FIRST AMENDMENT TO THE SETTLEMENT AGREEMENT
Exhibit
10.17
FIRST
AMENDMENT
TO
THE
This
FIRST AMENDMENT TO THE SETTLEMENT AGREEMENT, dated as of November 7, 2008 (this
“Amendment”), by and between Capstone Business Credit, LLC (“CBC”), Capstone
Capital Group I, LLC (“CCG”, and with CBC, “Capstone”) and Harbrew Imports, Ltd.
(the “Borrower”).
WHEREAS,
Capstone and the Borrower are parties to a Settlement Agreement dated as of
August 21, 2008 (as amended, restated, modified or supplemented and in effect
from time to time, the “Settlement Agreement”).
WHEREAS,
pursuant to the Settlement Agreement, Borrower delivered its Promissory Note
to
Capstone in the principal amount of $1,350,000 (the “Promissory
Note”).
WHEREAS,
Capstone and the Borrower desire to amend the Settlement Agreement and to amend
and restate the Promissory Note;
WHEREAS,
pursuant to certain Guarantees dated January 22, 2007, as reaffirmed by the
Reaffirmation of Guarantees dated October 31, 2007 (the “Guarantees”), Xxxxxxx
XxXxxxx (“Guarantor”) irrevocably and unconditionally guaranteed all of the
obligations of Borrower under the Financing Agreements; and
WHEREAS,
capitalized terms which are used herein without definition and which are defined
in the Settlement Agreement shall have the same meanings herein as in the
Settlement Agreement;
NOW,
THEREFORE, in consideration for the agreements, covenants and representations
contained herein, and other good and valuable consideration, the receipt and
sufficiency is hereby acknowledged, the parties hereto agree as
follows:
SECTION
1. Amendment
to Settlement Agreement.
(a) Section
1(a) of the Settlement Agreement is hereby deleted in its entirety, and in
its
place and stead, the following shall be inserted:
“(a) In
payment under the Financing Agreements, and in settlement of the Capstone Claim,
Borrower shall deliver to Capstone $2,664,406.04 in readily available funds
(the
“Settlement Payment”), which shall be paid by Borrower to Capstone as
follows:
(i) $2,664,406.04
(the “Payment Balance”) shall be paid on or before August 21, 2009, TIME BEING
OF THE ESSENCE (the “Settlement Payment Due Date”). Borrower shall execute and
deliver its Amended and Restated Secured Promissory Note with respect to the
Payment Balance, to Capstone. The Amended and Restated Secured Promissory Note
shall be secured by the Collateral (as defined in the PO Financing Agreement
and
the Factoring Agreement).”
(b) Section
1(e) of the Settlement Agreement shall be deleted in its entirety, and in its
place and stead, the following shall be inserted:
“(e) From
the
date of this Agreement until the Settlement Payment Date (the “Interim Factoring
Period”) Borrower shall submit all of its Account Receivables (as defined in the
Factoring Agreement) to CBC for collection only, and not for factoring under
the
Factoring Agreement (the “Interim Receivables”). Fifty percent (50%) of the
aggregate amount of funds collected by CBC with respect to the Interim
Receivables, less any fees or expenses incurred by CBC in connection therewith,
(the “Interim Receivables Collection Amount”) shall be credited against (i)
interest payable under the Promissory Note, as amended, and (ii) the Payment
Balance, and 50% of the Interim Receivables Collection Amount shall be paid
to
Borrower. For the purposes of this Agreement, the Assigned Receivables shall
not
be deemed to be, and shall not be included in the Interim
Receivables.”
(c) The
following new Section 1(i) shall be inserted immediately following Section
1(h)
of the Settlement Agreement:
“(i) Notwithstanding
anything to the contrary contained in this Settlement Agreement, the Amended
and
Restated Secured Promissory Note, the PO Financing Agreement or the Factoring
Agreement, upon and after Borrower’s receipt of aggregate gross proceeds of
$5,000,000 in connection with its issuance of its 8% Secured Convertible Notes
and Warrants to purchase Common Stock pursuant to its Private Placement
Memorandum dated November 23, 2008 (the “Private Placement”), (A) the sum of
$500,000 shall within two days of Borrower’s receipt thereof be remitted to
Capstone in readily available funds, to pay down the Amended and Restated
Secured Promissory Note, and thereafter (B) 10% of the aggregate gross proceeds
in excess of $5,000,000 received by Borrower in connection with the Private
Placement shall, within two days of Borrower’s receipt thereof, be remitted to
Capstone, in readily available funds, to pay down the Amended and Restated
Secured Promissory Note.”
SECTION
2. Effectiveness.
This
Amendment shall become effective upon the execution and delivery of this
Amendment by Capstone and the Borrower.
SECTION
3. Representations
and Warranties.
The
parties hereby represents and warrants to each other as follows:
(a) Authority,
Etc.
The
execution and delivery by such party of this Amendment and the performance
by
such party of all of its agreements and obligations under the Settlement
Agreement as amended hereby are within the authority of such party and have
been
duly authorized by all necessary action on the part of such party.
(b) Enforceability.
The
Settlement Agreement as amended hereby constitutes the legal, valid and binding
obligation of such party, enforceable in accordance with its terms, except
as
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors’
rights.
SECTION
4. Affirmation
of the Guarantees.
Guarantor hereby reaffirms each of the Guarantees and all of Guarantor’s
obligations arising under each of the Guarantees.
SECTION
5. Miscellaneous
Provisions.
(a) Except
as
otherwise expressly provided by this Amendment, all of the terms conditions
and
provisions of the Settlement Agreement are confirmed and ratified in all
respects. It is declared and agreed by each of the parties hereto that the
Financing Agreements, the Guarantees, and the Settlement Agreement, as amended
hereby, shall continue in full force and effect, and that this Amendment and
the
Settlement Agreement shall be read and construed as one
instrument.
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(b) THIS
AMENDMENT SHALL BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL
FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF SAID STATE, WITHOUT REFERENCE TO CONFLICTS OF LAW
PRINCIPLES.
(c) The
Amendment may be executed in any number of counterparts, but all such
counterparts shall together constitute but one instrument. In making proof
of
this Amendment it shall not be necessary to produce or account for more than
one
counterpart signed by each party hereto by and against which enforcement hereof
is sought.
(d) Headings
or captions used in this Amendment are for convenience of reference only and
shall not define or limit the provisions hereof.
IN
WITNESS WHEREOF, the
parties hereto have executed this Amendment to be effective as of the day first
above written.
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HARBREW
IMPORTS, LTD
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By:
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/s/
Xxxxxxx X. XxXxxxx
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Name:
Xxxxxxx X. XxXxxxx
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Title:
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CAPSTONE
BUSINESS CREDIT, LLC
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By:
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/s/
Xxxxxx Xxxxxxxxx
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Name:
Xxxxxx Xxxxxxxxx
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Title:
Managing Member
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CAPSTONE
CAPITAL GROUP I, LLC
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By:
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/s/
Xxxxxx Xxxxxxxxx
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Name:
Xxxxxx Xxxxxxxxx
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Title:
Managing Member
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Section
4 Agreed to:
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/s/
Xxxxxxx X. XxXxxxx
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Xxxxxxx
XxXxxxx
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