TERMINATION AGREEMENT TO THE DISCOUNT FACTORING AGREEMENT AND RELATED DOCUMENTS
Exhibit
10.1
TO
THE DISCOUNT FACTORING AGREEMENT
AND
RELATED DOCUMENTS
This
TERMINATION AGREEMENT (this “Termination
Agreement”), dated as of June 5, 2009, is entered into by and between
Harbrew Imports, Ltd., a New York corporation (the “Company”), Capstone
Business Credit, LLC (“CBC”) and Capstone
Capital Group I, LLC (“CCG”, and together
with CBC, the “Factor”).
RECITALS
WHEREAS, the Company and the
Factor entered into a Discount Factoring Agreement, dated January 22, 2007 (the
“Factoring
Agreement”), pursuant to which the Factor provided certain financing to
the Company; and
WHEREAS, the Company and the
Factor 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 the Factor provided certain financing to
the Company; and
WHEREAS, the Company and the
Factor are parties to a Settlement Agreement dated as of August 21, 2008, as
amended by that certain First Amendment to the Settlement Agreement dated as of
November 7, 2008, and as further amended by that certain Second Amendment to the
Settlement Agreement dated as of December __, 2008 (as amended, restated,
modified or supplemented and in effect from time to time, the “Settlement
Agreement”); and
WHEREAS, pursuant to certain
Guarantees dated January 22, 2007, as reaffirmed by the Reaffirmation of
Guarantor dated October 31, 2007, and further reaffirmed in the First Amendment
to the Settlement Agreement and in the Second Amendment to the Settlement
Agreement (the “Guarantees”), Xxxxxxx
XxXxxxx (the “Guarantor”)
irrevocably and unconditionally guaranteed all of the obligations of the Company
under the Financing Agreements and related agreements; and
WHEREAS, as of the date of
this Termination Agreement, the Company owes to the Factor $2,833,204.36 under
the Financing Agreements (the “Amount Owed”);
and
WHEREAS, the Company and the
Factor desire to amend the Settlement Agreement and terminate the PO Financing
Agreement upon the terms and conditions of this Termination Agreement;
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;
AGREEMENT
NOW, THEREFORE, in
consideration of the premises, covenants and agreements hereinafter contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Termination
of the Financing Agreements. Subject to the provisions of this
Termination Agreement, the Company and the Factor shall hereby terminate the PO
Financing Agreement as of the date of this Agreement (the “PO Financing Termination
Date”). Without limiting the generality or effect of the
immediately preceding sentence, from and after the PO Financing Termination
Date, the parties hereto shall have no further rights or obligations under the
PO Financing Agreements, except as specifically set forth
herein. Subject to the provisions of this Termination Agreement, upon
the payment in full of the Promissory Note (as defined herein), the Company and
the Factor shall each be entitled to terminate the Factoring Agreement at any
time pursuant to the terms of that Factoring Agreement (the “Factoring Termination
Date”).
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2. Settlement
Under the Financing Agreements. 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 the Factor against the Company arising out of, or in
connection with, the PO Financing Agreement, the parties agree as
follows:
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A.
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As
payment under the PO Financing Agreement, and in full settlement of any
outstanding claims, the Borrower shall deliver to the Factor $2,833,204.36
in readily available funds and/or securities (the “Settlement
Payment”), which shall be paid by Borrower to Capstone as
follows:
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i.
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$500,000
shall be paid pursuant to the terms of an unsecured promissory note
bearing interest at the rate of seven percent (7%) per annum to be
delivered to the Factor on the date hereof (the “Promissory
Note”). The Promissory Note is attached hereto as
Exhibit
A. The payment terms under that certain Promissory Note
shall be as follows:
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(a)
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A
payment of $10,000 per month shall be made to the Factor, which payment
shall be first due thirty (30) days from the Effective Date and continuing
for a period of twenty four (24)
months,
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(b)
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A
payment of $100,000 shall be due on the thirteenth (13th)
month following the Effective Date,
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(c)
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The
remaining amount due shall be paid in full on the date that is twenty five
(25) months following the Effective Date,
and
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(d)
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In
the event the Company is successful in any financing, the Company shall
pay fifty percent (50%) of any monies raised (up to the outstanding
balance of the Promissory Note) to the Factor as a partial or full payoff
of the Promissory Note.
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ii.
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$500,000
worth of common stock of the Company’s parent company, Iconic Brands, Inc.
(formerly, Paw Spa, Inc.), (which is equal to 1,000,000 shares of Iconic
Brands, Inc. (formerly, Paw Spa, Inc.) common stock) shall be issued to
the Factor;
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iii.
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$1,833,205
worth of Series B Convertible Preferred Stock of the Company’s parent
company, Iconic Brands, Inc. (formerly, Paw Spa, Inc.), (which is equal to
916,603 shares of Class B Preferred Stock) shall be issued to the
Factor. The Class B Preferred Stock shall have a value of $2.00
per share. The Certificate of Designation for the Class B
Preferred Stock is attached hereto as Exhibit B;
and
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iv.
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A
warrant to purchase up to 1,000,000 shares of common stock at an exercise
price of $0.50 per share with an expiration date of three (3) years from
the date hereof. A copy of the Warrant is attached hereto as
Exhibit
C.
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B.
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Releases.
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i.
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With
no additional acts required by any party, at the date when there is only
$400,000 remaining to be paid under the Promissory Note, 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 the
Company 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 Financing Agreements,
including but not limited to the Guarantees provided by the
Guarantor.
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ii.
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With
no additional acts required by any party, at the date when there is only
$400,000 remaining to be paid under the Promissory Note, the Company, for
itself and its predecessors, successors, 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 the Factor
and its predecessors, successors, assigns, subsidiaries, and affiliates,
and each of their respective members, stockholders, directors, managers,
employees and agents as well as the Guarantor (collectively, the “Capstone Released
Parties”) from any and all actions, suits, damages, claims and
demands which the Borrower Releasing Parties may have as of 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 our of, under or in connection with the Financing
Agreements.
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iii.
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The
releases provided for in this Section B (the “Releases”)
apply in all jurisdictions. Nothing contained in the foregoing
Releases shall be construed to impair any representation, obligation,
promise, covenant or condition contained in this Termination
Agreement.
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C.
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UCC-3 Termination
Statements. Upon the Factoring Termination Date, the
Factor shall file UCC-3 termination statements terminating their liens on
Borrower’s assets granted pursuant to the Financing
Agreements. In the event the Factor does not timely file such
UCC-3 termination statements, the Company shall be authorized to file such
UCC-3 termination statements on behalf of the
Factor.
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3. Binding
Agreement. This Termination 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 merger or
consolidate.
4. Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
5. 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.
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6. Governing
Law. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York, without giving effect to any of the
conflicts of law principles which would result in the application of the
substantive law of another jurisdiction. This Termination Agreement shall not be
interpreted or construed with any presumption against the party causing this
Termination Agreement to be drafted.
7. Enforceability. Should
any provision of the Termination 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 Termination Agreement.
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 Termination Agreement, and that this Termination Agreement, when executed,
will constitute a valid, legal and binding agreement, enforceable against
themselves in accordance with the terms hereof.
9. Entire
Agreement; Amendment; and Merger. This Termination Agreement contains the
entire understanding and agreement of the parties with respect to the matters
covered hereby and, except as specifically set forth herein or in the Financing
Agreements or Settlement Agreement, neither the Company nor the Factor makes any
representations, warranty, covenant or undertaking with respect to such matters
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein. No provision of this Termination
Agreement nor any of the Financing Agreements or the Settlement Agreement may be
waived or amended other than by a written instrument signed by the parties, and
no waiver of any of the provisions of this Termination Agreement shall be
binding unless agreed to in writing by the party or parties against which such
waiver is sought to be enforced.
[REMAINDER
OF PAGE LEFT BLANK]
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[SIGNATURE
PAGE TO CAPSTONE TERMINATION AGREEMENT]
IN WITNESS WHEREOF, the
parties hereto have caused this Termination Agreement to be duly executed as of
the date first above written.
HARBREW
IMPORTS, LTD.
By:
Name:
Xxxxxxx XxXxxxx
Title:
President
CAPSTONE
BUSINESS CREDIT, LLC
By:
Name:
Xxxxxx Xxxxx
Title:
Chief Financial Officer
CAPSTONE
CAPITAL GROUP I, LLC
By:
Name:
Xxxxxx Xxxxx
Title:
Chief Financial Officer
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