GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS
THE GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS is made this 26th
day of October, 2001, by and between Value Star, Inc., a California corporation,
located at, in the City of Oakland, County of Alameda, State of California,
Federal Tax Identification Number 94-3144764, hereinafter referred to as
"Assignor," and DEVELOPMENT SPECIALISTS, INC., located at 333 South Grand
Avenue, Suite 2010, Los Angeles, CA 90071, hereinafter referred to as
"Assignee."
WITNESSETH: Whereas Assignor is indebted to various persons,
corporations and other entities and is unable to pay its debts in full, and has
decided to discontinue its business, and is desirous of transferring its
property to an assignee for the benefit of creditors so that the property so
transferred may be expeditiously liquidated and the proceeds thereof be fairly
distributed to its creditors without any preference or priority, except such
priority as established and permitted by applicable law;
NOW, THEREFORE, in consideration of Assignor's existing indebtedness to
its creditors, the covenants and agreements to be performed by Assignee and
other consideration, receipt of which is hereby acknowledged, it is hereby
AGREED:
1. TRANSFER OF ASSETS. Assignor hereby assigns, grants, conveys,
transfer and set over to Assignee all personal property and assets, whatsoever
and wheresoever situated, which are now, or have ever been, used in connection
with the operation of Assignor's business, and which assets include, but are not
limited to all personal property and any interest therein not exempt from
execution, including all that certain stock of merchandise, store furniture and
fixtures, book accounts, books, bills, accounts receivable, cash on hand, cash
in bank, patents, copyrights, trademarks and trade names, insurance policies,
tax refunds, rebates,
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general intangibles, insurance refunds and claims, and choses in action that are
legally assignable, together with the proceeds of any non-assignable choses in
action that may hereafter be recovered or received by the Assignor. Further,
this general assignment specifically includes all claims for refunds or
abatement of all excess taxes heretofore or hereafter assessed against or
collected from the Assignor by the United States or any of its departments or
agencies, any state or local taxing authority and the Assignor agrees to sign
and execute a power of attorney or other such document(s) as required to enable
Assignee to file and prosecute, compromise and/or settle all such claims before
the respective taxing authority. Assignor agrees to endorse any refund checks
relating to the prior operations of said Assignor's business and to deliver such
checks immediately to Assignee.
2. LEASES AND LEASEHOLD INTERESTS. This General Assignment includes all
leases and leasehold interests in any asset of the Assignor; however should the
Assignee determine that said lease or leasehold interest is of no value to the
estate, then said interest is thereby relinquished without further liability or
obligation to the Assignee .
3. UNION CONTRACTS. Any contract or agreement between the Assignor and
any Labor or Trade Union remains in force as between the Assignor and the
respective Union, however the Assignee is not bound to the terms of said
contract unless the Assignee specifically so agrees in writing at the time of
the acceptance of this general assignment.
4. FORWARDING OF MAIL. Assignor authorizes the forwarding of its mail
by the U.S. Postal Service as directed by Assignee.
5. POWERS AND DUTIES OF ASSIGNEE. Assignee shall have all powers
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Re: Value Star, Inc., a California Corporation
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necessary to marshal and liquidate the estate including but not limited to:
a. To collect any and all accounts receivable and obligations
owing to Assignor and not otherwise sold by Assignee;
b. To sell or otherwise dispose of all personal property of
Assignor in such manner as Assignee deems best. Assignee shall have the power to
execute any and all documents necessary to effectuate the sale of said property
and to convey title to same.
c. To sell or otherwise dispose of all tangible and intangible
personal property of Assignor, including but not limited to all of Assignor's
machinery, equipment, inventory, service or trademarks, trade names, patents,
franchises, causes or choses in action and general intangibles in such manner as
Assignee deems best. Assignee shall have the power to execute any and all
documents necessary to effectuate the sale of this property and to convey title
to same. In this regard, Assignee shall have the power to employ an auctioneer
to appraise said assets and to conduct any public sale of the assets and to
advertise said sale in such manner as Assignee deems best. Assignee shall have
the power to execute bills of sale and any other such documents necessary to
convey title to Assignor's property to any bona fide buyer.
d. To employ attorneys, accountants and any other additional
personnel to whatever extent may be necessary to administer the assets and
claims of the assignment estate and to assist in the preparation and filing of
any and all State, County or Federal Tax Returns as required.
e. To require all of Assignor's creditors to whom any balance
is owing to submit verified statements to Assignee of said claim(s), pursuant to
California Code of Civil Procedure ss.1802.
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f. To settle any and all claims against or in favor of
Assignor, with the full power to compromise, or, in the Assignee's sole
discretion, to sue or be sued, and to prosecute or defend any claim or claims of
any nature whatsoever existing in favor of Assignor.
g. To open bank accounts in the name of the Assignee or its
nominees or agents and to deposit assigned assets or the proceeds thereof in
such bank accounts and to draw checks thereon and with the further power and
authority to do such acts and execute such papers and documents in connection
with this general assignment as Assignee may deem necessary or advisable.
h. To conduct the business of the Assignor, should the
Assignee deem such operation proper.
i. To apply the net proceeds arising from the operation of and
liquidation of Assignor's business and assets, in the following priority amounts
as to only and not time of distribution, as follows:
(1) FIRST, to deduct all sums which Assignee may at
its option pay for the discharge of any lien on any of said property
and any indebtedness which under the law is entitle to priority of
payment and to reimburse Assignee as to all costs advanced by the
Assignee or any third party for the preservation of the assignment
estate's assets, including the maintenance and insurance of said assets
and, the expenses of any operation.
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(2) SECOND, all costs and expenses incidental to the
administration of the assignment estate, including the payment of a
reasonable fee to the Assignee, as that term is hereinafter defined and
the payment of reasonable compensation for the services of attorneys
for the Assignee, accountants to the Assignee, attorneys to the
Assignor for services related to the making of and administration of
the general assignment and any other professionals the Assignee deems
necessary to properly administer the assignment estate.
(3) THIRD, all federal taxes of any nature whatsoever
owing as of the date of this general assignment, or other such claim of
any federal governmental agency as defined under 31 U.S.C. ss.3713,
including but not limited to federal withholding taxes, federal
unemployment taxes and any other federal income, excise, property and
employment taxes.
(4) FOURTH, all state, county and municipality taxes
of any nature whatsoever owing as of the date of this general
assignment, including but not limited to employment, property and
income taxes.
(5) FIFTH, all monies due employees of the Assignor
entitled to priority as defined under California Code of Civil
Procedure ss.1204 and 1204.5 up to the statutory maximum.
(6) SIXTH, with the exception of those classes set
forth above, all distributions to other creditors shall be, within each
class, pro-rata in accordance with the terms of each creditor's
indebtedness, until all such debts are paid in full. The Assignee may
make interim distributions whenever the Assignee has accumulated
sufficient funds to enable it to make a reasonable distribution. No
distribution shall be in an amount less than $100,000 (in the
aggregate) except the final distribution.
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(7) SEVENTH, any monies (distributions) unclaimed by
creditors ninety days after the final distribution to unsecured
creditors (if any) or the termination of the administration of the
estate created by this general assignment, shall be re-distributed to
all known unsecured creditors, being those creditors who cashed their
respective dividend checks from the assignment estate, so long as any
such distribution exceeds one percent of each such creditor's allowed
claim.
(8) EIGHTH, the surplus, if any, of the assignment
estate funds, when all debts of the Assignor shall have been paid in
full, shall be paid and transferred to the holders of the equity of
said Assignor, as per the list of equity holders provided with the
making of this general assignment.
j. To do and perform any and all other acts necessary and
proper for the liquidation or other disposition of the assets, including but not
limited to abandonment, and the distribution of the proceeds derived therefrom
to Assignor's creditors.
6. RIGHTS OF CREDITORS. All rights and remedies of the creditors
against any surety or sureties for the Assignor are hereby expressly reserved
and nothing herein shall prevent the creditors or any of them from suing any
third parties or persons who may be liable to any of the creditors for all or
any part of their claims against the Assignor, or from enforcing or otherwise
obtaining the full benefit of any mortgage, charge, pledge, lien or other
security which they now hold on any property, creditors or effects of the
Assignor.
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7. LIABILITY OF ASSIGNEE. It is understood and agreed that the Assignee
is to assume no personal liability or responsibility for any of its acts as
Assignee herein, but its obligation shall be limited to the performance of the
terms and conditions of the general assignment in good faith and in the exercise
of its best business judgment.
8. WARRANTIES OF ASSIGNOR. Assignor hereby warrants as follows: The
list of creditors delivered concurrently herewith to the Assignee and as
required under California Code of Civil Procedure ss.1802 is complete and
correct as reflected by the books and records of the Assignor, as to the names
of Assignor's creditors, their addresses and the amounts due them.
Assignor, through its officers and directors, shall perform
any and all acts reasonably necessary and proper to assist the assignee in its
orderly liquidation of the Assignor's assets, the collection of any and all
monies owing the Assignor and in the distribution of said monies and proceeds of
asset sales to the Assignor's creditors; provided, however, the officers and
directors of Assignor shall only provide such assistance to the Assignee to the
extent, and on the condition that, they are reasonably compensated for such
services.
9. POWER OF ATTORNEY. The Assignor, by this general assignment hereby
grants the Assignee a general power of attorney, which power of attorney
specifically includes the right of the Assignee to prosecute any action in the
name of the Assignor as Attorney in Fact.
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10. ACCEPTANCE BY ASSIGNEE. By execution of this general assignment,
the Assignee does hereby accept the estate herein created and agrees to
faithfully perform its duties according to the best of the Assignee's skill,
knowledge and ability. It is understood that the Assignee shall receive
reasonable compensation for its services in connection with this estate.
Reasonable compensation is defined to mean a guaranteed minimum payment of
$25,000 to be applied against a fee of 5% of the first $1 million and 3.5% of
any amounts thereafter generated from the liquidation of the assets of the
assignor. Reasonable compensation does not replace or subsume the reimbursement
of all the Assignee's expenses incurred as a result of the administration of the
assignment estate from the proceeds generated therefrom.
IN WITNESS WHEREOF, the parties have hereunto set their hands the day
and year first above written:
Value Star, Inc.
By: /s/ James Stein
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President
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Title
Attested to by: /s/ Michael Kelly
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Its Secretary
Assignee Acceptance by: /s/ Geoffrey L. Berman
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Geoffrey L. Berman, Vice President
Development Specialists, Inc.
Date of Acceptance: 10/28/01