SETTLEMENT AGREEMENT
This
Settlement Agreement (the “Settlement Agreement”) is made and entered into as of
the 21st day of August 2008, by and between Capstone Business Credit, LLC
(“CBC”), Capstone Capital Group I, LLC (“CCG”, and with CBC, “Capstone”) and
Harbrew Imports, Ltd. (the “Borrower”).
RECITALS
WHEREAS,
CBC and Borrower entered into a Discount Factoring Agreement dated January
22,
2007 (the “Factoring Agreement”), pursuant to which CBC provided certain
financing to Borrower;
WHEREAS,
as of the date of this Settlement Agreement, Borrower owes CBC $101,498.42
under
the Factoring Agreement, against which such amount $57,555.72 held in the
Reserve Account (as defined in the Factoring Agreement) shall be
applied;
WHEREAS,
CCG and Borrower entered into a certain Purchase Order Financing Agreement
dated
as of January 22, 2007 (the “PO Financing Agreement”, and with the Factoring
Agreement, the “Financing Agreements”), pursuant to which CCG provided certain
financing to Borrower;
WHEREAS,
as of the date of this Settlement Agreement, Borrower owes CCG $2,875,406.04
under the PO Financing Agreement (collectively with the amount owed under the
Factoring Agreement, the “Capstone Claim”);
WHEREAS,
pursuant to his Guarantees dated January 22, 2007, Xxxxxxx XxXxxxx (“Guarantor”)
has agreed to guaranty all obligations of Borrower under the Financing
Agreements (the “Guarantees”);
WHEREAS,
Capstone and Borrower desire to adjust and settle the Capstone Claim and to
avoid the expense, inconvenience and uncertainty of litigation; and
WHEREAS,
the parties, after careful consideration of all facts and circumstances and
consultation with their respective attorneys, desire to settle the Capstone
Claim on the terms and conditions set forth in this Settlement
Agreement.
NOW,
THEREFORE, in consideration of the mutual promises, agreements, warranties,
representations and covenants contained herein, Capstone and Borrower hereby
agree as follows:
1. The
Settlement. For
and
in consideration of the full settlement of any and all claims that are, could
have been, or might in the future be asserted by Capstone against Borrower
arising out of, or in connection with, the Capstone Claim, the parties agree
as
follows:
(a) In
payment under the Financing Agreements, and in settlement of the Capstone Claim,
Borrower shall deliver to Capstone $1,500,000 in readily available funds (the
“Settlement Payment”), which shall be paid by Borrower to Capstone as
follows:
(i) a
good
faith nonrefundable deposit of $150,000 shall be paid upon the execution and
delivery of this Settlement Agreement (the “Deposit”).
(ii) $1,350,000
(the “Payment Balance”) shall be paid on or before the October 21, 2008, TIME
BEING OF THE ESSENCE (the “Settlement Payment Due Date”). Upon the execution and
delivery of this Settlement Agreement, Borrower shall execute and deliver its
Promissory Note with respect to the Payment Balance, to Capstone. The Promissory
Note shall be secured by the Collateral (as defined in the PO Financing
Agreement and the Factoring Agreement).
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(b) The
Borrower hereby assigns to Capstone under and pursuant to the Discount Factoring
Agreement all of Borrower’s rights, title and interest in and to the accounts
receivables identified on Schedule
1
attached
hereto and made a part hereof (the “Assigned Receivables”). Borrower represents
and warrants to Capstone that Borrower has, and is transferring to Capstone,
good and indefeasible title to all of the Assigned Receivables, free and clear
of all liens, claims and encumbrances of any kind or type, whatsoever.
(c) The
Financing Agreements shall remain in place, in accordance with their respective
terms, and Borrower and Capstone shall continue to comply therewith until full
and indefeasible payment of the Settlement Payment has been made to Capstone,
at
which time (x) the Financing Agreements shall be terminated and (y) all of
Capstone’s right, title and interest in and to the Interim Receivables (defined
below) that have not been collected by CBC shall be assigned by CBC to the
Borrower.
(d) Upon
the
later to occur of (i) the full and indefeasible payment of the Settlement
Payment to Capstone (the “Settlement Payment Date”), and (ii) the payment by
Borrower of all amounts due and payable by it during the Interim Factoring
Period (defined below) under the Factoring Agreement, if any
(i) Capstone
shall execute and deliver the release letter (the “Release Letter”) to Guarantor
in substantially the form attached hereto as Exhibit
A;
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(ii) Capstone
shall file UCC-3 termination statements terminating their liens on Borrower’s
assets granted pursuant to the Financing Agreements; and
(iii) Capstone
and Borrower shall execute and deliver the Release Agreement (the “Release
Agreement”) in substantially the form attached hereto as Exhibit
B.
(e) From
the
date of this Agreement until the Settlement Payment Date (the “Interim Factoring
Period”) Borrower shall submit all of its Accounts Receivable (as defined in the
Factoring Agreement) to CBC for collection only, and not for factoring under
the
Factoring Agreement (the “Interim Receivables”). The aggregate amount of funds
collected by CBC with respect to the Interim Receivables (the “Interim
Receivables Collection Amount”) shall be credited against the Payment Balance.
For the purposes of this Agreement, the Assigned Receivables shall not be deemed
to be, and shall not be included in the Interim Receivables.
(f) Notwithstanding
anything contained in this Agreement to the contrary, including without
limitation Section 1(e), in the event that the Settlement Payment is not paid
in
full by 5:00 pm on the Settlement Payment Due Date, TIME BEING OF THE ESSENCE,
the Interim Receivables Collection Amount shall not be credited against the
Payment Balance.
(g) During
the Interim Factoring Period all governmental fees, charges and taxes relating
to, or arising out of, the sale of goods giving rise to the Interim Receivables
(the “Receivables Expenses”) shall be timely paid by Borrower. In the event that
any Receivables Expense becomes past due, Borrower shall have ten (10) days
from
the date that any such Receivable Expense became due and payable to pay such
Receivables Expense in full (the “Expense Cure Period”). In the event that
Borrower fail to pay any such Receivables Expense within the Expense Cure
Period, CBC shall have the right, but not the obligation, to pay all amounts
necessary to satisfy such Receivables Expense (the “Cure Amount”), in which case
an amount equal to the product of (i) two (2) and (ii) the Cure Amount shall
be
deducted from the Interim Receivables Collection Amount.
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(h) Notwithstanding
anything to the contrary contained in this Settlement Agreement, in the event
that at any time Capstone is required to return all or any portion of the
Settlement Payment to Borrower or its successors or assigns, the Release Letter
and the Release Agreement shall be null and void, ab initio.
2. Binding
Agreement. This
Settlement Agreement shall be binding upon and inure the benefits of the parties
hereto and their respective heir, executors, administrators, predecessors,
successors and assigns and upon any corporation or other entity into or with
which any party hereto may merge or consolidate.
3. Counterparts.
The
Settlement Agreement may be executed in one or more counterparts, which may
be
executed by facsimile or electronically, each of which shall be deemed to be
an
original, but all of which together shall constitute one and the same
instrument.
4. Brokers.
Each
party hereto hereby confirms that no brokers or finders were employed by such
party or any of its officers, directors employees or shareholders in connection
with the Financing Agreements.
5. Governing
Law.
The
validity, interpretation and effect of this Settlement Agreement shall be
governed exclusively by the laws of the State of New York, without giving effect
to the provisions, policies or principles of any state law relating to the
choice or conflict of laws. All disputes, litigation, proceedings or other
legal
actions by any party to this Settlement Agreement in connection with or relating
to this Settlement Agreement or any matters described or contemplated in this
Settlement Agreement shall be instituted in the courts of the State of New
York
or of the United States in the State of New York, in either case sitting in
New
York County, New York. Each party to this Settlement Agreement irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York
and
of the United States sitting in the County of New York, New York in connection
with any such dispute, litigation, action or proceeding arising out of or
relating to this Settlement Agreement.
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6. Enforceability.
Should
any provision of the Settlement Agreement be declared or determined by any
court, arbitrator or body of competent jurisdiction to be illegal, invalid
or
unenforceable, the legality, validity and enforceability of the remaining parts,
terms or provisions shall not be affected thereby, and said illegal,
unenforceable or invalid part, term or provision shall be deemed not to be
a
part of this Settlement Agreement.
7. Not
Construed Against Drafter. This
Settlement Agreement shall be construed without regard to any presumptions
against the party causing the same to be prepared.
8. Authority.
The
parties hereto, each for themselves or on behalf of the parties they represent,
hereby represent and warrant that each has the full power, capacity and
authority to enter into and perform the obligations under and in connection
with
this Settlement Agreement, and that this Settlement Agreement, when executed,
will constitute a valid, legal and binding agreement, enforceable against
themselves in accordance with the terms hereof.
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9. Amendments
and Waver. No
modification or amendment to this Settlement Agreement shall be binding upon
the
parties hereto unless in writing signed by the parties, and no waiver of any
of
the provisions of this Settlement Agreement shall be binding unless agreed
to in
writing by the party or parties against which such waiver is sought to be
enforced.
10. Merger.
Any
and
all previous understanding with respect to the subject matter of this Settlement
Agreement are superceded by and merged into this Settlement Agreement, which
fully and completely expresses the parties’ agreement with respect to the
subject matter hereof.
11. Entire
Agreement. The
foregoing constitutes the entire agreement between the parties herein with
respect to the subject matter contained herein, superseding all negotiations,
prior discussions and communications, preliminary agreements and agreements
related to the subject matter hereof made prior to the date hereof. The Recitals
are incorporated herein by reference.
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IN
WITNESS WHEREOF, the
Settlement Agreement has been entered into between Capstone and Borrower as
of
the date first set forth above
| HARBREW IMPORTS, LTD. | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxx XxXxxxx | |
|
Name: Xxxxxxx Xxxx XxXxxxx |
||
| Title: President | ||
| CAPSTONE BUSINESS CREDIT, LLC | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxx | |
|
Name: Xxxxxx Xxxxxxxxx |
||
| Title: Managing Member | ||
| CAPSTONE CAPITAL GROUP I, LLC | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxx | |
|
Name: Xxxxxx Xxxxxxxxx |
||
| Title: Managing Member | ||
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EXHIBIT
A
| ______ ___, 2008 |
Xxxxxxx
XxXxxxx
0000
Xxxxx Xxxxx
Xxxxxxxx,
XX 00000
Dear
Xx.
XxXxxxx,
Reference
is made to the Guarantees made by you, both dated January 22, 2007
(collectively, the Guarantees), guarantying the obligations of Harbrew Imports,
Ltd. (“Harbrew”) in favor of Capstone Business Credit, LLC and Capstone Capital
Group I, LLC (collectively “Capstone”).
As
you
had satisfied the conditions for the release of the Guarantees as provided
for
in the Settlement Agreement dated August __, 2008 by and between Harbrew and
Capstone (the “Settlement Agreement”), Capstone, for itself and on behalf of its
affiliates, does hereby forever release, discharge and acquit, and covenant
not
to xxx you, of, from and regarding any and all liability under the
Guarantees.
Notwithstanding
anything to the contrary contained in this letter, in the event that at anytime
Capstone is required to return all or any portion of the Settlement Payment
(as
defined in the Settlement Agreement) to Borrower or its successors or assigns,
this release letter shall be null and void, ab initio.
This
Release shall be effective on the date first above written.
| Very truly yours, | |
| CAPSTONE BUSINESS CREDIT, LLC | |
| By: ___________________________ | |
|
Name:
Xxxxxx Xxxxxxxxx
|
|
|
Title:
Managing Member
|
|
| CAPSTONE CAPITAL GROUP I, LLC | |
| By: ___________________________ | |
|
Name:
Xxxxxx Xxxxxxxxx
|
|
|
Title:
Managing Member
|
EXHIBIT
B
RELEASE
AGREEMENT
This
Release Agreement is made and entered into as of the ___ day of ________, 2008
(this “Agreement”), by and between Harbrew Imports, Ltd., a New York corporation
having offices at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx (“Borrower”), Capstone
Business Credit, LLC, a Delaware limited liability company having offices at
1350 Avenue of the Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 (“CBC”) and
Capstone Capital Group I, LLC, a Delaware limited liability company having
an
address at 1350 Avenue of the Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
(“CCG”, and with CBC, “Capstone”). Borrower and Capstone are sometimes referred
to herein collectively as the “Parties” and each as a “Party.”
Recitals:
A. Borrower
and Capstone have, pursuant to that certain Settlement Agreement dated August
__, 2008 (the “Settlement Agreement”) agreed to execute and deliver this Release
Agreement.
B. The
conditions set forth in the Settlement Agreement with respect to the delivery
of
this Release Agreement have been satisfied.
NOW,
THEREFORE, for good and valuable consideration, the Parties agree as
follows:
1. Releases.
(a) Capstone,
for itself and its predecessors, successors, subsidiaries and affiliates, and
each of their respective, members, stockholders, directors, managers, employees
and agents (collectively, the “Capstone Releasing Parties”) hereby releases,
waives and forever discharges Borrower and its predecessors, successors,
assigns, subsidiaries, and affiliates, and each of their respective members,
stockholders, directors, managers, employees and agents (collectively, the
“Borrower Released Parties”) from any and all actions, suits, damages, claims
and demands which the Capstone Releasing Parties may have as of the date hereof
against the Borrower Released Parties (whether known or unknown, liquidated
or
unliquidated, due or to become due, direct or derivative, and whether absolute,
accrued, contingent or otherwise, and whether heretofore arising from tort,
statute, fiduciary duties or contract), arising out of, under or in connection
with the Discount Factoring Agreement dated January 22, 2007 by and between
CBC
and Borrower, including without limitation, the Minimum Commission pursuant
to
Section 13 of the Discount Factoring Agreement, and the Purchase Order Financing
Agreement dated January 22, 2007 by and between CCG and Borrower (collectively,
the “Financing Agreements”).
(b) Borrower,
for itself and its predecessors, successors, assigns, subsidiaries, and
affiliates, and each of their respective members, stockholders, directors,
managers, employees and agents (collectively, the “Borrower Releasing Parties”)
hereby release, waive and forever discharge Capstone and its predecessors,
successors, assigns, subsidiaries and affiliates, and each of their respective
members, stockholders, directors, managers, employees and agents (collectively,
the “Capstone Released Parties”) from any an all actions, suits, damages, claims
and demands which the Borrower Releasing Parties may have as to the date hereof
against the Capstone Released Parties (whether known or unknown, liquidated
or
unliquidated, due or to become due, direct or derivative, and whether absolute,
accrued, contingent or otherwise, and whether heretofore arising from tort,
statute, fiduciary duties or contract), arising out of, under or in connection
with any of the Financing Agreements.
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(c) The
releases provided for in this Section 1 (the “Releases”) apply in all
jurisdictions. Nothing contained in the foregoing Releases shall be construed
to
impair any representation, obligations, promise, covenant or condition contained
in the Settlement Agreement;
(d) Notwithstanding
anything to the contrary contained in this Agreement, in the event that at
any
time Capstone is required to return all or any portion of the Settlement Payment
(as defined in the Settlement Agreement) to Borrower or its successors or
assigns, this Agreement, including the Releases, shall be null and void, ab
initio.
2. Miscellaneous
(a) Entire
Agreement.
This
Agreement contains the entire agreement between the Parties with respect to
the
transactions contemplated hereunder, and supersedes all negotiations,
representations, warranties, commitments, offers, contracts and writings prior
to the date hereof. No waiver and no modification or amendment of any provision
of this Agreement shall be effective unless specifically made in writing and
duly signed by the Party or Parties to be bound thereby.
(b) Counterparts.
This
Agreement may be executed in one or more counterparts, which may be executed
by
facsimile, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
(c) Assignment,
Successors and Assigns.
The
respective rights and obligations of the parties hereto shall not be assignable,
without the prior written consent of the other parties. This Agreement shall
be
binding upon and inure to the benefit of the parties hereto and their successors
and permitted assigns.
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(d) Severability.
In the
event any provision of this Agreement or portion thereof is found to be wholly
or partially invalid, illegal or unenforceable in any judicial proceeding,
then
such provision shall be deemed to be modified or restricted to the extent and
in
the manner necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this Agreement
shall be construed and enforced to the maximum extent permitted by law, as
if
such provision had been originally incorporated herein as so modified or
restricted, or as if such provisions had not been originally incorporated
herein, as the case may be.
(e) Governing
Law; Dispute Resolution.
The
validity, interpretation and effect of this Agreement shall be governed
exclusively by the laws of the State of New York, without giving effect to
the
provisions, policies or principles of any state law relating to the choice
or
conflict of laws. All disputes, litigation, proceedings or other legal actions
by any Party to this Agreement in connection with or relating to this Agreement
or any matters described or contemplated in this Agreement shall be instituted
in the courts of the State of New York or of the United States in the State
of
New York, in either case sitting in New York County, New York. Each party to
this Agreement irrevocably submits to the exclusive jurisdiction of the courts
of the State of New York and of the United States sitting in the County of
New
York, New York in connection with any such dispute, litigation, action or
proceeding arising out of or relating to this Agreement. Each Party irrevocably
waives any defense or objection it may now or hereafter have based on forum
non
conveniens and waives any objection to venue of any action instituted
hereunder.
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(f) No
Third-Party Beneficiary.
This
Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed
to
give to any person or entity, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
(g) Specific
Performance.
Each of
the parties hereto acknowledges and agrees that in the event of any breach
of
this Agreement, the non-breaching party or parties would be irreparably harmed
and could not be made whole by monetary damages. It is accordingly agreed that
the parties hereto will waive the defense in any action for specific performance
that a remedy at law would be adequate and that the parties hereto, in addition
to any other remedy to which they may be entitled at law or in equity, shall
be
entitled to compel specific performance of this Agreement.
In
Witness Whereof, the Parties hereto have executed this Agreement the day and
year first above written.
HARBREW
IMPORTS, LTD
By:
_________________________
Name:
Title:
CAPSTONE
BUSINESS CREDIT, LLC
By:
_________________________
Name:
Xxxxxx Xxxxxxxxx
Title:
Managing Member
5
CAPSTONE
CAPITAL GROUP I, LLC
By:
_________________________
Name:
Xxxxxx Xxxxxxxxx
Title:
Managing Member
6
