NOTE AND DEBT CONTRIBUTION AGREEMENT
THIS NOTE AND DEBT CONTRIBUTION AGREEMENT ("Agreement") is entered into as
of the 20th day of June, 2000, by and among Xxxxxx Xxxxxx, Xxxxx Xxxxxx
(together, the "Xxxxxxx"), and Overseas Filmgroup, Inc., a Delaware corporation
("Company").
WHEREAS, the Xxxxxxx are stockholders of the Company, and hold debt
instruments of the Company and are owed (i) accrued and unpaid salary, (ii)
business expenses and other amounts under the terms of their respective
employment agreements and (iii) amounts under the terms of a certain tax
reimbursement agreement;
WHEREAS, contemporaneously herewith, the Company is selling various
securities to Xxxxxxxx Street Productions, LLC ("Xxxxxxxx"), and pursuant to the
terms of the Securities Purchase Agreement dated May 3, 2000 ("Securities
Purchase Agreement"), between the Company and Xxxxxxxx, as a condition to the
purchase by Xxxxxxxx of such securities, it has been agreed that the Xxxxxxx
shall contribute to the capital of the Company and cancel and/or forgive certain
debt, liabilities, obligations and other amounts as stated herein; and
WHEREAS, contemporaneously herewith, the Xxxxxxx and the Company are
entering into certain employment, "first look" and option agreements.
IT IS AGREED:
1. Cancellation and Contribution of Debt and Cash; Forgiveness of Accrued
Salary and Other Liabilities.
(a) The debt owed by the Company to the Xxxxxxx represented by the
promissory note dated October 31, 1996, in the aggregate outstanding principal
amount of $1,358,268 as of the date of this Agreement, bearing interest at the
annual rate of 9% ("1996 Note"), and all accrued and unpaid interest thereon
through the date of this Agreement in the amount of $469,006, together, is
hereby canceled and contributed to the capital of the Company by the Xxxxxxx;
provided, however, that the Company shall repay to the Xxxxxxx $130,000 of the
principal balance outstanding under the 1996 Note as set forth in Section 2(a).
(b) All of the accrued and unpaid interest through the date of this
Agreement in the amount of $85,101 under that certain print and advertising loan
in the aggregate outstanding principal amount of $400,000 ("P&A Loan") made by
the Xxxxxxx to the Company is hereby canceled and contributed to the capital of
the Company by the Xxxxxxx.
(c) $85,435 of the salary payable by the Company to the Xxxxxxx, which
has otherwise been accrued by the Company in the aggregate amount of $646,195
through the date of this Agreement ("Accrued Salary"), is hereby discharged by
the Xxxxxxx and shall not be due and payable by the Company to the Xxxxxxx.
2. Company to Pay Outstanding Balance of Debt, Liabilities, Obligations and
Other Amounts. Contemporaneously with the execution of this Agreement, the
Company is paying to the Xxxxxxx an aggregate of $1,430,000 in cash, which is
comprised of the following:
(a) $130,000, which represents a portion of the aggregate principal
amount owed by the Company to the Xxxxxxx under the 1996 Note;
(b) $400,000, which represents the aggregate principal amount owed by
the Company to the Xxxxxxx under the P&A Loan;
(c) $200,000, which represents the entire amount owed by the Company
to the Xxxxxxx with respect to the federal income tax audit of the 1992 and 1993
tax years of the Company under that certain tax reimbursement agreement between
the Company and the Xxxxxxx;
(d) $560,760, which represents the balance of the Accrued Salary owed
by the Company to the Xxxxxxx; and
(e) $139,240, which represents various reimburseable expenses payable
by the Company to the Xxxxxxx pursuant to the Xxxxxxx' employment
agreements.
3. General Release by Xxxxxxx. Xxxxxx and Xxxxx (individually and jointly),
in consideration of the restructuring and payment in full of the outstanding
debt and salary obligations of the Company to each of them and for the entry
into the employment, first look and option agreements with the Company, release
and discharge the Company and each subsidiary and affiliate of the Company and
each of their respective officers, directors, employees, heirs, executors,
administrators, successors and assigns (together the "Company Group") from all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialities, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against the Company Group, each of Xxxxxx and Xxxxx, individually or jointly,
and Robert's and/or Ellen's heirs, executors, administrators, successors and
assigns (as the case may be) ever had, now have or hereafter can, shall or may,
have relating to payment of outstanding debt, salary obligations, expense
reimbursements and tax reimbursement payments relating to the federal income tax
audit of the 1992 and 1993 tax years of the Company from the beginning of the
world to the day of the date of this Agreement. Each of the Company Group is
intended to be a third party beneficiary of this release and as such may
individually or jointly enforce the terms of the release. Each of Xxxxxx and
Xxxxx have read and understand the content and legal import of the above GENERAL
RELEASE and have been advised by counsel in respect thereof.
4. Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware (without regard to choice of law provisions).
5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
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7. Notices. Any notice, statement or demand authorized by this Agreement to
be given or made by the Company or by either of the Xxxxxxx shall be
sufficiently given or made if sent by certified mail, or private courier
service, postage prepaid, addressed as follows:
to Xxxxxx or Xxxxx at:
00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
with a copy to:
Xxxxx X. Xxxx, Esq.
Loeb & Loeb LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
to the Company at:
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxx Xxxx Xxxxxx, Esq.
Xxxxxxxx Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
8. Entire Agreement; Amendments and Waivers. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of each of the Xxxxxxx and the Company.
9. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement on the date first above written.
/s/ Xxxxxx Xxxxxx
_____________________________________
Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
____________________________________
Xxxxx Xxxxxx
OVERSEAS FILMGROUP, INC.
/s/ Xxxxxxx X. Xxxxxxx
By: _____________________________________
Xxxxxxx X. Xxxxxxx, Chief Financial
Officer and Chief Operating Officer
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State of California )
) ss:
County of Los Angeles )
On the ___ day of _____________, 2000, before me personally came Xxxxxx
Xxxxxx, to me known to be the individual described in the above Agreement, and
duly acknowledged to me that he executed the above Agreement, including the
Release contained therein.
_____________________________
Notary Public
(Seal)
State of California )
) ss:
County of Los Angeles )
On the ___ day of _____________, 2000, before me personally came Xxxxx
Xxxxxx, to me known to be the individual described in the above Agreement, and
duly acknowledged to me that she executed the above Agreement, including the
Release contained therein.
____________________________
Notary Public
(Seal)
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