XXXXXX CAPITAL CORPORATION
000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
April 17, 2002
Xx. Xxxxx Xxxxxx
Paradise Music & Entertainment, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxxxx:
As you know, (a) Paradise Music & Entertainment, Inc. ("Paradise") and All
Access Entertainment Management Group, Inc., PDSE Records, Inc. d/b/a Label M in
New York, Push Records, Inc., Xxxx Xxxxxxx Music, Inc. Picture Vision, Inc.,
Straw Dogs, Inc., Shelter Films, Inc., PDSE Digital (each being a wholly owned
subsidiary of Paradise) (collectively with Paradise being called the "Company")
have entered into a Commercial Factoring Agreement dated as of April 25, 2001,
as amended (the "Factoring Agreement) and related documents (collectively the
"Factoring Agreement Documents") with us, which was supplemented by (b) a Loan
Agreement dated August 15, 2002 (the "Loan Agreement") and related documents
(collectively the "Loan Agreement Documents") between Paradise and us. Also
Paradise entered into a Loan Agreement dated January 24, 2002 (the "2002 Loan
Agreement") and related documents (collectively the "2002 Loan Agreement
Documents") with us.
You acknowledge that the Company is in default under the Factoring
Agreement Documents, the Loan Agreement Documents and the 2002 Loan Agreement
Documents and that we have agreed to forbear in exercising our rights under
these various agreements so long as there is no default by Paradise in its
obligations set forth in this letter.
You and Paradise have requested that we extend the maturity date of the
sums due us under the Factoring Agreement Documents, the Loan Agreement
Documents and the 2002 Loan Agreement Documents and that all references to May
1, 2002 in Sections 1.5 and 2.6 of the 2002 Loan Agreement be changed to July
15, 2002. We agree to the extension of such date to the earlier of (i) July 15,
2002 and (ii) the date Paradise shall default in any of its obligations set
forth in this letter.
You and Paradise acknowledge that as of the date hereof, the total sum owed
to us by the Company under the Factoring Agreement is $421,101.45 (the "Present
Balance") (see attached Schedule). You and Paradise have requested us to convert
$200,000.00 of the Present Balance to Common Stock of Paradise at the rate of
$0.05 per share, or a total of 4,000,000 shares and Paradise has agreed that the
exercise price on the 75,000 Warrants issued to us on April 25, 2001 and the
200,000 Warrants issued to us on August 15, 2001, is hereby amended to $0.05 per
share. We agree that Paradise may so convert $200,000.00 of the Present Balance.
You and Paradise have also requested and we have agreed that Section 2.6 of
the 2002 Loan Agreement be amended to provide (a) Borrower (as referred to
therein) be permitted to retain for use in its business, any sums up to $500,000
received from purchasers of 12 month subordinated notes (i.e. subordinate to our
senior position) that provide to the purchasers warrants to purchase 660,000
shares of Common Stock of Paradise at a price of $0.05 per share for each
$50,000.00 of such notes purchased; (b) one third (1/3) of all sums raised from
the sale of Series A Convertible Preferred Stock pursuant to a Private Placement
Memorandum dated March 25, 2002, shall be promptly paid to us in reduction of
any sums due as by Paradise or the Company; and (c) the phrase in said Section
2.6 "in excess of $150,000 in the aggregate" is deleted.
Our agreement to your requests as expressed in this letter are subject to
completion of the following by not later that April 30, 2002:
1. Our receipt of your corporate resolutions authorizing the actions set
forth in this letter;
2. Our receipt of our Warrant for 500,000 shares of Paradise Common Stock
@$0.02 per share pursuant to the 2002 Loan Agreement;
3. Evidence of receipt by Investech on our behalf of 1,600,000 shares of
Paradise Common Stock pursuant to the 2002 Loan Agreement;
4. Evidence of receipt by Investech on our behalf of 1,064,569 shares of
Paradise Common Stock pledged to us by Xxxxx Xxxxxx pursuant to the
2002 Loan Agreement;
5. Evidence of receipt by Investech on our behalf of 4,000,000 shares of
Paradise Common Stock pursuant to the third paragraph of this letter;
Kindly execute a copy of this letter to evidence your and Paradise's
agreement to the above.
Thank you.
Sincerely yours,
XXXXXX CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxx
-----------------------
Xxxxxx Xxxxxx, CEO
AGREED:
PARADISE MUSIC & ENTERTAINMENT COMPANY
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx, President
