EXHIBIT 10(aa)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
IN RE: CASE NO. 97-22199-BKC-RBR
CHAPTER 11
THE SINGING MACHINE COMPANY, INC.,
Tax ID# 00-0000000
DEBTOR.
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AGREEMENT REGARDING TREATMENT OF XXXXX XXX AGENCY
IN DEBTOR'S PLAN OF REORGANIZATION
THIS AGREEMENT regarding Plan treatment ("Agreement") is made as of the
16th day of December, 1997, by and between The Singing Machine Company, Inc., a
Debtor-in-Possession ("SMC") and the Xxxxx Xxx Agency ("Xxxxx Xxx"), a DELAWARE
corporation.
WITNESSETH:
WHEREAS, SMC filed a Chapter 11 bankruptcy proceeding on April 11, 1997
("Petition Date"), and was assigned Case No. 97-22199-BKC-RBR (the "Bankruptcy
Case");
WHEREAS, SMC and Xxxxx Xxx have agreed that SMC is liable to Xxxxx Xxx
for royalties due on the Cut-out Inventory (as hereinafter defined) in the
amount of $414,598.16;
WHEREAS, SMC and Xxxxx Xxx have agreed that the royalties due on the
Cut-out Inventory shall be treated as a pre-petition debt owed by SMC to Xxxxx
Xxx; and
WHEREAS, Xxxxx Xxx elects to accept one (1) share of stock in SMC for
each $2.00 of Pre-Petition Debt (as hereinafter defined), and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as follows:
ARTICLE I - RECITALS, EXHIBITS, SCHEDULES
1.1 The foregoing recitals are true and correct and, together with the
schedules and exhibits referred to hereafter, are hereby incorporated into this
Agreement by this reference. Capitalized words used herein and not otherwise
defined in the text hereof shall have the meaning set forth in the Debtor's Plan
of Reorganization and Disclosure Statement, as amended.
ARTICLE II - ROYALTIES DUE ON PRE-PETITION DEBT
2.1 The Cut-out Inventory are those music selections that are listed on
Schedule "A" hereto.
2.2 SMC and Xxxxx Xxx agree that the royalties owed for the Cut-out
Inventory (the "Cut-Out Royalties") shall be treated as pre-petition debt owed
by SMC to Xxxxx Xxx and shall be included as part of Xxxxx Xxx'x general
unsecured claim in SMC's Bankruptcy Case. As of the Petition Date, the Cut-Out
Royalties due were $414,598.16.
2.3 In addition to the Cut-Out Royalties, SMC and Xxxxx Xxx agree that
SMC owed, as of the Petition Date, Xxxxx Xxx $406,750.00 for royalties other
than those owed for the Cut-Out Royalties (the "Pre-Petition Regular
Royalties").
2.4 Xxxxx Xxx shall amend its proof of claim filed in SMC's Bankruptcy
Case to reflect $821,348.16 in general unsecured debt, which is the sum of the
Cut-Out Royalties and the Pre-Petition Regular Royalties (collectively referred
to as the "Pre-Petition Debt").
2.5 Xxxxx Xxx agrees that the Pre-Petition Debt shall be treated as a
general unsecured claim in the Debtor's Plan of Reorganization and further
agrees to elect to accept the issuance of shares of common stock of the
reorganized Debtor on the following basis: for each $2.00 of the
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Pre-Petition debt, Xxxxx Xxx will receive one (1) share of common stock.
ARTICLE III - POST-PETITION ROYALTIES DUE
3.1 SMC recognizes that it has a continuing obligation to pay royalties
since the filing of its Bankruptcy Case. SMC has paid to Xxxxx Xxx all its
royalty obligations for the period commencing on the Petition Date through and
including June 30, 1997. All royalty payments due for the period commencing July
1, 1997 and thereafter, shall be paid into the Trust Account of Xxxxxxx and
Xxxxxx("Xxxxxxx & Xxxxxx") and shall be held in escrow until such time as
Court enters a final order on the Debtor's Plan of Reorganization;
3.2 Upon the Order confirming the Debtor's Plan of Reorganization
becoming final and non-appealable, the Debtor shall calculate post-petition
royalties due, excluding those royalties due on the Cut-Out Inventory (the
"Post-Petition Royalties") and direct Xxxxxx & Xxxxxx to release from escrow and
pay to Xxxxx Xxx an amount equal to the Post-Petition Royalties and turnover the
remainder of the funds in the Trust Account to SMC.
3.3 In the event that SMC's Chapter 11 Plan of Reorganization does not
get confirmed, the Bankruptcy Case is converted to Chapter 7 or this Agreement
is not approved by the Court, Xxxxxxx & Xxxxxx shall turnover to Xxxxx Xxx the
entire sum deposited into the Trust Account pursuant to Paragraph 3.1 hereof for
credit towards SMC's post-petition royalties due, including those royalties due
on the Cut-Out Inventory.
ARTICLE IV - MISCELLANEOUS
4.1 MODIFICATION. No changes of or modifications or additions to this
Agreement shall be valid unless the same shall be in writing and signed by the
parties hereto.
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4.2 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
the parties hereto, their beneficiaries, heirs and administrators. No party may
assign or transfer its interests herein, or delegate its duties hereunder,
without the written consent of the other party.
4.3 NO WAIVER. No waiver of any provision of this Agreement shall be
effective, unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
4.4 GENDER AND USE OF SINGULAR AND PLURAL. All pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the party or parties or their personal representatives, successors and
assigns may require.
4.5 COUNTERPARTS. This Agreement and any amendments may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together will constitute one and the same instrument. The parties may
execute the Agreement by facsimilie transmitted signatures.
4.6 HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
4.7 GOVERNING LAW. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Florida, without giving effect to its
choice of law or conflict of laws rule, and any proceeding arising between the
parties in any manner pertaining or related to this Agreement shall, to the
extent permitted by law, be held in Broward County, Florida.
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4.8 FURTHER ASSURANCES. The parties hereto will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
4.9 CONSTRUCTION. This Agreement shall not be construed more strictly
against one party than against the other, it being recognized that both SMC and
Xxxxx Xxx have contributed substantially to the preparation of this Agreement.
4.10 BANKRUPTCY COURT APPROVAL. This Agreement will be binding upon the
parties and conditioned upon the entry of an Order by the Bankruptcy Court
approving its terms.
4.11 EXECUTION AUTHORITY. SMC and Xxxxx Xxx expressly authorize
their respective attorneys to execute this Agreement on their behalf and have
consented to the terms and conditions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year set forth above.
XXXX AND XXXXX, P.A. XXXXXXX AND XXXXXX
Attorney for Debtor Attorneys for Xxxxx Xxx Agency
0000 X. Xxxxxxxx Xxxx Xxxx 000 Xxxxx Xxxx Xxx
Xxxxx 000 Xxxxx 000
Xxxx Xxxxx, XX 00000 Xxxx Xxxxx, XX 00000
000-000-0000 (000) 000-0000
By /s/ XXXX X. XXXXXXXX XXXXXX By: /s/ XXXXX X. XXXX
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XXXX X. XXXXXXXX XXXXXX, ESQ. XXXXX X. XXXX, ESQ.
Florida Bar No. 0873179 Florida Bar No. 602728
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