EXHIBIT 10.6
SUBSIDIARY GUARANTY
New York, New York May 14, 2004
FOR VALUE RECEIVED, and in consideration of note purchases from, loans
made or to be made or credit otherwise extended or to be extended by Laurus
Master Fund, Ltd. ("Laurus") to or for the account of XSTREAM BEVERAGE GROUP,
INC., a Nevada corporation ("Debtor"), from time to time and at any time and for
other good and valuable consideration and to induce ▇▇▇▇▇▇, in its discretion,
to purchase such notes, make such loans or extensions of credit and to make or
grant such renewals, extensions, releases of collateral or relinquishments of
legal rights as Laurus may deem advisable, each of the undersigned (and each of
them if more than one, the liability under this Guaranty being joint and
several) (jointly and severally referred to as "Guarantors " or "the
undersigned") unconditionally guaranties to Laurus, its successors, endorsees
and assigns the prompt payment when due (whether by acceleration or otherwise)
of all present and future obligations and liabilities of any and all kinds of
Debtor to Laurus and of all instruments of any nature evidencing or relating to
any such obligations and liabilities upon which Debtor or one or more parties
and Debtor is or may become liable to Laurus, whether incurred by Debtor as
maker, endorser, drawer, acceptor, guarantors , accommodation party or
otherwise, and whether due or to become due, secured or unsecured, absolute or
contingent, joint or several, and however or whenever acquired by Laurus,
whether arising under, out of, or in connection with (i) that certain Securities
Purchase Agreement dated as of the date hereof by and between the Debtor and
Laurus (the "Securities Purchase Agreement") and (ii) each Related Agreement
referred to in the Securities Purchase Agreement (the Securities Purchase
Agreement and each Related Agreement, as each may be amended, modified, restated
or supplemented from time to time, are collectively referred to herein as the
"Documents"), or any documents, instruments or agreements relating to or
executed in connection with the Documents or any documents, instruments or
agreements referred to therein or otherwise, or any other indebtedness,
obligations or liabilities of the Debtor to Laurus, whether now existing or
hereafter arising, direct or indirect, liquidated or unliquidated, absolute or
contingent, due or not due and whether under, pursuant to or evidenced by a
note, agreement, guaranty, instrument or otherwise (all of which are herein
collectively referred to as the "Obligations"), and irrespective of the
genuineness, validity, regularity or enforceability of such Obligations, or of
any instrument evidencing any of the Obligations or of any collateral therefor
or of the existence or extent of such collateral, and irrespective of the
allowability, allowance or disallowance of any or all of the Obligations in any
case commenced by or against Debtor under Title 11, United States Code,
including, without limitation, obligations or indebtedness of Debtor for
post-petition interest, fees, costs and charges that would have accrued or been
added to the Obligations but for the commencement of such case. Terms not
otherwise defined herein shall have the meaning assigned such terms in the
Securities Purchase Agreement. In furtherance of the foregoing, the undersigned
▇▇▇▇▇▇ agrees as follows:
1. No Impairment. Laurus may at any time and from time to time, either
before or after the maturity thereof, without notice to or further consent of
the undersigned, extend the time of payment of, exchange or surrender any
collateral for, renew or extend any of the Obligations or increase or decrease
the interest rate thereon, or any other agreement with Debtor or with any other
party to or person liable on any of the Obligations, or interested therein, for
the extension, renewal, payment, compromise, discharge or release thereof, in
whole or in part, or for any modification of the terms thereof or of any
agreement between Laurus and Debtor or any such other party or person, or make
any election of rights Laurus may deem desirable under the United States
Bankruptcy Code, as amended, or any other federal or state bankruptcy,
reorganization, moratorium or insolvency law relating to or affecting the
enforcement of creditors' rights generally (any of the foregoing, an "Insolvency
Law") without in any way impairing or affecting this Guaranty. This instrument
shall be effective regardless of the subsequent incorporation, merger or
consolidation of Debtor, or any change in the composition, nature, personnel or
location of Debtor and shall extend to any successor entity to Debtor, including
a debtor in possession or the like under any Insolvency Law.
2. Guaranty Absolute. Subject to Section 5(c), each of the undersigned
jointly and severally guarantees that the Obligations will be paid strictly in
accordance with the terms of the Documents and/or any other document, instrument
or agreement creating or evidencing the Obligations, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of Debtor with respect thereto. Guarantors hereby
knowingly accept the full range of risk encompassed within a contract of
"continuing guaranty" which risk includes the possibility that Debtor will
contract additional indebtedness for which Guarantors may be liable hereunder
after ▇▇▇▇▇▇'s financial condition or ability to pay its lawful debts when they
fall due has deteriorated, whether or not Debtor has properly authorized
incurring such additional indebtedness. The undersigned acknowledge that (i) no
oral representations, including any representations to extend credit or provide
other financial accommodations to Debtor, have been made by ▇▇▇▇▇▇ to induce the
undersigned to enter into this Guaranty and (ii) any extension of credit to the
Debtor shall be governed solely by the provisions of the Documents. The
liability of each of the undersigned under this Guaranty shall be absolute and
unconditional, in accordance with its terms, and shall remain in full force and
effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation: (a) any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or deletion
from or any other action or inaction under or in respect of the Documents or any
other instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof, (b) any lack of validity or enforceability of any
Document or other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof, (c) any furnishing of
any additional security to Laurus or its assignees or any acceptance thereof or
any release of any security by Laurus or its assignees, (d) any limitation on
any party's liability or obligation under the Documents or any other documents,
instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof or any invalidity or unenforceability, in whole or in
part, of any such document, instrument or agreement or any term thereof, (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Debtor, or any action taken
with respect to this Guaranty by any trustee or receiver, or by any court, in
any such proceeding, whether or not the undersigned shall have notice or
knowledge of any of the foregoing, (f) any exchange, release or nonperfection of
any collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the Obligations or
(g) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, the undersigned. Any amounts due from the undersigned to
Laurus shall bear interest until such amounts are paid in full at the highest
rate then applicable to the Obligations. Obligations include post-petition
interest whether or not allowed or allowable.
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3. Waivers.
(a) This Guaranty is a guaranty of payment and not of collection.
Laurus shall be under no obligation to institute suit, exercise rights
or remedies or take any other action against Debtor or any other person
liable with respect to any of the Obligations or resort to any
collateral security held by it to secure any of the Obligations as a
condition precedent to the undersigned being obligated to perform as
agreed herein and each of the Guarantors hereby waives any and all
rights which it may have by statute or otherwise which would require
Laurus to do any of the foregoing. Each of the Guarantors further
consents and agrees that ▇▇▇▇▇▇ shall be under no obligation to marshal
any assets in favor of Guarantors, or against or in payment of any or
all of the Obligations. The undersigned hereby waives all suretyship
defenses and any rights to interpose any defense, counterclaim or
offset of any nature and description which the undersigned may have or
which may exist between and among Laurus, Debtor and/or the undersigned
with respect to the undersigned's obligations under this Guaranty, or
which Debtor may assert on the underlying debt, including but not
limited to failure of consideration, breach of warranty, fraud, payment
(other than cash payment in full of the Obligations), statute of
frauds, bankruptcy, infancy, statute of limitations, accord and
satisfaction, and usury.
(b) Each of the undersigned further waives (i) notice of the
acceptance of this Guaranty, of the making of any such loans or
extensions of credit, and of all notices and demands of any kind to
which the undersigned may be entitled, including, without limitation,
notice of adverse change in Debtor's financial condition or of any
other fact which might materially increase the risk of the undersigned
and (ii) presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notices of presentment,
non-payment or protest and notice of any sale of collateral security or
any default of any sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by
▇▇▇▇▇▇, the undersigned shall not be entitled to be subrogated to any
of the rights of ▇▇▇▇▇▇ against Debtor or against any collateral or
guarantee or right of offset held by ▇▇▇▇▇▇ for the payment of the
Obligations, nor shall the undersigned seek or be entitled to seek any
contribution or reimbursement from Debtor in respect of payments made
by the undersigned hereunder, until all amounts owing to Laurus by
Debtor on account of the Obligations are paid in full and Laurus'
obligation to extend credit pursuant to the Documents have been
terminated. If, notwithstanding the foregoing, any amount shall be paid
to the undersigned on account of such subrogation rights at any time
when all of the Obligations shall not have been paid in full and
Laurus' obligation to extend credit pursuant to the Documents shall not
have been terminated, such amount shall be held by the undersigned in
trust for Laurus, segregated from other funds of the undersigned, and
shall forthwith upon, and in any event within two (2) business days of,
receipt by the undersigned, be turned over to Laurus in the exact form
received by the undersigned (duly endorsed by the undersigned to
Laurus, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as Laurus may determine, subject to
the provisions of the Documents. Any and all present and future debts
and obligations of Debtor to any of the undersigned are hereby waived
and postponed in favor of, and subordinated to the full payment and
performance of, all present and future debts and Obligations of Debtor
to ▇▇▇▇▇▇.
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4. Security. All sums at any time to the credit of the undersigned and
any property of the undersigned in Laurus' possession or in the possession of
any bank, financial institution or other entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, Laurus (each such entity, an "Affiliate") shall be deemed
held by Laurus or such Affiliate, as the case may be, as security for any and
all of the undersigned's obligations to Laurus and to any Affiliate of Laurus,
no matter how or when arising and whether under this or any other instrument,
agreement or otherwise.
5. Representations and Warranties. Each of the undersigned
respectively, hereby jointly and severally represents and warrants (all of which
representations and warranties shall survive until all Obligations are
indefeasibly satisfied in full and the Documents have been irrevocably
terminated), that:
(a) Corporate Status. It is a corporation, partnership or limited
liability company, as the case may be, duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization
indicated on the signature page hereof and has full power, authority
and legal right to own its property and assets and to transact the
business in which it is engaged.
(b) Authority and Execution. It has full power, authority and legal
right to execute and deliver, and to perform its obligations under,
this Guaranty and has taken all necessary corporate, partnership or
limited liability company, as the case may be, action to authorize the
execution, delivery and performance of this Guaranty.
(c) Legal, ▇▇▇▇▇ and Binding Character. This Guaranty constitutes
its legal, valid and binding obligation enforceable in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting the enforcement of creditor's rights and
general principles of equity that restrict the availability of
equitable or legal remedies.
(d) Violations. The execution, delivery and performance of this
Guaranty will not violate any requirement of law applicable to it or
any contract, agreement or instrument to it is a party or by which it
or any of its property is bound or result in the creation or imposition
of any mortgage, lien or other encumbrance other than to Laurus on any
of its property or assets pursuant to the provisions of any of the
foregoing, which, in any of the foregoing cases, could reasonably be
expected to have, either individually or in the aggregate, a Material
Adverse Effect.
(e) Consents or Approvals. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no
consent, license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required in connection with the execution,
delivery, performance, validity or enforceability of this Guaranty by
it, except to the extent that the failure to obtain any of the
foregoing could not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.
(f) Litigation. No litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or
governmental authority, bureau or agency is currently pending or, to
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the best of its knowledge, threatened (i) with respect to this Guaranty
or any of the transactions contemplated by this Guaranty or (ii)
against or affecting it, or any of its property or assets, which, in
each of the foregoing cases, if adversely determined, could reasonably
be expected to have a Material Adverse Effect.
(g) Financial Benefit. It has derived or expects to derive a
financial or other advantage from each and every loan, advance or
extension of credit made under the Documents or other Obligation
incurred by the Debtor to Laurus.
6. Acceleration.
(a) If any breach of any covenant or condition or other event of
default or Event of Default (as defined in any Document) shall occur
and be continuing under any agreement made by Debtor or any of the
Guarantors to Laurus (including without limitation, under any Document)
, any and all Obligations shall for purposes hereof, at Laurus' option,
be deemed due and payable without notice notwithstanding that any such
Obligation is not then due and payable by Debtor.
(b) Each of the undersigned will promptly notify Laurus of any
default by such undersigned in its respective performance or observance
of any term or condition of any agreement to which the undersigned is a
party if the effect of such default is to cause, or permit the holder
of any obligation under such agreement to cause, such obligation to
become due prior to its stated maturity and, if such an event occurs,
▇▇▇▇▇▇ shall have the right to accelerate such undersigned's
obligations hereunder.
7. Payments from Guarantors. Laurus, in its sole and absolute
discretion, with or without notice to the undersigned, may apply on account of
the Obligations any payment from the undersigned or any other guarantors, or
amounts realized from any security for the Obligations, or may deposit any and
all such amounts realized in a non-interest bearing cash collateral deposit
account to be maintained as security for the Obligations.
8. Costs. The undersigned shall pay on demand, all costs, fees and
expenses (including expenses for legal services of every kind) relating or
incidental to the enforcement or protection of the rights of Laurus hereunder or
under any of the Obligations.
9. No Termination. This is a continuing irrevocable guaranty and shall
remain in full force and effect and be binding upon the undersigned, and each of
the undersigned's successors and assigns, until all of the Obligations have been
paid in full and Laurus' obligation to extend credit pursuant to the Documents
has been irrevocably terminated. If any of the present or future Obligations are
guarantied by persons, partnerships or corporations in addition to the
undersigned, the death, release or discharge in whole or in part or the
bankruptcy, merger, consolidation, incorporation, liquidation or dissolution of
one or more of them shall not discharge or affect the liabilities of any
undersigned under this Guaranty.
10. Recapture. Anything in this Guaranty to the contrary
notwithstanding, if ▇▇▇▇▇▇ receives any payment or payments on account of the
liabilities guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any Insolvency Law, common law or equitable doctrine, then to the extent of any
sum not finally retained by ▇▇▇▇▇▇, the undersigned's obligations to ▇▇▇▇▇▇
shall be reinstated and this Guaranty shall remain in full force and effect (or
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be reinstated) until payment shall have been made to Laurus, which payment shall
be due on demand.
11. Books and Records. The books and records of ▇▇▇▇▇▇ showing the
account between ▇▇▇▇▇▇ and Debtor shall be admissible in evidence in any action
or proceeding, shall be binding upon the undersigned for the purpose of
establishing the items therein set forth and shall constitute prima facie proof
thereof.
12. No Waiver. No failure on the part of Laurus to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by ▇▇▇▇▇▇ of any right,
remedy or power hereunder preclude any other or future exercise of any other
legal right, remedy or power. Each and every right, remedy and power hereby
granted to Laurus or allowed it by law or other agreement shall be cumulative
and not exclusive of any other, and may be exercised by ▇▇▇▇▇▇ at any time and
from time to time.
13. Waiver of Jury Trial. EACH OF THE UNDERSIGNED DOES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE
UNDERSIGNED DOES HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF ▇▇▇▇▇▇ HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LAURUS WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
14. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT CANNOT BE
CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED
AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT HAVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS. EACH OF THE UNDERSIGNED EXPRESSLY CONSENTS TO THE JURISDICTION AND
VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR ALL
PURPOSES IN CONNECTION HEREWITH. ANY JUDICIAL PROCEEDING BY THE UNDERSIGNED
AGAINST LAURUS INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN THE
SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE UNDERSIGNED FURTHER
CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING,
WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE
AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY
PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK
OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR
APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE
RULES OF SAID COURTS. EACH OF THE UNDERSIGNED WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY
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DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS.
15. Severability. To the extent permitted by applicable law, any
provision of this Guaranty which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
16. Amendments, Waivers. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the undersigned therefrom shall in
any event be effective unless the same shall be in writing executed by each of
the undersigned directly affected by such amendment and/or waiver and ▇▇▇▇▇▇.
17. Notice. All notices, requests and demands to or upon the
undersigned, shall be in writing and shall be deemed to have been duly given or
made (a) when delivered, if by hand, (b) three (3) days after being sent,
postage prepaid, if by registered or certified mail, (c) when confirmed
electronically, if by facsimile, or (d) when delivered, if by a recognized
overnight delivery service in each event, to the numbers and/or address set
forth beneath the signature of the undersigned.
18. Successors. Laurus may, from time to time, without notice to the
undersigned, sell, assign, transfer or otherwise dispose of all or any part of
the Obligations and/or rights under this Guaranty. Without limiting the
generality of the foregoing, Laurus may assign, or grant participations to, one
or more banks, financial institutions or other entities all or any part of any
of the Obligations. In each such event, Laurus, its Affiliates and each and
every immediate and successive purchaser, assignee, transferee or holder of all
or any part of the Obligations shall have the right to enforce this Guaranty, by
legal action or otherwise, for its own benefit as fully as if such purchaser,
assignee, transferee or holder were herein by name specifically given such
right. Laurus shall have an unimpaired right to enforce this Guaranty for its
benefit with respect to that portion of the Obligations which ▇▇▇▇▇▇ has not
disposed of, sold, assigned, or otherwise transferred.
19. Release. Nothing except cash payment in full of the Obligations
shall release any of the undersigned from liability under this Guaranty,
provided that this Guaranty shall be released upon the provision by ▇▇▇▇▇▇ of
written confirmation to the Debtor that (x) all indebtedness obligations owed by
the Debtor or any Guarantor to Laurus have been repaid in full (including,
without limitation, all principal, interest and fees related to the Note and any
other indebtedness outstanding at such time and owed to Laurus) and (y) all
commitments by ▇▇▇▇▇▇ to fund any indebtedness have been terminated in their
entirety.
[REMAINDER OF THIS PAGE IS BLANK.
SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned
this 14th day of May, 2004.
TOTAL BEVERAGE NETWORK, INC.
By:
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Name:
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Title:
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Address:
Telephone:
Facsimile:
State of Incorporation:
BEVERAGE NETWORK OF CONNECTICUT, INC.
By:
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Name:
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Title:
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Address:
Telephone:
Facsimile:
State of Incorporation:
BEVERAGE NETWORK OF MASSACHUSETTS, INC.
By:
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Name:
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Title:
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Address:
Telephone:
Facsimile:
State of Incorporation:
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BEVERAGE NETWORK OF HAWAII, INC.
By:
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Name:
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Title:
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Address:
Telephone:
Facsimile:
State of Incorporation:
XSTREAM BRANDS, INC.
By:
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Name:
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Title:
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Address:
Telephone:
Facsimile:
State of Incorporation:
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