Document:

ex105.htm

    EXHIBIT 10.5

     

    PURCHASE ORDER FINANCING
AGREEMENT

     

    This
PURCHASE ORDER FINANCING AGREEMENT ("Agreement") is
dated as of January 22, 2007, by and between Harbrew Imports, Ltd., a New York
corporation ("Debtor")
and Capstone Capital Group I, LLC ("Secured
Party").

     

    RECITALS

     

    A. Debtor
desires to obtain financing from Secured Party to enable Debtor to acquire goods
for resale for which Debtor has obtained purchase orders.

     

    B. In
connection therewith, Debtor has requested that Secured Party cause the issuance
of Letters of Credit and make cash advances to Debtor in accordance with the
terms and conditions herein.

     

    NOW,
THEREFORE, in consideration of the premises, and intending to be legally bound
hereby, the Parties hereby agree as follows:

     

    AGREEMENT

     

    1.            DEFINITIONS.
All terms used herein that are defined in the Uniform Commercial
Code
shall have the meanings ascribed thereto therein. As used herein, the following
terms shall have the following meanings:

     

    1.1             "Account" – means the account
between Debtor and Secured Party.

     

    1.2             "Advances" – means L/C
Advances and Purchase Money Advances.

     

    1.3             "Advance Limit" – (i) for the
first year of this Agreement, $13,000,000 and (ii) for the
second year of this Agreement, $17,000,000.

     

    1.4             "Agreement Term" – the period
from the date that the Agreement becomes effective
until the Termination Date.

     

    1.5             "Annual Fee" – (i) for the
first year of this Agreement, $325,000 and (ii) for the second
year of this Agreement, $425,000.

     

    1.6             "Buyer" – a customer of
Debtor, acceptable to Secured Party in its sole discretion,
who has agreed to purchase the Pre-Sold Goods which are the subject of a
Financed Transaction.

     

    1.7             "Cash Advance Guarantee Fee" –
2.50% for the first thirty days (or part thereof)
that each Purchase Money Advance is outstanding and 1.25% for every fourteen
days (or part thereof) thereafter that such Purchase Money Advance remains
outstanding.

     

    1.8             "Collateral" – all Debtor's
present and future Accounts, Chattel Paper, Goods (including
Inventory and Equipment), InstrumenK Investment Property, Documents, and
General
Intangibles, Letter of Credit Rights, Commercial Tort Claims, Deposit Accounts,
and the proceeds thereof.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    1.9             
"Chosen State" – New
York.

     

    1.10           "Default Rate" –
24%.

     

    1.11           "Delivery Instructions" –
arrangements to be used in shipping and storing any Pre-Sold
Goods (including, but not limited to, the terms and conditions of any and all
warehouse and other agreements relating to the Warehouse).

     

    1.12           "Due Date" – the earlier of
sixty (60) days from the date of an Advance or the day on
which any of the goods which are the subject of such Advance are shipped to a
Buyer.

     

    1.13           "Eligible Purchase Orders" –
purchase orders issued in favor of Debtor, and which
have not expired or been cancelled, covering the purchase of goods from Debtor,
issued by Buyers.

     

    1.14           "Factor" – Capstone Business
Credit, LLC.

     

    1.15           "Factoring Agreement" – that
certain Discount Factoring Agreement, between Debtor
and Factor, dated the date hereof, as amended.

     

    1.16           "Financed Transaction" – a
transaction whereby Debtor has agreed to purchase Pre-Sold
Goods from a Supplier for resale to the Buyer of such Pre-Sold Goods, concerning
which Secured Party has been requested to providing financing hereunder to
enable Debtor to acquire the subject Pre-Sold Goods.

     

    1.17           "Financing Request Package" –
the following documents relating to a Financed Transaction:

     

    1.17.1 all documents between Debtor and a Buyer
evidencing a valid and binding contract for the sale by Debtor to a Buyer of
Pre-Sold Goods, and the unconditional and irrevocable assignment of such
contract to Secured Party;

     

    1.17.2 a Supplier Letter, duly executed by the
subject Supplier; 

     

    1.17.3 undated Invoice(s);

     

    1.17.4 Eligible Purchase Order(s);

     

    1.17.5 an itemization of all costs related to
such Financed Transaction, including but not limited to the cost and sale price
of the Pre-Sold Goods, shipping and insurance costs, and customs
duties;

     

    1.17.6 a description of the freight forwarder,
shipping company, Warehouse and any Delivery Instructions; and

     

    1.17.7 a fully executed Warehouse
Agreement.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.18           "Guarantor(s)"
– all entities now or hereafter guaranteeing the
Obligations.

     

    1.19           "Guaranty"
– a continuing guaranty in form and substance acceptable to Secured Party
by which a Guarantor guarantees the Obligations.

     

    1.20           "Issuer"
– the issuer of a Letter of Credit. 

     

    1.21           "Interest
Rate" – at any time the rate which is 4% in excess of the Prime
Rate.

     

    1.22          
"Invoice(s)" – invoice(s), from Debtor to a Buyer, relating to all
Pre-Sold Goods which are the subject of a Financed Transaction.

     

    1.23          
"L/C Advances" – all amounts paid by Secured Party on account of Letters
of Credit.

     

    
      1.24          
"Letter of Credit" – a letter of credit issued in favor of Debtor's
Suppliers: 1.24.1
to enable Debtor to acquire Pre-Sold Goods:

    

     

    1.24.2 in a form acceptable to Secured
Party; 

     

    1.24.3 requiring inter alia, as a condition of
draw by the Beneficiary, that the Beneficiary present an inspection certificate
by an independent inspection service acceptable to Secured Party that the
subject goods conform to an Eligible Purchase Order;

     

    1.24.4
requiring that the shipment of the Pre-Sold Goods be evidenced by a
negotiable bill of lading, consigned to Secured Party; and

     

    1.24.5
providing for honor by the acceptance by Issuer of a draft which shall be
due at least thirty days from sight.

     

    1.25          
"Letter of Credit Fees" – such commissions, issuance fees, transfer fees
and other reasonable fees and charges in connection with the issuance or
administration of each Letter of Credit as are generally imposed by Secured
Party.

     

    1.26          
"Letter of Credit Guarantee Fee" – 2.50% for the first thirty days (or
part thereof) that each Letter of Credit is outstanding and 1.25% for every
fourteen days (or part thereof) thereafter that such Letter of Credit remains
outstanding.

     

    1.27           "Loan
Documents" – this Agreement, together with any documents, instruments and
agreements, executed and/or delivered in connection herewith, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

     

    1.28           "Obligors"
– Debtor and all Guarantors.

     

    1.29           "Obligations"
– all present and future obligations owing by Debtor to Secured Party
whether arising hereunder or otherwise, and whether arising before, during or
after the commencement of any Bankruptcy Case in which Debtor is a
debtor.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.30           "Pre-Sold
Goods" – goods which are the subject of Eligible Purchase
Orders.

     

    1.31            "Prime Rate" – means that rate
designated by JP Morgan Chase Bank, or any successor
thereof, from time to time as its prime rate, which shall not necessarily
constitute its lowest available rate.

     

    1.32           "Purchase Money Advances" –
all amounts paid by Secured Party as loans to Debtor to
enable Debtor to acquire Pre-Sold Goods.

     

    1.33           "Purchase Money Advance Limit" –
That portion of the Eligible Purchase Orders
which relates to the sales price of the Pre-Sold Goods, excluding shipping and
like charges.

     

    1.34           "Subject Account" – an Account
created by the sale of the goods or services which are
the subject of an Eligible Purchase Order to the issuer of the Eligible Purchase
Order.

     

    1.35           "Supplier" – a supplier,
acceptable to Secured Party in its sole discretion, who has
agreed to sell the Pre-Sold Goods which are the subject of a Financed
Transaction.

     

    1.36           "Supplier Letter" – a letter
from Supplier, with all required infolination supplied,
in the form attached hereto as Exhibit A.

     

    1.37           "Termination Date" – the
earlier of (i) two years from the date of this Agreement or (ii)
the date on which Secured Party elects to terminate this Agreement pursuant to
the terms herein.

     

    1.38           "Warehouse" – a segregated
warehouse space in which Debtor agrees to maintain
the Pre-Sold Goods, at a location specified by Secured Party.

     

    1.39           "Warehouse Agreement" – an
agreement among the Warehouse, the Buyer and Secured
Party, in form acceptable to Secured Party, acknowledging Secured Party's
security interest in the Pre-Sold Goods and agreeing among other things that
such Pre-Sold Goods shall not be released without Secured Party's prior written
consent.

     

    2.             CREDIT
FACILITIES.

     

    2.1              Purchase
Money Advances.

     

    2.1.1 During the Agreement
Term, upon receipt and approval by Secured Party in its sole discretion of a
Financing Request Package, Secured Party may make a Purchase Money Advance up to
the Purchase Money Advance Limit.

     

    2.1.2 The Purchase Money Advance will be paid
directly by Secured Party to the Supplier for the account of
Debtor.

     

    2.1.3 Each Purchase Money Advance shall be
repaid in full on or before the Due
Date.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.2             
Letters Of Credit.

     

    2.2.1 Subject to the terms and conditions of
this Agreement, and during the Agreement Term:

     

    2.2.1.1Issuance of Letters of Credit.
Secured Party may, from time to time,
in its sole discretion and at Debtor's request, cause the issuance of Letters of
Credit in an amount or amounts determined by Secured Party.

     

    2.2.1.2 Request for Issuance. Each
request by Debtor for the issuance of Letter
of Credit shall be accompanied by the Financing Request Package on which such
request is based.

     

    2.2.2 Reimbursement.

     

    2.2.2.1 Debtor shall repay Secured Party for
the amount of any L/C Advance
on or before its respective Due Date.

     

    2.2.2.2 Secured Party shall have no duty to
inquire into the propriety of any
request by an Issuer for payment by Secured Party, and all such payments by
Secured Party shall conclusively establish Debtor's reimbursement obligations
hereunder.

     

    2.2.2.3 Debtor unconditionally indemnifies
Secured Party and holds Secured
Party harmless from any and all loss, claim or liability incurred by Secured
Party arising from any transactions or occurrences relating to any Letter of
Credit, the collateral relating thereto and any drafts or acceptances
thereunder, and all Obligations thereunder, including any such loss or claim due
to any errors, omissions, negligence, misconduct or action taken by any Issuer.
This indemnity shall survive termination of this Agreement. Debtor agrees that
any charges incurred by Secured Party with respect to Issuer shall be conclusive
on Secured Party and may be charged to the Account.

     

    2.2.2.4 Secured Party shall not be
responsible for: (a) the existence, character,
quality, quantity, condition, packing, value or delivery of the goods purporting
to be represented by any documents; (b) any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the goods
from that expressed in the documents; (c) the validity, sufficiency or
genuineness of any documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (d) the time, place, manner or order in
which shipment is made; partial or incomplete shipment, or failure or omission
to ship any or all of the goods referred to in the Letters of Credit or
documents; (e) any deviation from instructions; (f) delay, default, or fraud by
the shipper and/or anyone else in connection with the goods or the shipping
thereof; or (g) any breach of contract between the shipper or vendors and
Debtor.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    2.2.2.5 Debtor agrees that any action taken by
Secured Party, if taken in good
faith, or any action taken by any Issuer, under or in connection with any
Letters of Credit, the drafts or acceptances, or the Collateral, shall be
binding on Debtor and shall not result in any liability whatsoever of Secured
Party to Debtor. In furtherance thereof, Secured Party shall have the full right
and authority to: (a) clear and resolve any questions of non compliance
of documents;
(b) give any instructions as to acceptance or rejection of any documents or
goods; (c) execute any and all steamship or airways guaranties (and applications
therefore), indemnities or delivery orders; (d) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and (e) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances;
all in Secured Party's sole name. The Issuer shall be entitled to comply with
and honor any and all such documents or instruments executed by or received
solely from Secured Party, all without any notice to or any consent from Debtor.
Notwithstanding any prior course of conduct or dealing with respect to the
foregoing including amendments and non-compliance with documents and/or Debtor's
instructions with respect thereto, Secured Party may exercise its rights
hereunder in its sole and reasonable business judgment. In addition, without
Secured Party's express consent and endorsement in writing, Debtor agrees: (a)
not to execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders; to grant any extensions of the maturity of, time
of payment for, or time of presentation of; any drafts, acceptances or
documents; or to agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances; and (b) after the
occurrence of an Event of Default which is not cured within any applicable grace
period, if any, or waived by Secured Party, not to (i) clear and resolve any
questions of non compliance of documents, or (ii) give any instructions as to
acceptances or rejection of any documents or goods.

     

    2.2.2.6 Debtor agrees that: (a) any necessary
import, export or other licenses or certificates for the import or handling of
the Collateral will have been promptly procured; (b) all foreign and domestic
governmental laws and regulations in regard to the shipment and importation of
the Collateral, or the financing thereof will have been promptly and fully
complied with; and (c) any certificates in that regard that Secured Party may at
any time request will be promptly furnished. In connection herewith, Debtor
warrants and represents that all shipments made under any such Letters of Credit
are in accordance with the laws and regulations of the countries in which the
shipments originate and terminate, and are not prohibited by any such laws and
regulations. Debtor assumes all risk, liability and responsibility for, and
agrees to pay and discharge, all present and future local, state, federal or
foreign taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, Secured Party, or other political
subdivision, where the Collateral is or may be located, or wherein payments are
to be made, or wherein drafts may be drawn, negotiated, accepted, or paid, shall
be solely Debtor's risk, liability and responsibility.

     

    2.2.2.7 Upon any payments made to the Issuer
under the Letter of Credit, Secured Party shall acquire by subrogation, any
rights, remedies, duties or obligations granted or undertaken by Debtor to the
Issuing Bank in any standing agreement relating to Letters of Credit or
otherwise, which shall be deemed to have been granted to Secured Party and apply
in all respects to Secured Party and shall be in addition to any rights,
remedies, duties or obligations contained herein.

     

    2.3             
Debtor acknowledges and agrees that Secured Party does not intend to make any
Advances to the extent that, before or as a result thereof; the aggregate
Obligations shall exceed the Advance Limit.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    3.             INTEREST AND
FEES.

     

    3.1            
 Interest.

     

    3.1.1 Interest on the unpaid
balance of Advances shall accrue interest at the Interest Rate and shall be
payable on the first day of the month following its accrual.

     

    3.1.2 Secured Party may charge
Debtor's Account with any past due amounts hereunder.

     

    3.1.3 Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable law (the "Maximum Rate"). If
Secured Party shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the loans hereunder or,
if it exceeds such unpaid principal, refunded to Debtor. In determining whether
the interest contracted for, charged, or received by Secured Party exceeds the
Maximum Rate, Secured Party may, to the extent permitted by applicable law, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

     

    3.2             
Fees.

     

    3.2.1
Letter of Credit Fees. In consideration for Secured Party's causing the
issuance of Letters of Credit, Debtor shall pay any Letter of Credit Fees to
Secured Party immediately upon the issuance of a Letter of Credit and monthly
thereafter, in arrears, on the first (1st) day of each month following the
accrual thereof.

     

    3.2.2 Cash
Advance Guarantee Fee. Debtor shall pay the Cash Advance Guarantee Fee to
Secured Party monthly, in arrears, on the first (1st) day of each
month following the accrual thereof.

     

    3.2.3
Letter of Credit Guarantee Fee. Debtor shall pay the Letter of Credit
Guarantee Fee to Secured Party monthly, in arrears, on the first (1st) day of
each month following the accrual thereof.

     

    3.2.4
Annual Fee. Debtor shall pay to Secured Party any amount by which the
Cash Advance Guarantee Fees and Letter of Credit Guarantee Fees earned in the
preceding twelve months is less than the Annual Fee, on each anniversary of the
date hereof.

     

    4.           
 GRANT
OF SECURITY INTEREST. To secure the payment and performance in full
of all of
the Obligations, Debtor hereby grants to Secured Party a continuing security
interest in and to and lien upon, and a right of setoff against, and Debtor
hereby assigns and pledges to Secured Party, all of the Collateral.

     

    5.           
 CONDITIONS
PRECEDENT TO ALL ADVANCES. Secured Party shall not
make any
Advances unless and until:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    5.1            
 Secured Party holds a perfected security interest in the Collateral and
the Subject Account.

     

    5.2            
 Secured Party has received guaranties, in a form acceptable to it in its
sole discretion,
signed by all guarantors.

     

    6.             COVENANTS.
Debtor covenants that:

     

    6.1            
 Debtor shall immediately advise Secured Party if and when an Eligible
Purchase Order has
been cancelled or attempted to have been cancelled.

     

    6.2      
       Debtor shall maintain or cause to be
maintained at all times, with financially sound and
reputable insurers, casualty insurance with respect to the Inventory and other
assets. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to Secured Party and shall provide for
thirty (30) days' prior written notice to Secured Party of cancellation or
reduction of coverage. Debtor hereby irrevocably authorizes Secured Party and
any designee of Secured Party to obtain at debtor's expense, and, after an Event
of Default, to adjust or settle any claim or other matter under or arising
pursuant to such insurance or to amend or cancel such insurance. Debtor shall
deliver to Secured Party evidence of such insurance and a Secured Party's loss
payable endorsement naming Secured Party as loss payee as to all existing and
future insurance policies relating to the Inventory. Debtor shall deliver to
Secured Party, in kind, all instruments representing proceeds of insurance
received by Debtor. Secured Party may apply any and all insurance proceeds
received at any time to the cost of repairs to or replacement of any portion of
the Inventory and/or, at Secured Party's option, to the payment of or as
security for any of the Obligations, whether or not due, in any order or manner
as Secured Party determines.

     

    6.3            
 Debtor shall furnish to Secured Party, in form and substance satisfactory
to Secured
Party:

     

    6.3.1 As soon as possible after the end of each
fiscal year of Debtor, and in any event within one hundred and twenty (120) days
thereafter:

     

    6.3.1.1 a complete copy of Debtor's financial
statements, including but not limited to (a) the management letter, if any, (b)
the balance sheet as of the close of the fiscal year, and (c) the income
statement for such year, together with a statement of cash flows, prepared by a
firm of independent certified public accountants of recognized standing and
acceptable to Debtor, or if permitted by Debtor in writing, by Debtor;
and

     

    6.3.1.2 A statement certified
by the chief financial officer of Debtor that Debtor is in compliance with all
the terms, conditions, covenants and warranties of this Agreement.

     

    6.3.2 No later than fifteen (15) days after the
close of each month (an "Accounting Period"),
Debtor's balance sheet as of the close of such Accounting Period and its
income statement for that portion of the then current fiscal year through the
end of such Accounting Period certified by Debtor's chief financial officer as
being complete, correct, and fairly representing its financial condition and
results of operations.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    6.3.3 Copies of each of Debtor's:

     

    6.3.3.1 federal income tax
returns, and any amendments thereto, within seventy-five
(75) days of the filing thereof with the Internal Revenue Service;
and

     

    6.3.3.2 federal payroll tax returns within ten
(10) days of filing, together
with proof, satisfactory to Debtor, that all taxes have been paid.

     

    6.4             
Debtor shall permit Secured Party or any representatives thereof, during usual
business
hours, without notice to Debtor, to periodically:

     

    6.4.1 have access to all premises where
Collateral is located for the purposes of inspecting (and removing, if after the
occurrence of an Event of Default) any of the Collateral, including Debtor's
books and records; and

     

    6.4.2 Permit Secured Party or its designees to
inspect, audit, make copies of, and make extracts from Debtor's records as
Debtor may request.

     

    6.4.3 Without expense to Secured Party, Secured
Party may use any of Debtor's personnel, equipment, including computer
equipment, programs, printed output and computer readable media, supplies and
premises for the collection of accounts and realization on other Collateral as
Secured Party, in its sole discretion, deems appropriate.

     

    6.5             
Debtor shall pay all reasonable out-of-pocket expenses of Secured Party
(including,
but not limited to, fees and disbursements of Secured Party's counsel) incident
to (whether by judicial proceedings or otherwise, and whether any resulting
dispute resolution procedure involving tort, contract or other
claims):

     

    6.5.1 the preparation, negotiation, execution,
administration and enforcement of the Loan Documents, any amendments, extensions
and renewals thereof, and any other documents prepared in connection with any
transactions between Debtor and Secured Party, whether or not
executed;

     

    6.5.2 any expenses incurred by Secured Party
(whether or not for the benefit of Debtor) under this Agreement, including,
without limitation, all expenses for postage relating to the mailing of
statements, invoices, and verifications, and all expenses relating to any audits
of all or any portion of the Collateral;

     

    6.5.3 the protection of Secured Party's rights
under the Loan Documents;

     

    6.5.4 defending against any and all claims
against Secured Party relating to any of its acts of commission or omission
directly or indirectly relating to the Loan Documents;

     

    6.5.5 or in any way arising out of a bankruptcy
proceeding commenced by or against Debtor, including but not limited to expenses
incurred in enforcing or defending Secured Party's claims against Debtor or
the Collateral, defending any avoidance actions, and expenses related to the
administration of said proceeding.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    6.6          
    Debtor shall indemnify and save Secured Party harmless
from any and all liability with
respect to any stamp or other taxes (other than transfer or income taxes) which
may be determined to be payable in connection with the execution of the Loan
Documents or any action of Secured Party with respect to the Collateral,
including, without limitation, the transfer of the Collateral to Secured Party's
name or that of Secured Party's nominee or any purchaser at a foreclosure
sale.

     

    6.7          
   Debtor shall reimburse Secured Party for all costs and
expenses, including attorneys'
fees, which Secured Party incurs in enforcing any judgment rendered in
connection with this Agreement. This provision is severable from all other
provisions hereof and shall survive, and not be deemed merged into, such
judgment.

     

    6.8         
    Debtor shall make timely payment or deposit of all
taxes, assessments or contributions
required of Debtor. If Debtor fails to make any such payment or deposit or
furnish proof of such payment immediately upon Secured Party's request, Secured
Party may, in its sole discretion and without notice to Debtor:

     

    6.8.1 make payment of the same or any
part thereof; or 

     

    6.8.2 Set up such reserves against the
Obligations as Secured Party deems necessary to satisfy the liability therefore,
or both. 

     

    6.8.3 Secured Party may conclusively
rely on statements of the amount owing or other official statements issued by
the appropriate governmental agency. Any payment made by Secured Party shall
constitute neither:

     

    6.8.3.1
an agreement by Secured Party to make similar payments in the
future;
nor

     

    6.8.3.2
A waiver by Secured Party of any default under the Loan Documents.
Secured Party need not inquire into, nor contest the validity of, any expense,
tax, security interest, encumbrance or lien, and the receipt of the usual
official notice requiring the payment thereof shall be conclusive evidence that
the same was validly due and owing.

     

    6.9            
 Debtor shall give Secured Party written notice immediately upon forming an
intention
to change its name, state of organization or form of business
organization.

     

    6.10        
   Debtor shall maintain with financially sound and reputable insurers
insurance with
respect to its properties and business against such casualties and contingencies
as shall be in accordance with general practices of businesses engaged in
similar activities in similar geographic areas. Such insurance shall be in such
minimum amounts that the Secured Party will not be deemed a co-insurer under
applicable insurance laws, regulations, and policies and otherwise shall be in
such amounts, contain such terms, be in such forms and be for such periods as
may be reasonably satisfactory to the Secured Party. In addition, all such
insurance shall be payable to the Secured Party under a Secured Party Loss
Payable Endorsement. Without limiting the foregoing, the Debtor
will:

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    6.10.1 Keep all of its physical property
insured with casualty or physical hazard insurance on an "all risks" basis, with
broad form flood and earthquake coverage and electronic data processing
coverage, with a full replacement cost endorsement and an "agreed amount" clause
in an amount equal to 100%
of the full replacement cost of such property;

     

    6.10.2 Maintain all such workers' compensation
or similar insurance as may be required by law;

     

    6.10.3 Maintain, in amounts and with
deductibles equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, general public liability insurance
against claims of bodily injury, death, or property damage occurring, on, in or
about the properties of the Debtor; business interruption insurance; and product
liability insurance.

     

    6.11            Debtor
shall not create, incur, assume or permit to exist any lien upon or with
respect
to any Collateral now owned or hereafter acquired by Debtor. At the request of
Debtor, Secured Party shall enter into a subordination agreement in form
reasonably acceptable to Secured Party with respect to any Collateral that is
Equipment, so long as Debtor is not in default hereunder at the time of such
request.

     

    7.            EVENTS
OF DEFAULT. Each of the following events or conditions shall also
constitute
an "Event of Default":

     

    7.1         
    Debtor defaults in the performance of any Obligations
due hereunder; and

     

    7.2          
   Debtor is in default with respect to any agreement between
Debtor and Secured Party or
Debtor and Factor.

     

    7.3        
     An order for relief is entered against any Obligor
by any United States Bankruptcy
Court; or any Obligor does not generally pay its debts as they become due
(within the meaning of 11
U.S.C. 303(h) as at any time amended, or any successor statute thereto);
or any Obligor makes an assignment for the benefit of creditors; or any Obligor
applies for or consents to the appointment of a custodian, receiver, trustee, or
similar officer for it or for all or any substantial part of its assets, or such
custodian, receiver, trustee, or similar officer is appointed without the
application or consent of any Obligor; or any Obligor institutes (by petition,
application, answer, consent, or otherwise) any bankruptcy, insolvency,
reorganization, moratorium, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by petition,
application, or otherwise) against any Obligor; or any judgment, writ, warrant
of attachment, execution, or similar process shall be issued or levied against a
substantial portion of the property of any Obligor;

     

    7.4       
      An adverse change occurs with respect to the
financial condition or operations of Debtor
which results in a material impairment of the prospect of repayment of the
Obligations;

     

    7.5   
          A sale,
hypothecation or other disposition is made of twenty (20%) percent or
more of
the beneficial interest in any class of voting stock of Debtor; and

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    7.6        
     Any Guarantor defaults in the performance of its
obligations to Secured Party or shall
notify Secured Party of its intention to rescind, modify, terminate or revoke
the Guaranty with respect to future transactions, or the Guaranty shall cease to
be in full force and effect for any reason whatever.

     

    8.            REMEDIES.
Upon the occurrence of any Event of Default, all Obligations shall accrue
interest at the Default Rate, and in addition to any other remedies available to
Secured Party under the Loan Documents, at law, in equity or otherwise, Secured
Party may:

     

    8.1              Declare
all Obligations to be immediately due and payable, without presentment,
demand,
protest, or notice of any kind, all of which are hereby expressly waived by
Debtor; and

     

    8.2             Debtor
shall immediately provide Secured-Party with cash collateral in the amount of
any undrawn face amount of any Letter of Credit.

     

    9.            ATTORNEYS'
FEES. Debtor agrees to reimburse Secured Party on demand
for:

     

    9.1              the
actual amount of all costs and expenses, including attorneys' fees, which
Secured
Party has incurred or may incur in:

     

    9.1.1 negotiating, preparing, or administering
this Agreement and any documents prepared in connection herewith;
and

     

    9.1.2 protecting, preserving or enforcing any
lien, security interest or other right granted by Debtor to Secured Party or
arising under applicable law, whether or not suit is brought;

     

    9.2         
    the actual costs, including photocopying, travel, and
attorneys' fees and expense's incurred
in complying with any subpoena or other legal process attendant to any
litigation in which Debtor is a party; and

     

    9.3             
either (the choice of which shall be in the sole discretion of Secured
Party):

     

    9.3.1 the
actual amount of all costs and expenses, including attorneys' fees, which
Secured Party may incur in enforcing this Agreement and any documents prepared
in connection herewith, or in connection with any federal or state insolvency
proceeding commenced by or against Debtor, including those (i) arising out the
automatic stay, (ii) seeking dismissal or conversion of the bankruptcy
proceeding or (ii) opposing confirmation of Debtor's plan thereunder;
or

     

    9.3.2 20% OF THE AMOUNT OF THE CLAIM OF SECURED
PARTY AGAINST DEBTOR, WHICH DEBTOR AGREES SHALL CONSTITUTE A REASONABLE
SUBSTITUTE FOR SUCH ACTUAL FEES AND EXPENSES.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      10.           TERMINATION.

    

     

    10.1           This
Agreement shall become effective upon the execution and delivery hereof by
Debtor
and Secured Party and shall continue in full force and effect for two years from
the date hereof.

     

    10.2           Upon
the Termination Date, the unpaid balance of the Obligations shall be due
and
payable without demand or notice.

     

    
      11.           MISCELLANEOUS.

    

     

    
      11.1           
Notices.

       

    

    11.1.1 All notices required to
be given to either party hereunder shall be deemed given upon the first to occur
of: (a) deposit thereof in a receptacle under the control of the United States
Postal Service; (b) transmittal by electronic means to a receiver under the
control of the party to whom notice is being given; or (c) actual receipt by the
party to whom notice is being given, or an employee or agent of thereof. For
purposes hereof, the addresses of the parties are as set forth below or as may
otherwise be specified from time to time in a writing sent by one party to the
other in accordance with the provisions hereof:

     

    DEBTOR

    
       

      
        	
                 
      

              	
                Address:

              	102 Buffalo Avenue
	 	 	Freeport, NY 11520 
	 	Attention:	Richard DeCicco
	 	Fax
      Number: 	516-377-2509

      

    

     

    SECURED
PARTY

    
       

      
        	
                 
      

              	
                Address:

              	b

                1350
      Avenue of the Americas, 24th Floor

              
	 	 	
                New
      York, NY 10019

              
	 	Attention:	Joseph F. Ingrassia
	 	Fax
      Number: 	212-755-6833

      

    

    
    

     

     

    11.2           
Survival. All
representations, warranties and agreements herein contained shall be
effective so long as any portion of this Agreement remains
executory.

     

    11.3           
Amendment
and Waiver. Neither this Agreement nor any provisions hereof
may
be changed, waived, discharged or terminated, nor may any consent to the
departure from the terms hereof be given, orally (even if supported by new
consideration), but only by an instrument in writing signed by all parties to
this
Agreement. Any waiver or consent so given shall be effective only in the
specific instance and for the specific purpose for which given.

     

    11.4          
 No Waiver. No
failure to exercise and no delay in exercising any right, power, or remedy
hereunder shall impair any right, power, or remedy which Secured Party may have,
nor shall any such delay be construed to be a waiver of any of such rights,
powers, or remedies, or any acquiescence in any breach or default hereunder; nor
shall any waiver by Secured Party of any
breach or default by Debtor hereunder be deemed a waiver of any default or
breach subsequently occurring. All rights and remedies granted to Secured Party
hereunder shall remain in full force and effect notwithstanding any single or
partial exercise of, or any discontinuance of action begun to enforce, any such
right or remedy. The rights and remedies specified herein are cumulative and not
exclusive of each other or of any rights or remedies that Secured Party would
otherwise have. Any waiver, permit, consent or approval by Secured Party of any
breach or default hereunder must be in writing and shall be effective only to
the extent set forth in such writing and only as to that specific
instance.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    11.5           
Choice of Law. This Agreement and all transactions contemplated hereunder
and/or evidenced hereby shall be governed by, construed under, and enforced in
accordance with the internal laws of the Chosen State.

     

    11.6         
  Waiver of Statute of Limitations. Debtor waives the pleading of
any statute of limitations with respect to any and all actions in connection
herewith. To the extent that Debtor may now or in the future have any claim
against Secured Party, arising out of this agreement or the transaction
contemplated herein whether in contract or tort or otherwise, Debtor must assert
such claim within one year of it accruing. Failure to assert such claim within
one year shall

    constitute
of waiver thereof. Debtor agrees that such period is reasonable and sufficient
for it to investigate and act upon the claim. This Section shall survive any
termination of this agreement. A copy of the waiver may be filed as a written
consent in any judicial proceeding.

     

    11.7          
 Venue. The parties agree that any suit, action or proceeding
arising out of the subject matter hereof, or the interpretation, performance or
breach of this Agreement, shall, if Secured Party so elects, be instituted in
the United States District Court for the Southern District of the Chosen State
or any court of said state located in the Chosen State (the "Acceptable Forums"), each party
agrees that the Acceptable Forums are convenient to it, and each party
irrevocably submits to the jurisdiction of the Acceptable Forums, irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement, and waives any and all objections to jurisdiction or venue that it
may have under the laws of the Chosen State or otherwise in those courts in any
such suit, action or proceeding. Should such proceeding be initiated in any
other forum, Debtor waives any right to oppose any motion or application made by
Secured Party as a consequence of such proceeding having been commenced in a
forum other than an Acceptable Forum.

     

    11.8           
WAIVER OF TRIAL BY JURY. IN RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH MAY
RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING HEREUNDER, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE
OR HAS NOT BEEN WAIVED; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    12.          
INTERCREDITOR
AGREEMENT.

    
    

    12.1           
Remittance of Factoring Advances and Application of Payments Thereof.
Factor shall pay all sums due to Debtor under the Factoring Agreement to
Secured Party. Upon receipt of any such sums, Secured Party shall immediately
apply such sums to all Obligations of Debtor then due to Secured Party, and
remit any balance to Debtor.

     

    12.2           
Priority. Notwithstanding the teilus or provisions of any agreement or
arrangement which either Secured Party or Factor may now or hereafter have with
Debtor or any rule of law, and irrespective of the time, order, or method of
attachment or perfection of any security interest or the recordation or filing
in any public record of any financing statement, Factor's security interest in
Debtor's assets, including receivables that that are the proceeds of the product
of inventory which is sold in the ordinary course of business and proceeds of
such receivables, shall at all times have priority over and be superior to any
security interest that Secured Party may have in Debtor's assets and Secured
Party, and its successors and assigns, hereby subordinate their security
interest in the Debtor's assets to Factor, and its successors and
assigns.

     

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.

     

     

     

    
      
        	DEBTOR: 	 	HARBREW IMPORTS,
      LTD.	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Richard DeCicco	 
	 	 	Name:
      Richard DeCicco	 
	 	 	Title:
      President	 
	 	 	 	 
	 	 	 	 
	SECURED
      PARTY: 	 	CAPSTONE CAPITAL GROUP I,
      LLC	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/
      Joseph F. Ingrassia	 
	 	 	Name:
      Joseph  F. Ingrassia	 
	 	 	 Title:
      Managing Member	 

      

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Agreed as
to Section 12 hereof:

     

     

    
      
        	b

                FACTOR:

              	 	CAPSTONE
      BUSINESS CREDIT, LLC	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Robert L. Olson	 
	 	 	Name:
      Robert L. Olson	 
	 	 	Title:
      Chief Financial Officer	 
	 	 	 	 

      

    

    
    

    
    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

     

    EXHIBIT A -- SUPPLIER LETTER

     

    [letterhead
of Supplier]

     

    Date:

    XXXX

     

    Re: [name
of Client] (the
"Buyer")

     

    Ladies
and Gentlemen:

     

    This will
confirm that we have agreed to supply to Buyer the goods described in that
certain purchase order #                                                            
dated                                              
(the
"Purchase Order") issued by Buyer to us (the "Goods").

     

     

    To induce
you to pay to us the sum of $             (the
"Payment"),
representing the full purchase
price of the Goods, we agree with you that we will ship the Goods to you in
accordance with the terms of the Purchase Order, irrespective of any claims to
which we may now or hereafter have against Buyer.

     

    Should we
fail to ship the Goods as set forth herein, we will repay the Payment to you, on
demand, together with interest at the rate of    % per
annum, computed from the date of receipt of the Payment by us to the date of
repayment to you.

     

    In the
event of any litigation arising hereunder, whether such litigation is based on
tort or contract, the prevailing party shall recover its attorneys fees and
expenses from the unsuccessful party.

     

    Very
truly yours.

     

    [name
of supplier]

     

    By:

     

    AGREED
AND ACCEPTED:

     

    CAPSTONE
CAPITAL GROUP I, LLC

     

    By:                                                             

    Name:
Joseph F. Ingrassia

    Title:
Managing Member

     

     

    17Unassociated Document

    EXHIBIT
10.6

     

    HARBREW
IMPORTS LTD.

     

    October
25, 2007

     

    

    Capstone
Business Credit, LLC

    1350
Avenue of the Americas, 24th Floor

    New York,
NY  10019

    

    Capstone
Capital Group I, LLC

    1350
Avenue of the Americas, 24th Floor

    New York,
NY  10019

    

     

    Ladies
and Gentlemen:

     

    Reference
is hereby made to the following documents (each, a “Financing Document”, and
collectively, together with the related agreements executed in connection
therewith, the “Financing Documents”):

     

    A)           that
certain Discount Factoring Agreement, dated as of January 22, 2007, between
Harbrew Imports, Ltd., a New York corporation (“Company”) and Capstone Business
Credit, LLC (“CBC”); and

     

    B)           
that certain Purchase Order Financing Agreement, dated as of January 22, 2007,
between Company and Capstone Capital Group I, LLC (“CCG”, together with CBC, are
collectively “Capstone”).

     

    In
connection with the Financing Documents, Company acknowledges and agrees as
follows:

     

    1)            
Company will promptly provide or cause to be provided all information as may be
requested by Capstone for purposes of compliance with the Patriot Act,
including, without limitation, information that enables Capstone to identify
Company (including its legal name, address, tax ID number and other
information), each guarantor under the Financing Documents, and Company’s
management and direct and indirect owners (including, in the case of
individuals, such individual’s legal name, address, social security number and
date of birth).

     

    2)            
Company will cause any acquirer of ten percent (10%) or more of Company’s stock
to execute a guaranty of Company’s obligations to Capstone, in form acceptable
to Capstone, promptly upon the acquisition of such stock by such
party.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    This
letter agreement (“Agreement”) shall constitute a Financing Document and shall
be subject to the provisions regarding governing law, waiver of jury trial,
jurisdiction and venue applicable to the Financing Documents.  In the
event of a conflict between the terms and provisions of this Agreement and the
terms and provisions any Financing Document, the terms and provisions of this
Agreement shall govern.  In all other respects, the Financing
Documents, as amended and supplemented hereby, shall remain in full force and
effect.

     

    This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the
same instrument.  Delivery of an executed counterpart of this
Agreement by telefacsimile or electronically in portable document format shall
be equally as effective as delivery of an original executed counterpart of this
Agreement.  Any party delivering an executed counterpart of this
Agreement by telefacsimile or electronically in portable document format shall
also deliver an original executed counterpart of this Agreement, but the failure
to do so shall not affect the validity, enforceability or binding effect of this
Agreement.

     

     

    
      
        	 	Very truly
    yours,	 
	 	 	 
	 	HARBREW IMPORTS,
      LTD.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Richard
      John DeCicco	 
	 	 	Name:
      Richard John DeCicco	 
	 	 	Its:
      President	 
	 	 	 	 

      

    

    
 

     

    ACKNOWLEDGED
AND ACCEPTED:

     

    
      	
              CAPSTONE
      BUSINESS CREDIT, LLC

               

               

              By:/s/
      Joseph F. Ingrassia

              Name:
      Joseph F. Ingrassia

              Its:  Managing
      Member

            
	
              CAPSTONE
      CAPITAL GROUP I, LLC

               

               

              By:/s/
      Joesph F. Ingrassia

              Name:
      Joseph F. Ingrassia

              Its:  Managing
      Member

            

    

    

     

     

     

    2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]