SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This SETTLEMENT AGREEMENT AND MUTUAL RELEASE is made this 31st day of March
1999 between JCSHO, Inc. f/k/a Intersound, Inc., a Minnesota corporation
("JCSHO"), and Platinum Entertainment, Inc., a Delaware corporation
("Platinum").
WHEREAS, pursuant to an Asset Purchase Agreement dated November 13, 1996,
as amended January 31, 1997 ("Asset Purchase Agreement"), Platinum agreed to
purchase (through its wholly-owned subsidiary River North Studios, Inc. ("River
North")) certain assets from JCSHO. As part of the Asset Purchase Agreement,
Platinum executed two convertible promissory notes payable to JCSHO or its
successors or assigns (collectively, "Promissory Notes"). One promissory note,
dated January 31, 1997, was in the amount of $1,875,000. The second promissory
note, dated January 31, 1997, was in the amount of $3,125,000.
WHEREAS, JCSHO, Platinum, River North and Midwest Trust Services, Inc.
entered into an Indemnity Escrow Agreement dated January 31, 1997 whereby
Platinum delivered the $1,875,000 promissory note to an escrow agent, Midwest
Trust Services, Inc.
WHEREAS, on June 8, 1998, JCSHO informed Platinum of its election to
convert the outstanding principal of the Promissory Notes into shares of
Platinum stock (the "Conversion Shares"). As a result of JCSHO's election, the
$1,875,000 promissory note was converted into 191,326 Conversion Shares, and the
$3,125,000 promissory note was converted into 318,877 Conversion Shares.
WHEREAS, on January 29, 1998, Platinum delivered to JCSHO and Midwest Trust
Services, Inc. a "Notice of Claim" in which Platinum asserted JCSHO breached the
Asset Purchase Agreement and the Indemnity Escrow Agreement.
WHEREAS, on February 26, 1998, JCSHO delivered to Platinum and Midwest
Trust Services, Inc. a "Notice of Dispute" in which it denied the claims alleged
in the Notice of Claim.
WHEREAS, there is a pending action entitled JCSHO, INC. F/K/A INTERSOUND,
INC. V.
PLATINUM ENTERTAINMENT, INC., No. 97-2479 MJD/AJB (D. Minn.), in which JCSHO
has asserted certain claims against Platinum and Platinum has asserted
certain claims against JCSHO, all of which arise from or relate to Platinum's
acquisition of certain assets of JCSHO pursuant to the Asset Purchase
Agreement.
WHEREAS, Platinum has denied and continues to deny all of JCSHO's claims,
and JCSHO has denied and continues to deny all of Platinum's claims.
WHEREAS, Platinum and JCSHO wish to settle their disputes and to terminate
the pending litigation.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
1. On the same day as the execution of this Agreement, Platinum and JCSHO will
jointly direct Midwest Trust Services, Inc., pursuant to paragraph 7(b) of
the Indemnity Escrow Agreement, to release the 191,326 Conversion Shares in
its possession to Platinum, and all obligations of the parties pursuant to
the Indemnity Escrow Agreement shall expire upon the delivery of the 191,326
Conversion Shares to Platinum.
2. On the same day as counsel for JCSHO delivers this Settlement Agreement
to counsel for Platinum, Platinum will deliver to JCSHO 306,122 (60%) of
the 510,203 Conversion Shares. Prior to delivery of the Conversion Shares
to JCSHO, Platinum will ensure that the Conversion Shares do not bear any
restrictive legends. At the request of JCSHO, Platinum shall provide an
opinion of counsel and/or directions to any transfer agent or other third
party that the 306,122 Conversion Shares may be resold without registration
pursuant to Rule 144(k), provided that JCSHO meets all the requirements
thereof.
3. Platinum will retain the remaining 204,081 (40%) Conversion Shares.
4. JCSHO and Platinum mutually release, acquit, and forever discharge each
other and their respective agents, assigns, officers, employees, directors,
shareholders, subsidiaries, successors, affiliates, partnerships, limited
partnerships and corporations
from any and all causes of action, rights of action, claims, counterclaims
or cross claims of any kind or nature whatsoever, whether based in law or
in equity, whether known or unknown, of whatever kind and howsoever arising,
which each has or ever had against the other, arising by reason of conduct
occurring on or before the date of this Agreement.
5. The parties expressly agree that the mutual releases set forth above in
paragraph 4 will not discharge any obligation under this Agreement or
operate to release claims of Platinum or JCSHO against any other parties
not specifically released, and all claims against other parties are
reserved as to such parties.
6. JCSHO and Platinum will file with the United States District Court for the
District of Minnesota documents necessary to effectuate the dismissal with
prejudice, and without attorneys' fees and costs, of all claims asserted
in the pending action.
7. The parties agree that the provisions of this Agreement are severable and
that in the event that any provision of this Agreement should be held
invalid by any court of competent jurisdiction, the remaining provisions
of this Agreement shall continue in full force and effect.
8. The terms of this Agreement shall be binding upon and inure to the benefit
of, and shall be enforceable by, all parties hereto and their respective
personal representatives, heirs, successors and assigns.
9. The waiver by any party hereto of any breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach by the other party hereto.
10. This Agreement shall not be amended except by a writing signed by all
parties hereto.
11. The parties represent that they have had an adequate opportunity to discuss
all aspects of this Agreement with their respective attorneys, that they
understand all of the provisions of this Agreement and that they are
voluntarily accepting its terms, and that the person executing this
Agreement on its behalf is authorized to do so.
12. The parties agree that this Agreement may be executed in photocopied or
telecopied
counterparts. All executed counterparts shall be deemed to be one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of March
31, 1999.
JCSHO, Inc. f/k/a Intersound, Inc. Platinum Entertainment, Inc.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/Xxxxxx X. Xxxxxxx
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Title: President Title: General Counsel and
Senior Executive VP
