1
Exhibit 10.32
[LEGACY BRANDS LETTERHEAD]
January 30, 1998
Xxxxxxx X. Xxxxxxx, Manager Xxxxxxx X. Xxxxxxx, President
C. Brands Management LLC Capitol Bay Group
0000 Xxxxxxxxxxxx Xxxxx Xxxxxxx Xxx Xxxxxxxxxx
Xxxxxxxxx, XX 00000 0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Re: CONVERSION OF PROMISSORY NOTES-INDEMNIFICATION AGREEMENT.
Dear Xxxxx:
I would like to memorialize the understanding which we reached on this
date between Legacy Brands, Inc. ("Legacy") and X. Xxxxxx Management LLC ("C.
Brands") concerning the conversion to Legacy Common Stock ("Legacy Stock") of
principal and accrued interest owing under two promissory notes payable by
Legacy to X. Xxxxxx (the "Notes") as well as certain other related matters
involving Capitol Bay Group ("CapBay") and Capitol Bay Securities ("CBS").
Under a Memorandum of Agreement, dated August 8, 1995, between Legacy,
Xxxxxxx Xxxxxxxx ("Xxxxxxxx"), CapBay and various other persons (the "August 8,
1995 Agreement"), CapBay committed and undertook, through and on behalf of its
affiliated entity, CBS, although not a party to the August 8, 1995 Agreement or
a signatory to the August 1, 1995 Letter Agreement referenced in the August 8,
1995 Agreement, to certain actions therein, including raising financing for
Legacy.
Thereafter, CBS sold the Notes described above to C Brands, the
"investor" contemplated under the August 8, 1995 Agreement, Xxxxxxxx was
required to transfer, from his own holdings, shares of Legacy common stock for
issuance to X. Xxxxxx in addition to the number of shares Legacy was to issue
to X. Xxxxxx. Xxxxxxxx has filed suit against Legacy in the Superior Court of
the State of California, County of San Francisco seeking, among other things, a
judicial determination that the conditions set forth in the August 8, 1995
Agreement have not been satisfied and, therefore, that he is not obligated to
perform his obligations under the August 8, 1995 Agreement. If Xxxxxxxx is
successful in this suit and is entitled to recover from C. Brands the stock
which Legacy has recorded on its books as having been transferred from Xxxxxxxx
to C. brands, Legacy agrees that it will reissue
-1-
2
and deliver to X. Xxxxxx that number of shares of Legacy stock which the court
shall determine should not have been transferred from Xxxxxxxx under the
August 8, 1995 Agreement.
The Notes were issued in exchange for $622,500 in financing provided by X.
Xxxxxx to Legacy. As of November 27, 1997, the accrued interest owing under the
Notes was $113,500. Effective November 27, 1997, the entire principle and
interest amount owing under the Notes was converted into 147,200 shares of
Legacy Stock. All obligations of Legacy to pay penalties and other charges
under the Notes were waived and terminated on the date conversion occurred.
If you believe that this letter properly states the full and complete
understanding between Legacy, X. Xxxxxx, CapBay and CBS relating to the number
of shares to which X. Xxxxxx is entitled as a result of the conversion and to
provide indemnification to assure that shares that were required to be issued
as a result of the August 8, 1995 Agreement will be issued without regard to
the outcome of the pending litigation between Legacy and Xxxxxxxx, please sign
in the spaces provided.
Sincerely,
LEGACY BRANDS, INC.
/s/ XXXXXX X. XXXX
------------------------------
Xxxxxx X. Xxxx,
President
Read and agreed:
C. BRANDS MANAGEMENT LLC CAPITOL BAY GROUP
CAPITOL BAY SECURITIES, INC.
/s/ XXXXXXX X. XXXXXXX /s/ XXXXXXX X. XXXXXXX
------------------------------ ----------------------------------------
Xxxxxxx X. Xxxxxxx, Manager Xxxxxxx X. Xxxxxxx, President
-2-
