SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the
“Agreement”) is made this 18th day of October 2010 by and between Adrenalina,
Inc., of X.X. Xxx 0000, Xxxxxxxxxx Xxxxx, Xxxxxxx 00000 (hereinafter
"Adrenalina"); Extreme Publishing LLC of X.X. Xxx 0000, Xxxxxxxxxx
Xxxxx, Xxxxxxx 00000 (hereinafter “Extreme”); Liquid Publishing LLC,
of X.X. Xxx 0000, Xxxxxxxxxx Xxxxx, Xxxxxxx 00000 (hereinafter
“Liquid”) Adrenalina Films LLC of X.X. Xxx 0000, Xxxxxxxxxx Xxxxx, Xxxxxxx
00000 (hereinafter “Films”) Indika LLC of X.X. Xxx 0000,
Xxxxxxxxxx Xxxxx, Xxxxxxx 00000 (hereinafter “Indika”) Miami Music
and Records LLC of X.X. Xxx 0000, Xxxxxxxxxx Xxxxx, Xxxxxxx
00000 (hereinafter “Miami”) and Time Code Productions LLC of X.X. Xxx
0000, Xxxxxxxxxx Xxxxx, Xxxxxxx 00000 (hereinafter “Time”) (Extreme,
Liquid, Films, Indika, Miami and Time are collectively referred to as the
“Subsidiaries”), Very Awesome Media Group, Inc., a Florida corporation, of X.X
Xxx 0000 Xxxxxxxxxx, Xxxxxxx 00000 (“VAMG”), Xxxx Xxxxxx,
an individual residing at 000 Xxxxxx Xxxxx Xxxxx, Xxxxxx Xxxxx,
Xxxxxxx 00000 (“Lekach”), and Enable Growth Partners, LP
(“EGP”), Enable Opportunity Partners, L.P., (“EOP”) and Xxxxxx
Diversified Strategy Master Fund, LP. (“PDS” and, collectively with EGP and EOP,
“Enable”).
WITNESSETH
Whereas, Adrenalina on or about 29th day of
November 2007, issued senior secured convertible debentures and warrants in the
amount of Three Million ($3,000,000.00) Dollars and respectively to EGP and EOP;
and
Whereas, Adrenalina on or about 28th day of
February 2008, issued senior secured convertible debentures and warrants in the
amount of Two Million Five Hundred Thousand ($2,500,000.00) Dollars and
respectively to EGP, EOP and PDS; and
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Whereas, Adrenalina on or about 22nd day of
July 2008 issued warrants in the amount of Eighty Three Thousand Three Hundred
Thirty Four ($83,334.0)) Dollars to EGP; and
Whereas, on 22nd day of
August 2008, issued senior secured convertible debentures and warrants in the
amount of One Million ($1,000.000.00) Dollars and respectively to EGP (the
senior secured convertible debentures described in the preceding “Whereas”
clauses herein are hereinafter collectively referred to as the “Debentures” and
the warrants described in the preceding “Whereas” clauses herein are hereinafter
collectively referred to as the “Warrants”) and
Whereas, in connection with the
Debentures, Adrenalina, its Subsidiaries and Enable entered into that certain
Security Agreement, dated as of November 29, 2007 (as amended and/or
supplemented from time to time, the “Security Agreement”) in which each Debtor
granted a Security Interest in the Collateral (as such terms are defined in the
Security Agreement) to Enable; and
Whereas,
in connection with the Debentures issued in August 2008, Lekach entered into
that certain Individual Guarantee, dated as of August 22, 2008 (the “Personal
Guarantee”), in favor of Enable with respect to the Indebtedness of the Borrower
(as such terms are defined in the Personal Guarantee); and
Whereas,
Adrenalina and VAMG entered into a Stock Sale Agreement, dated October 26, 2009
(“Stock Sale Agreement”), pursuant to which, among other things, Adrenalina
transferred 100% of its interest in Liquid, Extreme, Miami and Films
(collectively, the “Transferred Subs”) to VAMG, Adrenalina transferred 100% of
its interest in The Adrenalina TV Show to Liquid, and Adrenalina agreed to
provide accounting and administrative services to VAMG for three years in
exchange for a monthly payment equal 5% of the revenue of the Transferred Subs
(with a minimum payment of $1,000), which is payable by VAMG to Enable (“Enable
Payment Right”).
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Whereas,
in connection with the Debentures issued in August 2008, the Subsidiaries
entered into that certain Guarantee, dated as of August 22, 2008 (the
“Subsidiary Guarantee”), in favor of Enable with respect to the Indebtedness of
the Borrower (as such terms are defined in the Subsidiary Guarantee);
and
Whereas,
Adrenalina has failed to repay the Debentures and desires to reach a amicable
settlement with Enable regarding the satisfaction of the Debentures, their
cancellation, the termination of the warrants and the release of all collateral
provided to Enable; and
Whereas, Enable is agreeable to a
satisfaction of the Debentures, their cancellation, the termination of the
Warrants and the release of all collateral provided by Adrenalina or its
principals to Enable, including the Personal Guarantee and Subsidiary Guarantee,
pursuant to the terms and conditions of this Agreement.
NOW THEREFORE, in
consideration of the mutual covenants herein contained and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Recitals. The
above recitals are true and correct in all material respects.
2. Consideration.
2.1 In
consideration for Enable agreeing to satisfy the Debentures and their
cancellation, the release and termination of the Warrants and release all liens
and encumbrances on the properties of Adrenalina and its principals and the
Personal Guarantee executed and delivered by Lekach and the Subsidiary Guarantee
executed and delivered by the Subsidiaries, Adrenalina agrees to pay Enable and
Enable agrees to accept from Adrenalina the sum of Four Hundred Thousand
($400,000.00) Dollars (“the Settlement Amount”) in full settlement of the
Debentures, all accrued interest, late charges, costs, attorneys’ fees and such
other monetary sums which may or could be owing under the terms of the
Debentures and/or the Warrants and any and all documents executed in connection
therewith.
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2.2 Adrenalina
shall pay Enable the Settlement Amount in the following manner:
2.2.1 The
sum of Two Hundred Thousand ($200,000.00) Dollars by wire transfer on the date
hereof;
2.2.2 The
sum of Thirty Three Thousand Three Hundred Thirty Three 33/100 ($33,333.33)
Dollars by wire transfer on or before October 31, 2010;
2.2.3 The
sum of Thirty Three Thousand Three Hundred Thirty Three 33/100 ($33,333.33)
Dollars by wire transfer on or before November 30, 2010;
2.2.4 The
sum of Thirty Three Thousand Three Hundred Thirty Three 33/100 ($33,333.33)
Dollars by wire transfer on or before December 31, 2010;
2.2.5 The
sum of Thirty Three Thousand Three Hundred Thirty Three 33/100 ($33,333.33)
Dollars by wire transfer on or before January 31, 2011;
2.2.6 The
sum of Thirty Three Thousand Three Hundred Thirty Three 33/100 ($33,333.33)
Dollars by wire transfer on or before February 28, 2011; and
2.2.7 The
sum of Thirty Three Thousand Three Hundred Thirty Three 35/100 ($33,333.35)
Dollars by wire transfer on or before March 31, 2011.
2.2.8 With
respect to each payment required by this Section 2.2, Adrenalina will pay 85% of
the payment amount to EGP, 10% of the payment amount to EOP and 5% of the
payment amount to PDS and shall deliver such payments by wire transfer to EGP,
EOP and PDS, respectively, on the applicable payment date pursuant to the wire
transfer instructions in Section 2.4.
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2.3 Adrenalina
shall be in default under this Agreement if any payment under this Agreement is
not received within five (5) days of its due date. The failure of
Adrenalina to make any of the required payments on its due date shall cancel and
terminate this Agreement and Enable shall retain all rights and remedies under
the Debentures, the Warrants and all of the executed documents related to or in
any manner connected with the Debentures and the Warrants (including, without
limitation, the Security Agreement, the Personal Guarantee and the Subsidiary
Guarantee). For purposes of clarity, in the event of default in payment under
this Agreement, (i) any amounts paid by Adrenalina to Enable pursuant to this
Agreement shall be deemed to be payments of principal on the Debentures and
shall be set off against the currently outstanding principal amount of the
Debentures on a dollar-for-dollar basis, (ii) any amounts paid as described in
the immediately preceding clause (i) shall have no affect on and shall not
reduce any amounts for accrued interest, late charges, costs, attorneys’ fees
and such other monetary sums which may or could be owing under the terms of the
Debentures and/or the Warrants and any and all documents executed in connection
therewith, (iii) there shall be no release of the collateral provided by
Adrenalina or its principals or Subsidiaries to Enable pursuant to, without
limitation, the Security Agreement, the Personal Guarantee and the Subsidiary
Guarantee, (iv) the Warrants shall not terminate and shall continue pursuant to
its terms and (v) the Enable Payment Right Termination shall not be
effective.
2.4 Adrenalina
shall make the required payments to Enable via wire transfer to the following
account:
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To
EGP:
Bank of
New York
ABA#
000000000
A/C
Xxxxxxxxx & Company, Inc.
A/C
890-000-7001
Further
Credit to:
662-70205
Enable Growth Partners LP
To
EOP:
Bank of
New York
ABA#
000000000
A/C
Xxxxxxxxx & Company, Inc.
A/C
890-000-7001
Further
Credit to:
662-70213
Enable Opportunity Partners LP
To
PDS:
Bank of
New York
ABA#
000000000
A/C
Xxxxxxxxx & Company, Inc.
A/C
890-000-7001
Further
Credit to:
662-70225
Xxxxxx Diversified Strategy Master Fund LLC
Additional
information on Bank of New York:
The Bank
of New York
Xxx Xxxx
Xxxxxx
Xxx Xxxx,
XX 00000
Phone:
000.000.0000
3. Deliveries.
3.1 Upon
the parties executing of this Agreement, Enable, or the parties hereto, as
applicable, shall execute and/or deliver to Xxxxxxxxx Xxxxx LLP of 000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000-0000, attention Xxxx X. Xxxx (the
“Escrow Agent”) to be held in escrow pursuant to the terms and conditions of an
Escrow Agreement, dated as of the date hereof (the “Escrow Agreement”) by and
among Adrenalina, Enable Capital Management (“Enable Capital) and the Escrow
Agent, the following:
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3.1.1 The
Debentures, endorsed in blank shall be delivered to the Escrow
Agent.
3.1.2 The
Warrants, endorsed in blank and delivered to the Escrow Agent.
3.1.3 The
Personal Guarantee and the Subsidiary Guarantee, delivered to the Escrow
Agent.
3.1.4 Executed
releases of all liens and encumbrances, in recordable form, from against or
relating to any real or personal property, including tangible and intangible
property belonging to, or in any way related to Adrenalina or its principals or
Subsidiaries, as such lien releases shall be provided by Adrenalina to
Enable.
3.1.5 A
Release executed by Adrenalina, each of the Subsidiaries, VAMG and Lekach in
favor of EGP, EOP and PDS, in the form attached hereto as Exhibit
A.
3.2 Upon
receiving notice (as further described in the Escrow Agreement) that Adrenalina
has made all of the payments required in Section 2.2, the Escrow Agent shall
release to Adrenalina all documents executed and delivered by Enable to the
Escrow Agent. Upon receiving notice (as further described in the
Escrow Agreement) that Adrenalina has defaulted on the payments required in
Section 2.2, the Escrow Agent shall release to Enable all documents executed and
delivered by Enable to the Escrow Agent.
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4. Acknowledgement by Enable of
Termination of Enable Payment Right. On the terms and
conditions set forth herein, and in consideration of the payment of the
Settlement Amount by Adrenalina, Enable hereby consents to the termination of
the Enable Payment Right under Section 4 of the Stock Sale Agreement and
acknowledges that VAMG shall have no further obligation to pay any amounts to
Enable pursuant to the Stock Sale Agreement (the “Enable Payment Right
Termination”); provided, however, that the
parties hereto acknowledge and agree that payment in full of the Settlement
Amount in accordance with the terms of this Agreement shall be a condition
precedent to the effectiveness of the Enable Payment Right
Termination.
5. Representations.
5.1. Representations
of Enable.
5.1.1 That
Enable has good and marketable title to the Debentures and Warrants and holds
same free and clear of all liens, security interests and encumbrances and that
the joinder of no person, firm or corporation, other than Enable will be
necessary to satisfy and release its rights under the Debentures and
Warrants.
5.1.2 Enable
has not transferred, conveyed, assigned, encumbered or otherwise disposed or
convey any interest to any third party in the Debentures or
Warrants.
5.1.3 That
Enable is not now the subject of a pending, threatened or contemplated
bankruptcy proceeding or an assignment for the benefit of its
creditors.
5.1.4 That
this Agreement and the documents to be executed and delivered by the Enable in
connection with the consummation of this Agreement are and will be valid,
binding and enforceable in accordance with their respective terms and
conditions.
5.1.5 That
the execution, delivery and performance by Enable of this Agreement is not
precluded by, and will not violate, any provisions of any existing law, statute,
rule or regulation or any judgment, order, decree, writ or injunction of any
court, governmental department, commission, board, bureau, agency of
instrumentality, and will not result in a breach of, or default under, any
agreement, mortgage, contract, undertaking or other instrument or document to
which Enable is a party or by which Enable is bound.
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5.1.6 That
there are no actions, suits or proceedings pending or threatened against, by or
affecting the Enable and/or any other officer, director or shareholder of
Enable, in any court or before any government agency relating to the ownership
of, or Enable's ability to satisfy, release and discharge the Debentures and
Warrants.
5.1.7 That
Enable is validly formed and in good standing under the Laws of the state of its
formation and that all necessary corporate actions have been taken in order to
authorize the officers of Enable to enter into this Agreement and to perform
each and every of the Enable's obligations hereunder.
5.1.8 [RESERVED]
5.1.9 Enable
will execute such documents that may be required to fully transfer, terminate,
satisfy, relinquish and otherwise convey to Adrenalina all of Enable’s rights
and interest in and to the Debentures, Warrants and to release and terminate any
and all rights in and to any and all property transferred as collateral and to
terminate and release all the Personal Guarantee provided by Xxxx Xxxxxx and the
Subsidiary Guarantee provided by the Subsidiaries.
5.2 Representations
by Adrenalina
5.2.1 That
this Agreement and the documents to be executed and delivered by Adrenalina in
connection with the consummation of this Agreement are and will be valid,
binding and enforceable in accordance with their respective
terms.
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5.2.2 That
the execution, delivery and performance by Adrenalina of this Agreement is not
precluded by, and will not violate, any provisions of any existing law, statute,
rule or regulation in the state of its incorporation or any judgment, order,
decree, writ or injunction of any court, governmental department, commission,
board, bureau, agency or instrumentality, and will not result in a breach of, or
default under, any agreement mortgage, contract, undertaking or other instrument
or document to which Adrenalina is a party or by which Adrenalina is
bound.
5.2.3 That
there are no actions, suits or proceedings pending or threatened against, by or
affecting the Adrenalina and/or any other officer, director or shareholder of
Adrenalina, in any court or before any government agency which would limit or
prevent Adrenalina’s performance of this Agreement.
5.2.4 That
Adrenalina is validly formed and in good standing under the Laws of the state of
its formation and that all necessary corporate actions have been taken in order
to authorize the officers of Adrenalina to enter into this Agreement and to
perform each and every of the Adrenalina's obligations hereunder.
5.2.5 Adrenalina
will procure and produce at closing, an appropriate resolution authorizing the
entering into of this transaction executed by the appropriate officers of the
Adrenalina
5.2.6 That
Adrenalina is not now the subject of a pending, threatened or contemplated
bankruptcy proceeding or an assignment for the benefit of its
creditors
6. Notices. All
notices and other communications hereunder shall be in writing and shall be
delivered (i) personally and evidenced by receipt thereof; or (ii) shall be sent
by registered mail, certified mail, postage prepaid and return receipt
requested; or (iii) Express Mail Service; or (iv) nationally utilized overnight
delivery service, addressed to the parties set forth below; or (v) shall be sent
by facsimile transmission (FAX) to the FAX numbers or by e mail forth
in the Contract and to the attention of the individuals as
follows:
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As to
Enable:
Attention:
Xxxxx Xxxxxx
Fax
Number: (000) 000-0000
E-Mail:
xxxxxxx@xxxxxxxxxxxxx.xxx
As to
Escrow Agent: Xxxxxxxxx Xxxxx LLP
Attention: Xxxx X. Xxxx
Phone
Number:000-000-0000\
Fax
Number:000-000-0000
E Mail:
xxxxx@xxxxxxxxxxxxxx.xxx
As to
Adrenalina:
Attention:CEO
Phone
Number:000-000-0000
Fax
Number:000-000-0000
E
Mail:Xxxxxxx@xxxxxxxxxx.xxx
Any
notice in accordance herewith shall be deemed received when delivery is received
or refused, as the case may be, as indicated on the receipt; provided, Fax and e
mail notices shall be deemed received when actually received by the party
intending to be notified.
7. Survival. The
representations and warranties set forth herein shall survive for 12 months
following the execution of this Agreement.
8. Parties Bound. This
Agreement shall be binding upon and inure to the benefit of Enable and
Adrenalina, their respective heirs, personal representatives, successors and
assigns.
9. Assignment. The
terms, covenants and conditions herein contained shall be binding upon and inure
to the benefit of the parties hereto and their successors and
assigns.
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10. Governing Law. The
laws of the State of New York shall govern the validity, construction,
enforcement and interpretation of this Agreement. The sole and only
venue for any action or proceeding hereunder shall be the applicable courts of
New York, New York.
11. Multiple
Counterparts. This Agreement may be executed in a number of
identical counterparts. If so executed, such counterparts shall,
collectively constitute one agreement, but in making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart
bearing signatures of all the parties hereto.
12. Entire
Agreement. This Agreement embodies the entire agreement of the
parties with respect to the transaction herein contemplated, superseding all
prior oral or written agreements. Any amendments hereto shall be in
writing and executed by the parties hereto.
13. Attorneys’
Fees. The prevailing party in any litigation, including
appellate and bankruptcy proceedings, arising out of or relating to this
Agreement or the transaction contemplated hereby shall be entitled to recover
reasonable attorney's fees, paralegal fees and costs at all trial and appellate
levels, from the non-prevailing party.
14. Non-Recording and
Confidentiality. Neither this Agreement nor any memorandum
thereof may be recorded in any public records, and the parties hereto agree to
use best efforts to maintain the confidentiality of this Agreement and the
transaction contemplated herein, including but not necessarily limited to each
party’s employees, and to protect against disclosure of the terms of this
Agreement or the release of copies hereof to any party not related to or not
employed by the parties hereto. This provision shall be ineffective
in the event of any litigation arising from or relating to this Agreement and
shall not prohibit disclosure of this Agreement or the terms thereof to the
extent required by governmental authority.
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15. Time. Each and
every time period set forth in this Agreement shall be deemed to be "time of the
essence". It is understood that all payments are being delivered and
paid by Federal wire transfer. It is therefore agreed that in the
event any Federal wire transfer, which has been initiated by Adrenalina at or
prior to the payment date is delayed by reasons beyond the control of Adrenalina
(provided that Adrenalina shall use reasonable best efforts to address and
remedy such delay), that such delay shall not be deemed to be a default
hereunder and during such delay period, the parties hereto shall take all
reasonable efforts to cause their respective banking institutions to trace the
cause of such delay in wire fund transfers and to insure that all funds are
transferred on a reasonably timely basis by such banking
institutions.
16. Facsimile
Signatures. Facsimile signatures or emailed PDF versions of
the parties affixed to this Agreement shall have the same force and effect as
original signatures.
17. No Construction Against
Drafter. All parties to this Agreement acknowledge and
agree that each had input into the drafting of this
Agreement. Accordingly, all parties to this Agreement agree and
acknowledge that in the event of a dispute, and in the event of any ambiguity
found in this Agreement, no presumption shall arise against any party as the
draftsmen of this instrument.
18. Typewritten Or Handwritten
Provisions. Typewritten or handwritten
provisions inserted in this form and acknowledged by the parties as evidenced by
their initials shall control all printed provisions in conflict
therewith.
19. Further Documents. Adrenalina
and/or Enable each agree to execute such other and further documents which may
be requested or needed in furtherance of this Agreement.
20. Holidays. Wherever
this Agreement provides for a date, day or period of time on or prior
to which action or events are to occur or not occur, and if such date, day or
last day of such period of time falls on a Saturday, Sunday or legal holiday,
then same shall be deemed to fall on the immediately following business
day.
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21. Venue And Waiver Of Jury
Trial. Any actions brought with regard to
this Agreement shall be, brought within the appropriate Court located in New
York, New York. The parties hereto each hereby waive any right it or its
successors or assigns may have to a jury trial in any litigation between parties
arising out of or relating to this Agreement. The parties hereto each
acknowledge that this provision was a material inducement to their entering into
this Agreement.
[Signature
Pages Follow]
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IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Settlement
Agreement as of the date first above written.
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ADRENALINA,
INC.
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By:
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_______________________________
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Name:
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Title:
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INDIKA
LLC
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By:
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_______________________________
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Name:
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Title:
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TIME
CODE PRODUCTIONS LLC
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By:
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_______________________________
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Name:
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Title:
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VERY
AWESOME MEDIA GROUP, INC.
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By:
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_______________________________
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Name:
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Title:
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EXTREME
PUBLISHING LLC
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By:
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_______________________________
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Name:
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Title:
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LIQUID
PUBLISHING LLC
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By:
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_______________________________
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Name:
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Title:
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ADRENALINA
FILMS LLC
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By:
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_______________________________
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Name:
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Title:
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MIAMI
MUSIC AND RECORDS LLC
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By:
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_______________________________
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Name:
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Title:
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___________________________
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Xxxx
Xxxxxx
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ENABLE
GROWTH PARTNERS LP
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By:
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_______________________________
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Name:
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Title:
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ENABLE
OPPORTUNITY PARTNERS LP
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By:
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_______________________________
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Name:
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Title:
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XXXXXX
DIVERSIFIED STRATEGY MASTER
FUND
LP
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By:
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_______________________________
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Name:
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Title:
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