principal sum of ___________ Dollars
($_________); and
2. WHEREAS, the Note is secured by a "Security Agreement" of even date, and
also incorporates a Warrant and Subscription Agreement (collectively,
"collateral documents") as part of its terms; and
3. WHEREAS, the Note provides, in pertinent part, that interest upon the
principal balance due to the Creditor becomes due and payable after a
period of 120 days; and
4. WHEREAS, the Company is in Default of the Note's Balance under its terms of
repayment; and
5. WHEREAS, pursuant to Paragraph (14) of the Note, the parties wish to amend
the Note's repayment terms and structure a delayed repayment plan
(forbearance) in consideration of several different repayment terms;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants contained in this Amendment, and intending to be legally bound, the
parties agree to the following:
C O V E N A N T S:
1. Amendment. PURSUANT TO 14 of the "Secured Convertible Promissory Note"
("Note") and its associated loan documents dated______________, the
undersigned, in consideration of the covenants contained herein, and in the
original Note, hereby amend the following Note section to reflect the
following changes, effective as of the original maturity date of the Note
(i.e.,___________).
A. Definitions. All capitalized terms used but not defined herein
shall have the meanings assigned to them in the Purchase Agreement.
The following terms as used in this Note shall have the following
meanings:
"Additional Stock" is defined in Section 8(f)(iv) hereof.
"Basic Rate" means a fixed interest rate of Ten percent (10%) per
annum.
"Common Stock" is defined in Section 8(a) hereof.
"Conversion Price" is defined in Section 8(a) hereof.
"Default Rate" means an interest rate per annum equal to the Basic
Rate plus three percent (3%).
"Loan" means the loan made by Holder to the Company that is
evidenced by this Note and any other loan made by Holder to the
Company.
"Loan Documents" means this Note, the Security Documents and any
other promissory note evidencing a Loan.
"Maturity Date" means___________.
"Obligations" means all principal, interest and other sums,
obligations and liabilities of any nature whatsoever which may or
shall become due to Holder in accordance with the provisions of
this Note, the Security Documents or the other Loan Documents.
"Principal Balance" means the outstanding principal balance of this
Note from time to time.
B. Interest. Subject to the provisions of this Note hereinafter set
forth, the entire Principal Balance shall bear interest from the
date of the Parties Amendment and Forbearance Agreement at the
Basic Rate of ten percent (10%) per annum, calculated for the
actual number of days elapsed, on the basis of a 360-day year.
Interest shall accrue and become payable to the Holder by the
Company in six equal installments spaced at 30-day intervals, the
first of which shall come due 30 days from the date of this Note's
execution, and the last of which shall become due at the maturity
date. All interest on the Principal Balance of this Note shall
otherwise be due and payable in accordance with Section 3 hereof.
If any payment hereunder would otherwise be due on a day that is
not a Business Day, it shall instead be due on the next succeeding
Business Day, and such extension of time shall be taken into
account in all calculations of interest due hereunder. If the
Company does not pay any amount due hereunder within a ten-day
period after the original dates due (contemplated in this Amendment
and Forbearance Agreement), such a failure to pay shall constitute
an "Event of Default." All outstanding principal and interest
shall be due and payable on the Maturity Date.
C. "Success Fee." Beginning on the date hereof, and terminating at
5:00 p.m. Pacific Time on the Maturity Date, Holder has the right,
at Holder's option, at any time, to receive fully paid and
nonassessable shares of Common Stock of the Company. The number of
shares of Common Stock to which Holder shall be entitled shall be
equal to the result of the following formula:
(i) Divide the Principal Balance (in U.S. Dollars) of this Note by
100,000.
(ii) Multiply the quotient by 33,000.
By way of example, if the Principal Balance is $300,000.00,
Holder may elect to receive 99,000 shares [($300,000/100,000) x
33,000 = 99,000].
2. Amendment Integration. This Amendment reflects the only change(s) to be
made to the above-referenced documents; any conflicts not otherwise
explicitly addressed in the original Note and collateral documents shall be
resolved by reference to the same.
3. Repayment Schedule. In consideration of the interest rate change and the
repayment schedule change, the Creditor agrees to knowingly and voluntarily
waive any damages to which (s)he (it) would have otherwise been entitled
under the terms of the original Note and collateral documents, thereby
rescinding the Company's current default status for the balance of the time
period contemplated by this Agreement.
A repayment schedule setting forth the amounts due and the dates upon which
they are due under the terms of the Agreement is attached hereto as Exhibit
"A" and incorporated herein by reference. The Principal Balance, as that
term is defined in the original Note and Collateral Documents, shall only
accrue interest at the amended basic rate of ten percent (10%) per annum
from the date of this Agreement, and Creditor waives the right to any
monetary interest to which (s)he (it) would have otherwise been entitled
under the original agreement's terms.
4. Warranty of Entire Interest. Each party hereto warrants that no other
person or entity has any interest in the claims referred to herein, except
as may otherwise be stated, and that (s)he (it) (they) has (have) not sold,
assigned, transferred, conveyed, or otherwise disposed of any of the
claims, demands, obligations, or causes of action to which this Agreement
refers.
5. Additional Documents. All parties agree to cooperate fully and execute any
and all supplementary documents and to take all additional actions which
may be necessary or appropriate to give full force and effect of this
Agreement's terms.
6. Construction of Agreement. Each party, having reviewed and discussed this
Agreement thoroughly, agrees that any question of construction shall not be
resolved by any rule of interpretation providing for interpretation against
the drafting party, and that any ambiguity shall not be assumed by a court
of competent jurisdiction to be construed for or against any specific party
to this Agreement.
7. Arms-Length Negotiation. This Agreement is the product of informed
negotiations between parties of equal bargaining power, and involves
compromises of the parties' previously stated legal positions or rights.
This Agreement forms the basis for significant legal rights and obligations
of the parties executing it. Each party executing this Agreement
acknowledges by such execution that (s)he (it) has read the Agreement, been
afforded the opportunity to seek legal counsel, and has either obtained
separate legal representation or waived her (his) (its) right to do so.
8. No Waiver. No waiver of any provision of this Agreement, or of any rights
or obligations of any party to it, shall be effective, except pursuant to a
written instrument signed by the party or parties waiving compliance. Any
such waiver shall be effective only in the specific instance and for the
specific purpose so stated in such a writing. The failure of any party to
this Agreement to seek redress for violation, or to insist on strict
performance, of any covenant or condition of this Agreement shall not
prevent a subsequent act which would have constituted a violation from
having the effect of an original violation.
9. Successors. This Agreement shall be binding upon and inure to the benefit
of all successors and assigns of the parties, and likewise extends to all
officers, directors, shareholders, agents, employees, and attorneys of each
undersigned party.
10. Jurisdiction and Venue. The laws of the State of Nevada shall govern the
interpretation and application of this Agreement, without reference to such
State's principles of conflicts of law. In the event that any suit is
brought arising out of or in connection with this Agreement, the parties
consent to the jurisdiction of, and agree that sole venue will lie in,
either the California State Superior Court located in Placer County,
California.
11. Notices. All notices and communication in connection with the Agreement
shall be mailed or otherwise delivered to the following addresses:
Originals to:
A. Xxx X. Xxxxxxxx, Chief Executive Officer, Chapeau, Inc. / BluePoint
Energy Products, Inc.; 0000 Xxxxxxxx Xxxx; Xxxxxxx Xxx, XX 00000.
With copy to: Xxxxx X. Xxxxxxxxxxx, Esq.; 0000 Xxxxxxx Xxxxxxxxx, Xxxxx
000; Xxxxxxxxx, Xxxxxxxxxx 00000.
B. Creditor:
12. Integration. This Agreement constitutes the entire written expression of
the Agreement between the parties with respect to the subject matter
hereof, and supersedes all prior discussions, agreements, and
understandings, whether written or oral, among the parties with respect
hereto. Each party acknowledges that (s)he (it) is not entering into this
Agreement on the basis of any representations not contained within this
document.
13. Modification. This Agreement may only be modified, amended, or otherwise
altered by a written instrument mutually signed by all parties.
14. Severability. If any provision or clause of this Agreement is held
unenforceable by a court of competent jurisdiction, such a finding shall
not impair the validity or enforceability of this Agreement's remaining
provisions.
15. Authority. All parties warrant and represent that they are authorized to
enter into this Agreement on their own behalf and on behalf of their
respective directors, officers, employees, agents, current or former
subsidiaries, divisions, affiliates, predecessors-in-interest, successors-
in-interest, assigns, and all persons or entities acting through or under
any of them, and that they have the legal authority to bind such persons
and entities to this Agreement's terms. The parties also represent and
warrant that the person whose signature is affixed to this document on
behalf of each respective party is authorized to sign this Agreement on
behalf of the respective party and has the legal authority to so bind that
party.
15. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which shall constitute one
and the same instrument. Specifically, the parties agree that they shall
execute this Agreement in two (2) originals or counterparts, with Company
to retain one (1) original, and Creditor to retain one (1) original.
16. Attorney Fees. Each party hereto shall bear its own attorneys' fees and
costs incurred in connection with this Agreement.
17. Breach. The prevailing party in any action or proceeding to enforce the
terms, covenants or conditions of this Agreement, or to procure an
adjudication or determination of the rights of the parties, shall be
entitled to recover and be awarded her (his) (its) attorney fees and costs
incurred in connection with such proceedings or efforts. This shall apply
to any arbitration, trial, appeal, bankruptcy or any other proceeding.
18. Headings/Gender/Plurality. The headings in this Agreement are inserted for
convenience of reference only and shall not affect interpretation of this
Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular and
the plural, and the pronouns stated in either the masculine, feminine, or
the neuter gender shall include the masculine, the feminine and the neuter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
CHAPEAU, INC.
By: ____________________ By:___________________________
Xxx X. Xxxxxxxx, CEO Creditor:
EXHIBIT "A"
Interest Interest Interest Interest Interest
