EXHIBIT 10.23.2
FORBEARANCE AGREEMENT AND RESTRUCTURE AGREEMENT
THIS FORBEARANCE AGREEMENT AND RESTRUCTURE AGREEMENT (the "Agreement")
dated as of May 15, 2001 is made by and between VALUESTAR, INC., a California
corporation ("Borrower") and TRANSAMERICA BUSINESS CREDIT CORPORATION, a
Delaware corporation ("TBCC").
WHEREAS, the Borrower and TBCC are parties to a Master Loan and
Security Agreement dated as of April 7, 2000 (the Master Loan Agreement and all
documents executed in connection therewith hereinafter referred to as "Loan
Agreement"; each capitalized term used but not defined herein shall have the
meaning given to such term in the Loan Agreement); and
WHEREAS, the Borrower is currently in default under the Loan Agreement
based on, among other things, its failure to pay the monthly payments for the
period between April, 2001 through May, 2001 ("Existing Defaults"); and
WHEREAS, as of April 27, 2001 the total amount due to TBCC, exclusive
of costs, expenses, late charges is $1,750,215.76; and
WHEREAS, the Borrower acknowledges and agrees that, based on the
Existing Defaults, TBCC has the right to exercise its rights and remedies under
the Loan Agreement; and
WHEREAS, the Borrower has requested that TBCC forbear temporarily from
exercising its rights and remedies under the Loan Agreement; and
WHEREAS, in consideration of the promises and undertakings of the
Borrower contained herein, TBCC is willing to forbear from exercising its rights
and remedies with respect to the Loan Agreement but only on the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto agree as follows:
1. Forbearance. Effective as of the date hereof through the earlier of (i) July
1, 2001 and (ii) the date of the occurrence of a Forbearance Default (as defined
below) (the "Forbearance Period"), and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, TBCC shall not seek to
exercise any of its rights or remedies under the Loan Agreement based on the
Existing Defaults during the Forbearance period. Further, provided that if (i)
there has been no Forebearance Default, (ii) that the conditions precedent set
forth in Section 2 hereof have been satisfied, (iii) the conditions set forth in
Section 3 hereof are satisfied, and (iv) no other Event of Default exists, then
upon the completion of the conditions of Section 3, the Loan shall not be deemed
to be in default and TBCC shall have all the rights and remedies available to
TBCC had the Loan not been in default.
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2. Conditions to Forbearance. This Agreement shall not be effective unless and
until each of the following conditions shall have been satisfied in the Lender's
sole discretion:
(a) TBCC shall have received executed counterparts of this
Agreement duly executed by the Borrower;
(b) The Borrower shall have paid all of the costs and expenses of
TBCC incurred in connection with the preparation, negotiation
and delivery of this Agreement, including, without limitation,
the reasonable fees and expenses of its counsel;
(c) TBCC shall have received a resolution authorizing this
Agreement, the matters covered hereby and the transactions
contemplated hereby;
(d) TBCC shall have received such other documents, instruments,
opinions, evidence, materials and information as TBCC may
reasonably request.
3. Payments and Warrant Repricing by Borrower. To induce TBCC to forebear on
principal and interest payments for April, May, and June 2001 the Borrower will
do the following conditions:
(a) Borrower shall resume regular monthly payments on July 1, 2001
in the monthly amounts of $39,023.25 for Schedule 1 and
$22,362.74 for Schedule 2 for a total of $61,385.99;
(b) Borrower shall remit deferred interest associated with the
April, May and June, 2001 payments with the July 1, 2001
payment in the total amount of $57,721.38;
(c) Borrower shall make one extra payment of principal and
interest on August 1, September 1, and October 1, 2001 each,
in the amounts of $39,023.25 for Schedule 1 and $22,362.74 for
Schedule 2;
(d) Borrower will make a $250,000 reduction in principal upon the
successful completion of an aggregate of $5 million in equity
or long-term debt raised. Such funds are to be applied
pro-rata to the final (15% balloon) payment and shall be made
on or before July 1, 2001;
(e) TBCC shall obtain an Amended and Restated Warrant for 50,000
shares at a price of $0.575 per share in the form attached as
Schedule A hereto; and
(f) Borrower shall be in compliance with every term and condition
of this Agreement.
4. Covenant. To induce TBCC to enter into this Agreement, the Borrower hereby
covenants and agrees that it shall provide TBCC and its agents access to the
Borrwer's premises and books and records at any time and from time to time,
during normal business hours and upon reasonable notice under the circumstances,
to (i) inspect and verify the equipment, (ii) inspect
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and copy any and all records pertaining thereto, and (iii) discuss its affairs,
finances and business with any of it's officers, employees or directors or with
the Auditors.
5. Representations and Warranties of the Borrower. To induce TBCC to enter into
this Agreement, the Borrower represents and warrant as follows:
(a) The recitals in this Agreement are true and correct in all
respects.
(b) This Agreement has been duly executed and delivered.
(c) The Borrower is a corporation duly organized, validly
existing, and in good standing under its state of
incorporation and the State of California.
(d) The execution, delivery and performance by the Borrower of
this Agreement and the documents contemplated hereby or
delivered in connection herewith (i) are within Borrower's
powers, have been duly authorized by all necessary action, and
do not contravene (A) any documents, contracts or agreements
to which Borrower is a party or by which it is bound or
affected, or (B) any requirements of any law or regulation to
which Borrower is bound or affected.
(e) No authorization, approval, or other action by, and no notice
to or filing with, any governmental authority is required for
the due execution, delivery, and performance by Borrower of
this Agreement or any of the documents contemplated hereby or
delivered in connection herewith to which Borrower is a party.
(f) This Agreement and each of the documents contemplated hereby
or delivered in connection herewith to which Borrower is a
party constitute, and each of such documents to which Borrower
is to be a party when delivered hereunder will constitute, the
legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
(g) There is no pending or, to the best of Borrwer's knowledge
after due inquiry, threatened action or proceeding affecting
Borrower which (i) could individually or in the aggregate be
reasonably expected to have a material adverse effect on
Borrower or (ii) purports to affect the legality, validity, or
enforceability of this Agreement, the transactions
contemplated hereby, or any of the documents contemplated
hereby or delivered in connection herewith.
(h) Except for the Existing Defaults, all representations and
warranties of Borrower in the Loan Agreement are incorporated
herein in full by this reference and are true and correct in
all material respects as of the date hereof except for
representations and warranties that expressly relate to an
earlier date, in which case such representations and
warranties were true and correct as of such earlier date.
(i) There are currently no Events of Default except the Existing
Defaults.
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6. Forbearance Default; Rights upon Forbearance Default.
(a) Each of the following shall constitute a "Forbearance Default"
hereunder:
(i) The existence of any Event of Default or other event
which, with the giving of notice or passage of time,
would constitute an Event of Default (other than the
Existing Defaults); or
(ii) The Borrower shall fail to keep or perform any of the
covenants or agreements contained herein; or
(iii) Any representation or warranty of Borrower shall be
false, misleading or incorrect in any material
respect.
(b) Upon the occurrence of a Forbearance Default or the
termination of the Forbearance Period, TBCC may exercise its
rights and remedies under the Loan Agreement and applicable
law.
7. Reservation of Right Reinstatement of Rights Waiver of Automation Stay.
(a) The Borrower acknowledges that, except as expressly set forth
herein, TBCC may at any time exercise any or all of the rights
and remedies available to it under the Loan Agreement and
applicable law.
(b) In the event that Borrower shall (i) file with any bankruptcy
court or be the subject of any petition under Title 11 of the
U.S. Code, as amended (the "Bankruptcy Code"); (ii) be the
subject of an order for relief under the Bankruptcy Code;
(iii) file or be the subject of a petition seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present
or future federal or state act or law relating to bankruptcy,
insolvency. or other relief for debtors; (iv) seek, consent to
or acquiesce in the appointment of a trustee, receiver,
conservator or liquidator; (v) be the subject of an order,
judgment or decree entered into by a court of competent
jurisdiction approving a petition filed against Borrower for
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present
or future federal or state act or law relating to bankruptcy,
insolvency, or relief for debtors, then the Lender shall
thereupon be entitled to relief from any automatic stay
imposed by Section 362 of the Bankruptcy Code or from any
other stay or suspension of remedies of the rights and
remedies otherwise available to TBCC under the Loan Agreement
and the Borrower specifically acknowledge that "cause" exists
for such relief within the meaning of Section 362(d) of the
bankruptcy Code and agrees not to oppose any motion by TBCC
for relief from the automatic stay imposed by Section 362.
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8. Acknowledgement of Obligations. The Borrower acknowledges that as of April
27, 2001, the Borrower is indebted to TBCC in the amount of $1,750,215.76 plus
fees, costs, late charges and expenses and that such obligations are absolute
and unconditional and are the legal, valid and binding obligations of the
Borrower without offset, defense or counterclaim, and interest, costs, and
expenses continue to accrue with respect thereto.
9. Reaffirmation of Loan Agreement.
(a) Borrower hereby reaffirms the Loan Agreement and acknowledges
that it is indebted to TBCC under the Loan Agreement and that
its obligations under Loan Agreement are absolute and
unconditional, are its legal, valid and binding obligations
without offset, defense or counterclaim, and interest, costs
and expenses continue to accrue with respect thereto.
(b) The Borrower hereby reaffirms, confirms and acknowledges all
of the terms of the Loan Agreement.
10. Effect and Construction of Agreement. Except as expressly provided herein,
the Loan Agreement shall remain in full force and effect in accordance with
their respective terms, and this Agreement shall not be construed to:
(a) waive or impair any rights, powers or remedies of TBCC under
the Loan Agreement upon termination of the Forbearance Period,
with respect to the Existing Defaults or otherwise; or
(b) constitute an agreement by TBCC or require TBCC to extend the
Forbearance Period (other than as provided in Section 1(b)
hereof), or grant additional forbearance periods, or extend
the term of the Loan Agreement or the time for payment of any
amounts due under the Loan Agreement.
TBCC acknowledges that it has consulted with counsel and with such
other experts and advisors as it has deemed necessary in connection with the
negotiation, execution and delivery of this Agreement and the other documents
executed in connection herewith.
In the event of any inconsistency between the terms of this Agreement
and the Loan Agreement, the terms of this Agreement shall govern.
11. Release. In consideration of the foregoing, Borrower hereby release, remises
acquits and forever discharges TBCC and TBCC's employees, agents,
representatives, consultants, attorneys, fiduciaries, servants officers,
directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporations and related corporate divisions (all of the
foregoing hereinafter called the "Released Parties"), from any and all actions
and causes of action, judgments, executions, suits, debts, claims, demands,
liabilities, obligations, damages and expenses of any and every character, known
or unknown, direct or indirect, at law or in equity, of whatsoever kind or
nature, whether heretofore or hereafter arising, for or because of any matter or
thing done, omitted or suffered to be done by any of the Released Parties prior
to and including the
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date of execution hereof, and in any way directly or indirectly arising out of
or in any way connected to this Agreement, the Loan Agreement or any of the
other Loan Documents (all of the foregoing hereinafter called the "Released
Matters"). The Borrower acknowledges that the agreements in this paragraph are
intended to be in full satisfaction of all or any alleged injuries or damages
arising in connection with the Released Matters. The Borrower represents and
warrant to TBCC that it has not purported to transfer, assign, pledge or
otherwise convey any of its right, title or interest in any Released Matter to
any other Person and that the foregoing constitutes a full and complete release
of all Released Matters.
12. Miscellaneous.
(a) Further Assurances. The Borrower agrees to execute such other
and further documents and instruments as TBCC may reasonably
request to implement the provisions of this Agreement.
(b) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns. No other
Person shall be entitled to claim any right or benefit
hereunder, including, without limitation, the status of a
third party beneficiary of this Agreement.
(c) Integration. This Agreement constitutes the entire agreement
and understanding among the parties relating to the subject
matter hereof and supersedes all prior proposals,
negotiations, agreements and understandings relating to such
subject matter. In entering into this Agreement, the Borrower
acknowledges that it is relying on no statement,
representation, warranty, covenant or agreement of any kind
made by TBCC or any employee or agent of TBCC, except for the
agreements of TBCC set forth herein.
(d) Invalidity. The provisions of this Agreement are intended to
be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or
enforceability without in any manner affecting the validity or
enforceability of such provision in any other jurisdiction or
the remaining provisions of this Agreement in any
jurisdiction.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF
LAW PRINCIPLES.
(f) Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of counterparts and by different
parties to this Agreement in separate counterparts, each of
which, when so executed, shall be deemed an original, but all
such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission
shall be deemed to be an original
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signature hereto.
(g) Notices. Any notices with respect to this Agreement shall be
given in the manner and to the addresses provided in the Loan
Agreement or to such other address as any party may designate
to the other parties hereto in the manner specified in the
Loan Agreement.
(h) Headings. The titles and headings of the numbered paragraphs
of this Agreement have been inserted for convenience of
reference only and are not intended to summarize or otherwise
describe the subject matter of such paragraphs and shall not
be given any consideration in the construction of this
Agreement.
(i) Survival. All representations, warranties, covenants,
agreements, undertakings, waivers and releases of the Borrower
contained herein shall survive the termination of the
Forbearance Period or payment in full of the obligations.
(j) Amendments, Etc. No Purported amendment, modification,
rescission, waiver or release of any provision of this
Agreement shall be effective unless the same shall be in
writing and signed by each of the parties hereto, and any such
waiver shall be effective only in the specific instance and
for the specific purpose for which given.
(k) Cost and Expenses. The Borrower shall pay on demand all costs
and expenses of TBCC including, without limitation, all
reasonable attorneys and other professionals' fees and related
disbursements incurred in connection with the administration
and enforcement of this Agreement or with respect to advising
TBCC of its rights and responsibilities hereunder and under
the Loan Agreement.
13. SUBMISSION TO JURISDICTION; JURY WAIVER. BORRWER IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING IN ILLINOIS FOR ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, AND BORRWER IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
ILLINOIS STATE OR FEDERAL COURT. BORRWER AND TBCC IRREVOCABLY WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE WILL FOLLOW
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
VALUESTAR, INC.
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: Controller
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Vice President
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Schedule A
Schedule 2 Schedule 1
Monthly Interest Monthly Interest Total Monthly
Payment Rate Interest Payment Rate Interest Payment
------- ---- -------- ------- ---- -------- -------
Apr-01 14.86% 7,459.35 14.94% 11,781.11 Interest for April
May-01 14.86% 7,459.35 14.94% 11,781.11 Interest for May
Jun-01 14.86% 7,459.35 14.94% 11,781.11 Interest for June
Jul-01 22,362.74 14.86% 22,378.05 39,023.25 14.94% 35,343.33 119,107.37
Aug-01 44,725.48 78,046.50 122,771.98
Sep-01 44,725.48 78,046.50 122,771.98
Oct-01 44,725.48 78,046.50 122,771.98
Nov-01 22,362.74 39,023.25 61,385.99
Dec-01 22,362.74 39,023.25 61,385.99
Jan-02 22,362.74 39,023.25 61,385.99
Feb-02 22,362.74 39,023.25 61,385.99
Mar-02 22,362.74 39,023.25 61,385.99
Apr-02 22,362.74 39,023.25 61,385.99
May-02 22,362.74 39,023.25 61,385.99
Jun-02 22,362.74 39,023.25 61,385.99
Jul-02 22,362.74 39,023.25 61,385.99
Aug-02 22,362.74 39,023.25 61,385.99
Sep-02 22,362.74 39,023.25 61,385.99
Oct-02 22,362.74 39,023.25 61,385.99
Nov-02 22,362.74 39,023.25 61,385.99
Dec-02 22,362.74 39,023.25 61,385.99
Jan-03 22,362.74 39,023.25 61,385.99
Feb-03 22,362.74 39,023.25 61,385.99
Mar-03 22,362.74 39,023.25 61,385.99
Apr-03 22,362.74 191,810.55 214,173.29
May-03 22,362.74 22,362.74
Jun-03 22,362.74 22,362.74
Jul-03 22,362.74 22,362.74
Aug-03 --
Sep-03 109,919.41 109,919.41
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