Exhibit 10.1
 
FORBEARANCE AGREEMENT
 
This Forbearance Agreement (this “Agreement”) is entered into as of December 13,
2011, by and between St George Investments LLC, an Illinois limited liability
company, its successors or assigns (“Lender”), and Drinks Americas Holdings,
Ltd., a Delaware corporation (“Borrower”).
 
A. Borrower previously sold and issued to Lender that certain non-interest
bearing Debenture dated June 18, 2009 in the amount of Four Million Dollars
($4,000,000.00) (the “Debenture”).
 
B. The Debenture was issued pursuant to a Securities Purchase Agreement dated
June 18, 2009 between Lender and Borrower (the “Purchase Agreement”), and
Borrower’s obligations under the Loan Documents were secured by that certain
Pledge Agreement dated June 18, 2009 (the “Pledge Agreement” and together with
the Debenture, the Purchase Agreement, and all other documents entered into in
conjunction therewith, including without limitation any amendments, waivers, or
prior forbearance agreements, the “Loan Documents”).

C. Pursuant to the Purchase Agreement, the Debenture was issued at a twenty-five
percent (25%) original issue discount, meaning that Lender would pay Three
Million Dollars ($3,000,000.00) to Borrower in consideration for the Debenture.
 
D. In conjunction with its acquisition of the Debenture, Lender i) delivered
Three Hundred Seventy-Five Thousand Dollars ($375,000.00) cash to Borrower and
ii) issued eleven (11) Secured Purchase Notes dated June 18, 2009, ten (10) in
the principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00), and
one (1) in the principal amount of One Hundred Twenty-Five Thousand Dollars
($125,000.00) (the “Buyer Notes”).
 
E. On or about July 14, 2009, the average value of the Collateral Shares (as
defined in the Pledge Agreement) fell below the Required Level (as defined in
the Pledge Agreement) for five consecutive trading days, which (i) constituted a
Trigger Event (as defined in the Debenture) under the Debenture (the “June 2009
Trigger Event”), and (ii) availed Lender the right to foreclose upon and sell
the Collateral Shares, among other remedies.
 
F. Pursuant to the June 2009 Trigger Event, on or about July 22, 2009, Lender
foreclosed on and sold 5,523,645 of the Collateral Shares.
 
G. According to the terms of the Debenture, the June 2009 Trigger Event
automatically (i) increased the amount due under the Debenture to 110% of such
amount outstanding immediately prior to the occurrence of such June 2009 Trigger
Event (the “Balance Increase”), (ii) increased the interest rate to 12% per
annum on the outstanding amount (the “Interest Rate Increase”), and (iii)
availed the Lender of certain additional remedies including, without limitation
a right of acceleration (the “Acceleration Right”).
 
H. Upon the occurrence of the June 2009 Trigger Event, Borrower requested that
Lender not enforce certain penalties and exercise certain remedies for a period
of time, whereupon Lender, Borrower, and certain other parties entered into that
certain Default Waiver to Debenture Dated June 18, 2009, dated July 30, 2009
(the “Default Waiver”). Pursuant to the Default Waiver, Lender agreed, subject
to the terms, limitations and conditions set forth therein, to (i) not enforce
(A) the Balance Increase, and (B) the Interest Rate Increase, and (ii) not
exercise the Acceleration Right.
 
 
 

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I. Subsequently, Borrower requested that Lender prepay a $200,000.00 portion
(the “Prepayment”) of that certain St. George 7 Month Secured Purchase Note
dated June 18, 2009 issued by Lender in favor of Borrower (the “Purchase Note”).
As a condition to making the Prepayment, Lender required that Borrower issue
that certain First Amendment to $4,000,000 Debenture Dated June 18, 2009, dated
August 29, 2009 (the “Amended Debenture”) which, among other things, (i)
reinstates (A) the Balance Increase, and (B) the Interest Rate Increase, and
(ii) acknowledges the Prepayment.
 
J. On April 28, 2011, Lender delivered to Borrower that certain Request for
Repayment in Common Shares (also known as Conversion Notice #33) wherein it
sought to convert Thirty-Eight Thousand Six Hundred Forty Dollars ($38,640.00)
of the outstanding balance of the Debenture into Twenty-Eight Million
(28,000,000) shares (the “Conversion #33 Shares”) of Borrower’s common stock,
par value $0.001 per share (“Common Stock”).
 
K. Borrower failed to deliver the Conversion #33 Shares to Lender as provided in
the Purchase Agreement and the Debenture (the “Conversion Default”).  The
Conversion Default is a Trigger Event under Section 7(e) of the Debenture and a
continuing default.
 
L. Borrower also failed to reserve Fifty Million (50,000,000) authorized, but
unissued, shares of Common Stock for the benefit of Lender (the “Reservation
Default”).  The Reservation Default is a material default under both Section 5.1
of the Purchase Agreement and Section 5(xi) of the Debenture.
 
M. Borrower also erroneously issued to Lender Form 1099-MISC showing One Million
Three Hundred Sixty Thousand One Hundred Fifty Dollars ($1,360,150.00) of
Nonemployee Compensation for 2010 (the “1099-MISC”).  However, Lender did not
receive any compensation from Borrower in 2010 or in any other year. Borrower
represents that it immediately remedied the erroneously issued 1099-MISC by
filing appropriate documents with applicable agencies.
 
N.  As a result of the Conversion Default, Reservation Default, and other
defaults arising under the Debenture and the Purchase Agreement (where referred
to herein individually, a “Default” and collectively, ”Defaults”), the Debenture
is currently due and payable and interest is accruing thereunder at a rate of
twelve percent (12%) per annum.  Certain additional penalties, fees, and costs
have also accrued thereunder as a result of the Defaults.
 
O. As a result of the Defaults, on June 24, 2011 Lender exercised its right of
offset set forth in Section 3 of the Buyer Notes by delivering to Borrower a
certain Notice of Buyer’s Exercise of Offset Rights (the “Offset”).  As a result
of the Offset, the Debenture balance was reduced by Four Hundred Seventy-Two
Thousand Ninety-One and 19/100 Dollars ($472,091.19).  The Offset, the
Prepayment, and Lender’s performance under the Purchase Agreement resulted in
each of the Buyer Notes being fully performed, satisfied, and cancelled.  The
outstanding balance of the Debenture immediately following the Offset was an
amount not less than Two Million Dollars ($2,000,000.00) with interest accruing
thereon at the rate of twelve percent (12%) per annum and certain additional
penalties, fees, and costs continuing to accrue.
 
 
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P. On October 5, 2011 the Borrower paid Fifty Thousand Dollars ($50,000.00) in
cash and on or around such date Borrower also issued Nineteen Million Three
Hundred Twenty Thousand (19,320,000) shares of Common Stock valued at
Thirty-Eight Thousand Six Hundred Forty Dollars ($38,640.00) to Lender, each to
be applied to the Debenture Balance (as defined below) and the Forbearance
Amount (as defined below) as of the date of such payment.
 
Q. As of the date hereof, the outstanding amount owing under the Debenture
(including interest, fees, penalties, and legal fees as provided in Section 3
hereof) is an amount to be determined, but is in no event less than Two Million
Dollars ($2,000,000.00) (plus any adjustments for interest, fees, or penalties
accruing hereafter, the “Debenture Balance”).
 
R. Borrower has requested that Lender forbear from exercising its rights and
pursuing remedies currently available to it against Borrower under the
Debenture, the Purchase Agreement, and the other Loan Documents.
 
S. Lender has agreed, subject to the terms, conditions and understandings
expressed in this Agreement, to refrain and forbear temporarily from exercising
and enforcing any of its remedies against Borrower resulting from the Defaults
as provided in this Agreement.
 
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties acknowledge, confirm, and agree as
follows:
 
1. Recitals.  The recitals set forth above in this Agreement are true and
accurate, are contractual in nature, are not mere recitals, and are hereby
incorporated into and made a part of this Agreement.
 
2. Forbearance.  Subject to the terms, conditions and understandings contained
in this Agreement, Lender hereby agrees to refrain and forbear from exercising
and enforcing any of its remedies under the Debenture, the Loan Documents or
under applicable laws, with respect to the Defaults, until January 1, 2013 (the
“Forbearance”). Borrower understands that the Forbearance shall terminate
immediately upon the occurrence of any material breach of this Agreement or upon
the occurrence of any Event of Default (as defined in the Debenture) or Trigger
Event (as defined in the Debenture and as modified herein) after the date hereof
and that upon the earlier of the termination of the Forbearance, Borrower’s
breach of any term or provision in this Agreement, or the occurrence of any new
Event of Default or Trigger Event after the date hereof, Lender may, in Lender’s
sole and absolute discretion, pursue all remedies available to it under the
terms of this Agreement, the Debenture, the Loan Documents or applicable law.
 
3. Legal Fees.  Borrower owes Fifteen Thousand Dollars ($15,000.00) to Lender
for legal fees, as provided by Section 8 of the Debenture, associated with both
collecting on the Debenture and preparation of this Agreement as a result of the
Defaults described herein.  This amount is included in the Debenture Balance.
 
 
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4. Obligations; Outstanding Balances; Ratification of the Debenture.  The
Debenture shall be and remain in full force and effect (subject to the
amendments set forth herein) in accordance with its terms and is hereby ratified
and confirmed in all respects. Notwithstanding anything to the contrary herein
or in the Loan Documents, as of the date hereof, the outstanding balance of the
Debenture shall be deemed and affirmed to be the Debenture Balance.  Any
reference to the Debenture after the date of this Agreement is deemed to be a
reference to the Debenture as amended by this Agreement.  No forbearance,
waiver, or amendments other than as set forth herein may be implied by this
Agreement.  Except as expressly set forth herein, the execution, delivery, and
performance of this Agreement shall not operate as a waiver of, or as an
amendment to, any right, power, or remedy of Lender under the Debenture, as in
effect prior to the date hereof.
 
5. Debenture Amendment.  For purposes of this Agreement, the Debenture is hereby
amended as follows:
 
(a) Maturity Date.  The Maturity Date (as defined in the Debenture) is hereby
amended to January 1, 2013 to conform to the Payment Schedule described herein.
 
(b) Amount Outstanding.  Notwithstanding the Debenture Balance set forth above,
each of Borrower and Lender agree that as of the date hereof, so long as
Borrower complies with the terms of this Agreement, the outstanding balance of
the Debenture shall be deemed to be equal to One Million One Hundred Twenty-Six
Thousand Three Hundred Sixty Dollars ($1,126,360.00) with interest accruing at
the rate of eight percent (8%) per annum, simple interest based on a 360-day
year, commencing on the date hereof (the “Forbearance Amount”), subject to the
terms of the Conditional Discount (as defined below); provided, however, that in
the event Borrower breaches any term or provision of this Agreement or any
additional Events of Default or Trigger Events occur under the Debenture or the
Loan Documents after the date hereof, the parties agree that the outstanding
balance of the Debenture as of the date of this Agreement shall be deemed to
have been the Debenture Balance, and any interest, fees, or penalties accrued
and accruing thereafter shall accrue on the Debenture Balance.
 
(c) Payment Schedule.  Section 2 of the Debenture is hereby amended such that
Borrower is now obligated to make payments to Lender according to the following
“Payment Schedule.”
 
(i)  
Borrower shall deliver to Lender fixed cash payments in the amounts and by the
dates specified below:

 
(1)  
Two Hundred Eighty-Five Thousand Three Hundred Sixty Dollars ($285,360.00) on or
before the execution of this Agreement.

 
(2)  
Fifty Thousand Dollars ($50,000.00) on or before March 1, 2012.

 
(3)  
Two Hundred Eighty-Three Thousand Dollars ($283,000.00) on or before June 1,
2012.

 
 
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(4)  
Fifty Thousand Dollars ($50,000.00) on or before September 1, 2012.

 
(5)  
Fifty Thousand Dollars ($50,000.00) on or before November 1, 2012.

 
(ii)  
Borrower shall also deliver to Lender a lump sum payment on or before January 1,
2013 for the lesser of (i) Four Hundred Eight Thousand Dollars ($408,000.00)
plus any accrued and unpaid interest and (ii) the remaining balance of the
Forbearance Amount plus any accrued and unpaid interest, after applying the
payments described above to the Forbearance Amount.

 
(iii)  
If any default in payment as set forth in Section 5(c) herein is not cured
within five (5) business days from the date of such default then such default
will be a material breach of this Agreement.

 
(d)  Conditional Discount.  If the Borrower makes payments totaling at least the
then current Forbearance Amount less One Hundred Thousand Dollars ($100,000.00)
on or before June 30, 2012, then the  Borrower will be eligible to receive a
discount of One Hundred Thousand Dollars ($100,000.00) to be applied to the then
current Forbearance Amount remaining due (the “Conditional Discount”).
 
(e)  Trigger Event.  Pursuant to this Agreement, Subsection 7(f) of the
Debenture, regarding the Required Level, and Subsection 7(g) of the Debenture,
regarding the Volume Default, are each hereby deemed void and unenforceable as
of the date hereof and at all times hereafter.  For avoidance of doubt, all
other Trigger Events shall remain in full force and effect; provided, however,
that the insufficient reservation of authorized but unissued shares of Common
Stock shall in no event constitute a Trigger Event, so long as Lender complies
with the Share Reserve (as defined below), or Increased Share Reserve (as
defined below), if applicable.
 
(f)  Conversion Shares Upon Execution of Forbearance.
 
(i)  
Notwithstanding anything herein to the contrary, Borrower shall issue four (4)
certificates for duly and validly authorized shares of Common Stock in the name
of the Company:  (i) one certificate for Forty-Nine Million (49,000,000) shares,
and (ii) three certificates, each for Seventeen Million (17,000,000) shares
(“Forbearance Conversion Shares”), which Forbearance Conversion Shares shall be
subject to future adjustments pursuant to a reverse split of the Common Stock or
other similar events related to the capital stock of the Borrower. The Borrower
shall deliver, no later than December 23, 2011, the Forbearance Conversion
Shares along with stock powers with medallion guarantees, in a form suitable to
the Lender and subject to the Lender’s prior approval, for each of the four
certificates, to be reserved and held at the office of Jonathan K. Hansen of
Carman Lehnhof Israelsen LLP (4626 North 300 West, Suite 160, Provo, UT 84604)
according to the terms of that certain Escrow Agreement of even date herewith
(the “Escrow Agreement”), and the Forbearance Conversion Shares shall be
delivered to Lender and available for sale by Lender only upon the conditions
specified in Section 5(f)(ii) of this Agreement.

 
 
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(ii)  
Upon the occurrence of any Event of Default or Trigger Event pursuant to the
Debenture or any other breach of this Agreement or breach of the Loan Documents
after the date hereof (provided that any Defaults which occurred prior to the
date hereof, which are set forth on Schedule 1 hereof, shall not constitute a
Trigger Event or any other breach of the Loan Documents), Lender shall be
entitled to deliver a Request for Repayment (as defined below); whereupon, the
Lender will submit the Transfer Agent Letter to instruct the transfer agent to
reissue the Forbearance Conversion Shares to Lender.  The transfer agent shall
deliver the Forbearance Conversion Share certificates along with a 144 Opinion
(as defined below), but the transfer agent shall only deliver to the Lender in
the name of the Lender the Forbearance Conversion Shares at such times and in
such amounts as Lender shall request, subject to compliance with the Ownership
Limitation (as defined below).  The Borrower covenants and agrees to act in good
faith and in full cooperation in carrying out the instructions specified in the
Transfer Agent Letter and the agreements as set forth herein.

 
(iii)  
Upon full performance of all the terms specified in this Agreement, Borrower
shall be entitled to instruct the Escrow Agent to release and deliver the
Forbearance Conversion Shares to Borrower.

 
6. Debenture Conversions. Lender hereby covenants that from the date hereof
Lender shall not convert all or any portion of the Debenture Balance or
Forbearance Amount for shares of Common Stock so long as Borrower is in
compliance with the terms and conditions as set forth in this Agreement;
provided, however, upon the occurrence of a default of any provision set forth
in this Agreement, the Debenture, or any of the other Loan Documents and at all
times thereafter until such time that the Borrower has satisfied all outstanding
obligations under the Loan Documents, Borrower covenants that it will honor all
of Lender’s conversions for all or any portion of the Debenture Balance in
accordance with the provisions set forth in Section 3(b) of the Debenture by
delivering shares of Common Stock, either electronically, if available, or via
certificates (without a restricted securities legend) for the full number of
shares of Common Stock issuable pursuant to the applicable Request for Repayment
as specified in Section 3 of the Debenture (the “Conversion Shares”).  Any
future conversion, including conversion under Section 5(f) of this Agreement
will be exercised at a per share price equal to the greater of (i) the Fixed
Re-Payment Price (as defined in the Debenture), and (ii) $0.002 (as adjusted for
stock splits, combination, or similar events).  Borrower will deliver the
Conversion Shares to Lender within three days of its receipt of a Request for
Repayment from Lender.  Borrower acknowledges that its failure to deliver
Conversion Shares as provided herein or in the Debenture shall be deemed a
material breach of this Agreement and that in such event, among all other
remedies available to Lender herein, in the other Loan Documents, or at law,
Lender shall be entitled to immediately accelerate the outstanding balance of
the Debenture and enter the Confession (as defined below) in a court of
competent jurisdiction.
 
 
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7. Authorized Shares.  At all times after the date hereof, Borrower shall
reserve for issuance to Lender upon conversion of the Debenture no fewer than
One Hundred Million (100,000,000) shares of Common Stock (the “Share Reserve”),
subject to future adjustments pursuant to a reverse split of the Common Stock or
other similar events related to the capital stock of the Borrower. The Share
Reserve shall be in addition to the Forbearance Conversion
Shares.  Notwithstanding the forgoing, upon the earlier occurrence of either (i)
the next shareholder meeting held by the Borrower, whether a special meeting or
an annual meeting, or (ii) any default or breach of this Agreement or any Event
of Default under the Debenture (“Share Reserve Condition”), the Borrower shall
use best efforts and take all action necessary to increase the authorized shares
and shall reserve from such increased authorized shares for the purpose of
issuance to Lender, such number of shares of Common Stock as shall be necessary
to effect the full conversion of the Debenture Balance and full exercise of the
Warrant (the “Increased Share Reserve”). If at any time following the occurrence
of a Share Reserve Condition the Share Reserve is insufficient to effect the
full conversion of the Debenture Balance and exercise of the Warrant, the
Borrower shall use best efforts to increase the Share Reserve accordingly.  And,
if at any time following a Share Reserve Condition, the Borrower does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Borrower shall call and hold a special meeting of the
stockholders within thirty (30) days of such occurrence, for the sole purpose of
increasing the number of authorized shares of Common Stock. The Borrower’s
management shall recommend to the Borrower’s stockholders to vote in favor of
increasing the number of authorized shares of Common Stock.  Management shall
also vote all of its shares in favor of increasing the number of authorized
shares of Common Stock. The Borrower shall use its best efforts to cause such
additional shares of Common Stock to be authorized so as to comply with the
requirements of this Section.
 
8. Ownership Limitation. Notwithstanding anything set forth in the Debenture or
the Loan Documents to the contrary, in the event of a Request for Repayment,
including delivery of Forbearance Conversion Shares, or other issuance of
shares, by Borrower that would result in the beneficial ownership by Lender and
its affiliates of more than 9.99% of the outstanding Common Stock of Borrower
(the “Ownership Limitation”), then (i) such exercise, right, or election shall
constitute a legal, valid, binding and enforceable exercise, right, or election,
(ii) to the extent the issuance or delivery of shares of Common Stock pursuant
to such exercise or election would result in a breach of the Ownership
Limitation (the number of shares of Common Stock in excess of the Ownership
Limitation, the “Excess Shares”), Borrower shall not be obligated to immediately
issue or deliver the Excess Shares and shall instead reserve the Excess Shares
for issuance to Lender at a later date; and (iii) immediately upon Lender’s
delivery to Borrower of written notice that the issuance of all or any portion
of the Excess Shares would not result in a breach of the Ownership Limitation,
Borrower shall issue or deliver to Lender such Excess Shares. The Ownership
Limitation is a valid, binding, and non-waivable provision of this Agreement.
 
 
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9. Rule 144 Opinion Letter.  Provided that exemption under Rule 144 is available
to the Lender, Borrower covenants to cause its legal counsel to deliver a legal
opinion to its transfer agent within five business days of receipt of a written
request. Such opinion shall be subject to Lender’s prior approval and shall
opine that Lender’s sale of all shares of Common Stock issued or delivered to
Lender, including those shares issued or delivered pursuant to either
conversions of the Debenture or issuances of Forbearance Conversion Shares,
shall be exempt from the registration provisions of the Securities Act of 1933,
as amended (the “Securities Act”), by reason of Rule 144 promulgated under the
Securities Act and shall further instruct Borrower’s transfer agent to deliver
certificates representing shares of Common Stock to Lender without a restricted
securities legend in accordance with its conversions of the Debenture while also
instructing the transfer agent that Lender is an intended third-party
beneficiary (the “144 Opinion”).  Notwithstanding the foregoing, Lender shall
have the right, in its sole discretion, to provide a 144 Opinion prepared by
counsel to Lender, and Borrower shall accept such 144 Opinion in its reasonable
discretion, which shall include the reasonable discretion of Borrower’s counsel.
 
10. Judgment by Confession. Together with its execution of this Agreement,
Borrower shall execute a Judgment by Confession in the form attached hereto as
Exhibit A (the “Confession”), which, in addition to any other rights or remedies
Lender may have under this Agreement, the Loan Documents or applicable law,
Lender may, in its sole discretion, cause to be entered into a court of
competent jurisdiction upon Borrower’s default of any provision set forth in
this Agreement, the Debenture, or any of the other Loan Documents. The
Confession shall provide for a judgment against Borrower equal to the Judgment
Amount (as defined in the Confession).  In addition, any amount remaining due
under the Debenture Balance, including any amount in excess of the Judgment
Amount, shall be immediately due and payable and Lender may pursue any and all
available remedies to collect that amount.
 
11. Irrevocable Instructions to Transfer Agent. Together with its execution of
this Agreement and the Confession, Borrower shall also execute and deliver to
its transfer agent the irrevocable transfer agent instruction letter
substantially in the form attached hereto as Exhibit B.  In addition, Borrower
will use its best efforts to cause the transfer agent to sign the irrevocable
transfer agent letter as an acknowledging party within thirty days of the date
hereof, and Borrower and Lender will work together in good faith to make those
revisions or amendments that are reasonably required by the transfer agent to
sign the transfer agent letter as an acknowledging party. However, if the
transfer agent refuses to sign the transfer agent letter, or any amendments
thereto, as an acknowledging party following the Borrower’s best efforts, then
such failure will not result in a Trigger Event or Event of Default under this
Agreement. For avoidance of doubt, the most recent executed transfer agent
letter shall remain in full force and effect until such time or times, if any,
that the transfer agent letter is amended and signed by both Borrower and
Lender.
 
 
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12. Failure to Comply. Lender’s Forbearance and agreement to enter into this
Agreement is conditioned on Borrower’s promise to comply with all of the terms,
covenants, and conditions of this Agreement, the Debenture and the other Loan
Documents. Upon the earlier of the (i) termination of the Forbearance, (ii)
Borrower’s breach of any term or provision in this Agreement, or the (iii)
occurrence of any new Event of Default or Trigger Event, the Lender may, at its
election, take any or all of the following actions: (x) withdraw the forbearance
and other accommodations given by Lender herein, (y) exercise the respective
rights and remedies under this Agreement, the Loan Documents, and applicable
law, in addition to all other available remedies, and (z) declare the Debenture
immediately due and payable.
 
13. Representations and Warranties. In order to induce Lender to enter into this
Agreement, Borrower, for itself, and for its affiliates, successors and assigns,
hereby acknowledges, represents, warrants and agrees as follows:
 
(a) Borrower has full power and authority to enter into this Agreement and to
incur and perform all obligations and covenants contained herein, all of which
have been duly authorized by all proper and necessary action.  No consent or
approval of Borrower, and no consent, approval, filing or registration with or
notice to any governmental authority is required as a condition to the validity
of this Agreement or the performance of any of the obligations of Borrower
hereunder.
 
(b) There is no fact known to Borrower or which should be known to Borrower
which Borrower has not disclosed to Lender on or prior to the date of this
Agreement which would or could materially and adversely affect the understanding
of Lender expressed in this Agreement or any representation, warranty, or
recital contained in this Agreement.
 
(c) Except as expressly set forth in this Agreement, Borrower acknowledges and
agrees that neither the execution and delivery of this Agreement nor any of the
terms, provisions, covenants, or agreements contained in this Agreement shall in
any manner release, impair, lessen, modify, waive, or otherwise affect the
liability and obligations of Borrower under the terms of the Loan Documents.
 
(d) Borrower hereby acknowledges that it has freely and voluntarily entered into
this Agreement after an adequate opportunity and sufficient period of time to
review, analyze, and discuss (i) all terms and conditions of this Agreement,
(ii) any and all other documents executed and delivered in connection with the
transactions contemplated by this Agreement, and (iii) all factual and legal
matters relevant to this Agreement and/or any and all such other documents, with
counsel freely and independently selected by Borrower (or had the opportunity to
be represented by counsel).  Borrower further acknowledges and agrees that it
has actively and with full understanding participated in the negotiation of this
Agreement and all other documents executed and delivered in connection with this
Agreement after consultation and review with its counsel (or had the opportunity
to be represented by counsel), that all of the terms and conditions of this
Agreement and the other documents executed and delivered in connection with this
Agreement have been negotiated at arm’s-length, and that this Agreement and all
such other documents have been negotiated, prepared, and executed without fraud,
duress, undue influence, or coercion of any kind or nature whatsoever having
been exerted by or imposed upon any party by any other party.  No provision of
this Agreement or such other documents shall be construed against or interpreted
to the disadvantage of any party by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
dictated, or drafted such provision.
 
 
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(e) Other than the Defaults, Borrower represents and warrants that as of the
date hereof no other Events of Default under the Loan Documents exist.
 
14. Headings.  The headings contained in this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this
Agreement.
 
15. Governing Law.  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Illinois without regard to the
principles of conflict of laws. Each party hereto submits to the jurisdiction of
any state or federal court sitting in Cook County, Illinois in any proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the proceeding may be heard and determined in any such court and
hereby expressly submits to the exclusive personal jurisdiction and venue of
such court for the purposes hereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum.  Each party
hereto hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to its address as set forth in
the Loan Documents, such service to become effective ten (10) days after such
mailing.
 
16. Counterparts.  This Agreement may be executed in any number of counterparts
with the same effect as if all signing parties had signed the same
document.  All counterparts shall be construed together and constitute the same
instrument.  The exchange of copies of this Agreement and of signature pages by
facsimile transmission or other electronic transmission (including email) shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes.  Signatures
of the parties transmitted by facsimile transmission or other electronic
transmission (including email) shall be deemed to be their original signatures
for all purposes.
 
17. Attorneys’ Fees. If any action at law or in equity is brought by a party to
enforce or interpret the terms of this Agreement, the Prevailing Party (as
defined hereafter) shall be entitled to reasonable attorneys’ fees, costs and
disbursements, in addition to any other relief to which such party may be
entitled.  “Prevailing Party” shall mean the party in any litigation or
enforcement action that prevails on a majority of final rulings, counts, or
judgments of dispositive issues adjudicated by a court of competent
jurisdiction.
 
18. Severability. If any part of this Agreement is construed to be in violation
of any law, such part shall be modified to achieve the objective of the parties
to the fullest extent permitted and the balance of this Agreement shall remain
in full force and effect.
 
19. Entire Agreement; Amendments. This Agreement, together with the Loan
Documents and all other documents referred to herein, supersedes all other prior
oral or written agreements between Borrower, Lender, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither Lender
nor Borrower makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged with
enforcement.
 
 
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20. Waiver of Jury Trial.  Borrower hereby waives the right to trial by jury in
an action arising hereunder.
 
21. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Borrower, Lender and its respective successors and
assigns.  Borrower shall not assign any of its respective rights or obligations
under this Agreement.  Lender may assign all or a portion of its rights and
obligations under this Agreement to one or more third parties on terms and
conditions acceptable to such Lender without the consent of Borrower, provided
that such Lender shall promptly provide notice of such assignment to Borrower.
 
22. Time of Essence.  Time is of the essence of this Agreement.
 
23. Continuing Enforceability; Conflict Between Documents. Except as otherwise
modified by this Agreement, the Debenture and the other Loan Documents shall
remain in full force and effect, enforceable in accordance with all of their
original terms and provisions.  That certain Personal Guarantee executed on June
18, 2009 by J. Patrick Kenny as a personal guarantor remains in full force and
effect and this Agreement in no way modifies the terms or enforceability of that
Personal Guarantee; provided, however, that upon Borrower delivering to Lender
cash payments equal to or in excess of the Forbearance Amount plus any
additional legal fees incurred in enforcing or collecting under this Agreement,
the Personal Guarantee will no longer be subject to enforcement by the Lender
notwithstanding the existence or occurrence of any Event of Default or breach of
this Agreement.  This Agreement shall not be effective or binding unless and
until it is fully executed and delivered by Lender and Borrower.  If there is
any conflict between the terms of this Agreement, the Debenture and the other
Loan Documents, the terms of this Agreement shall prevail.
 
24. Further Assurances. Each party shall do and perform or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
 
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the first
date above written.
 
BORROWER:

DRINKS AMERICAS HOLDINGS, LTD

By:                                                                 
Name:                                                             
                                                                    
Title:                                                                
          

LENDER:

ST GEORGE INVESTMENTS LLC

By: Fife Trading, Inc, its Manager

 
           
By:                                                                    
John M. Fife, President
 
 
 
 
[Signature page to Forbearance Agreement]
 
 
 

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EXHIBIT A

JUDGMENT BY CONFESSION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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EXHIBIT B

TRANSFER AGENT LETTER

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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