EXHIBIT 10.12
LAURUS MASTER FUND, LTD.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
May 14, 2004
XStream Beverage Group, Inc.
0000 X.X. 00xx Xxxxxx, Xxx 0-X
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Re: Restricted Account: Account Number XXX XXX XXXX,
Account Name: XStream Beverage Group, Inc.,
maintained at North Fork Bank (the "Restricted Account").
Reference is made to (i) that certain Securities Purchase Agreement,
dated as of May 14, 2004 (as amended, modified or supplemented from time to
time, the "Purchase Agreement"), by and between XStream Beverage Group, Inc., a
Nevada corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser") and (ii) that certain Restricted Account Agreement, dated as of May
14, 2004 (as amended, modified or supplemented from time to time, the
"Restricted Account Agreement"), by and among the Company, Laurus and North Fork
Bank (the "Bank"). Capitalized terms used but not defined herein shall have the
meanings ascribed them in the Purchase Agreement (and, if such term is not
defined in the Purchase Agreement, the meaning ascribed to such term in the
Restricted Account Agreement). Pursuant to the Section 3.2 of the Purchase
Agreement, the Company is required to place $2,450,000 in the Restricted
Account, and, subject to the provisions of this letter, the Purchase Agreement
and any Related Agreement, maintain such amount in the Restricted Account for as
long as the Purchaser shall have any obligations outstanding under the Note and
to assign the Restricted Account for the benefit of the Purchaser as security
for the performance of the Company's obligations to the Purchaser.
The Purchaser and the Company desire to clarify certain aspects
regarding the use of funds contained in the Restricted Account, and for good
consideration, the receipt and sufficiency of which is here acknowledged, the
Company and the Purchaser agree that (i) so long as (w) no Event of Default has
occurred or is continuing, (x) the Purchaser has completed its due diligence
review of the Baltimore Acquisition and the Company and its Subsidiaries (after
giving effect to the Baltimore Acquisition) (including its review of all related
financial information), in each case to the Purchaser's satisfaction, (y) the
date of the consummation of the Baltimore Acquisition occurs on or prior to July
1, 2004 and (z) the Company and its Subsidiaries comply with Section 6.12(f) of
the Purchase Agreement with respect to any entity acquired in connection with
the Baltimore Acquisition, then, concurrently with the consummation of the
Baltimore Acquisition, the Purchaser shall direct the Bank, pursuant to a
Release Notice, to wire cash maintained in the Restricted Account in an amount
equal to the lesser of (x) $1,450,000, (y) the amount that is then maintained in
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the Restricted Account and (z) the amount of additional consideration owed to
the seller with respect to the Baltimore Acquisition and necessary to consummate
the Baltimore Acquisition, to such bank account as the Company may direct the
Purchaser in writing and (ii) when (and not until) the aggregate outstanding
Principal Amount (as defined in the Note) of the Note has been reduced (through
voluntary or mandatory prepayments or conversions) to $2,450,000, promptly
following any conversion of a Tranche A Monthly Principal Amount (as defined in
the Note), a Tranche B Monthly Principal Amount or such other Principal Amounts
into Common Stock of the Company (such event, a "Conversion"), the Purchaser
shall direct the Bank, pursuant to a Release Notice, to wire an amount of funds
equal to the corresponding dollar amount by which the aggregate Principal Amount
of the Note has been reduced pursuant to such a Conversion from the Restricted
Account to such bank account as the Company may direct the Purchaser in writing.
Additionally, the Company may request that the Purchaser direct the
Bank to release all or any portion of the amounts contained in the Restricted
Account following (or in connection with) the purchase of inventory and/or an
acquisition of certain assets by the Company or any of its Subsidiaries. Such a
release referred to in the immediately preceding sentence shall be subject (in
all respects) to the Purchaser's evaluation of all factors that it considers (in
its sole discretion) relevant at the time of such requested release, including
its determination (i) of the relative benefit of such purchase and/or
acquisition to the Company and its Subsidiaries and (ii) of the overall
performance (financial or otherwise) of the Company and its Subsidiaries at such
time. The Purchaser shall not be under any obligation to release any amount
pursuant to this paragraph and the release of such amounts shall be in the
Purchaser's sole and absolute discretion.
This letter may not be amended or waived except by an instrument in
writing signed by the Company and the Purchaser. This letter may be executed in
any number of counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
signature page of this letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof or thereof, as the case may
be. This letter shall be governed by, and construed in accordance with, the laws
of the State of New York. This letter sets forth the entire agreement between
the parties hereto as to the matters set forth herein and supersede all prior
communications, written or oral, with respect to the matters herein.
* * *
If the foregoing meets with your approval please signify your
acceptance of the terms hereof by signing below.
Signed,
LAURUS MASTER FUND, LTD.
By:____________________
Name:
Title:
Agreed and Accepted this 14th day of May, 2004.
XSTREAM BEVERAGE GROUP, INC.
By:_____________________
Name:
Title:
