EXHIBIT 10.1
AGREEMENT
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THIS AGREEMENT (the "Agreement") is made as of the 12th day of April,
2004, by and between XXXXXX CAPITAL CORPORATION, an Alabama corporation having
an office at 00-X Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxx 00000
("PCC"), and PARADISE MUSIC & ENTERTAINMENT, INC., a Delaware corporation having
an office at PMB 300 0000 X 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Paradise").
WHEREAS, Paradise is indebted to PCC in the amount of $607,351.45 (the
"Obligation") as at October 10, 2003, the payment of which Obligation is in
default;
WHEREAS, Paradise has requested PCC to reduce the Obligation and has
agreed to make payment thereof in an amount and subject to the terms and
conditions contained herein and PCC has agreed to accept the same; and
WHEREAS, Paradise has requested PCC to extend to it a line of credit in
an amount of up to $5,000,000.00;
NOW, THEREFORE, for good and valuable consideration, and intending to be
legally bound, the parties agree as follows:
1. THE OBLIGATION. So long as Paradise is not in default of the terms
hereof: (a) the amount of the Obligation will be reduced to $300,000.00 and it
shall become due and payable April 15, 2005 (the "Due Date"); (b) the Obligation
will bear interest at the rate of 18% per annum from and after the earlier of
(i) the Due Date and (ii) the date on which PCC accelerates payment of the
Obligation pursuant to the provisions hereof (clause (b)(i) and (b)(ii) hereof
collectively, the "Maturity Date"); and (c) interest will be payable monthly in
advance.
2. PREPAYMENT OF THE OBLIGATION. The Obligation shall be prepaid out
of the net proceeds received by PCC from the sale of shares of Common Stock in
Paradise presently owned by PCC at such time or from time to time as such shares
are saleable on the public market.
3. ESCROW STOCK. Paradise agrees to deposit 15,000,000 fully paid and
non-assessable shares of its Common Stock in escrow (the "Escrow Stock") in a
brokerage account at The Maxim Group, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("Maxim") pursuant to an Escrow Agreement substantially in the form of
EXHIBIT A hereto. To the extent that the proceeds of sale referred to in
Paragraph 2 above are insufficient to pay the Obligation in full by the Due Date
or in the event PCC is, for whatever reason, legally prevented from selling a
sufficient amount of shares to repay the Obligation in full by the Due Date, a
sufficient number of shares of Escrow Stock will be delivered to PCC so that the
market value will make up the shortfall in the payment of the Obligation, and if
PCC is unable to sell any of its stock, then the number of shares having a
market value of $300,000.00 shall be delivered to PCC. If Paradise shall not
satisfy the Obligation in full by the close of business on the day that is six
(6) months after the Maturity Date, PCC shall be entitled to keep all of the
Escrow Stock and Paradise shall, if requested by PCC, direct Maxim to deliver
all of the Escrow Stock to PCC or an account designated by PCC.
4. COMMON STOCK REPURCHASE OPTION. Until the earlier of the date the
Obligation is paid in full or the Due Date, Paradise shall have the option to
purchase up to 1,200,000 shares of Common Stock of Paradise owned by PCC at a
price of $0.25 per share (up to the outstanding balance of the Obligation), the
proceeds of which shall be used to pay the Obligation. Such option shall be
exercised by Paradise tendering to PCC, payment for the purchased shares
together with notice of exercise of its option.
5. ACCOUNTS RECEIVABLE CREDIT FACILITY. So long as Paradise is not in
default of any of the terms hereof, PCC will extend to Paradise a line of credit
in the amount of up to $5,000,000.00 for the purposes of financing acquisitions
by Paradise. Loans made from such credit facility will be fully secured by
accounts receivable, will be subject to credit review by PCC on a case by case
basis, will be on PCC's normal business terms and each loan will be documented
in accordance with PCC's standard practice.
6. DELIVERY OF CERTIFICATES OWED TO PCC. Paradise agrees to promptly
deliver to Maxim for deposit in PCC's account # 00000000 at Maxim, certificates
for all shares previously acquired by but heretofore undelivered to PCC (the
"Certificates").
7. REPRESENTATION AND WARRANTIES. Paradise makes the following
representations and warranties to PCC, all of which are material and are made to
induce PCC to enter into this Agreement, are true as of the date hereof and
shall continue to be true until the Obligation is fully satisfied.
7.1 ORGANIZATION OF PARADISE; AUTHORITY; POWER, ETC. Paradise
is a corporation duly formed, validly existing and in good standing under the
laws of the State of Delaware, and has full power, legal capacity and authority
to execute this Agreement and all agreements and certificates to be executed in
connection herewith (collectively, the "Documents") and to perform and observe
all of its obligations hereunder and thereunder.
7.2 VIOLATION OF OTHER AGREEMENTS. The execution and delivery
of the Documents and the performance and observance of the covenants to be
performed and observed thereunder do not violate or constitute a default in any
agreement to which Paradise is a party.
7.3 VALIDITY OF DOCUMENTS. Upon due execution and delivery
thereof, the Documents shall constitute the legal, valid and binding obligations
of Paradise, enforceable against Paradise in accordance with their respective
terms, subject only to bankruptcy and insolvency laws applicable to creditors
generally and to equity principles which may preclude specific performance and
other equitable remedies.
7.4 CHARACTER OF REPRESENTATIONS; SURVIVAL. The representations
and warranties contained in this Agreement or in any certificate or statement
furnished to PCC by Paradise shall survive the execution of this Agreement and
shall not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
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7.5 AUTHORIZED SHARES. As of the date hereof there are
75,000,000 shares of Common Stock of Paradise authorized for issuance all of
which Common Stock is outstanding or reserved for issuance after giving effect
to all options, warrants and other securities that are convertible into shares
of Common Stock of Paradise. There is a sufficient number of authorized and
unissued shares of Common Stock of Paradise to satisfy the provisions of
Paragraph 3 above.
8. COVENANTS OF PARADISE. Paradise covenants and agrees as follows:
8.1 PERFORMANCE OF COVENANTS IN THE DOCUMENTS. To fully and
faithfully perform and observe the covenants and obligations to be performed and
observed in each of the Documents, and not suffer or permit a default
thereunder.
8.2 COOPERATION WITH PCC. To cause Xxxxx X. Xxxxxx, its
President and Chairman, to cooperate fully with PCC in order to carry out the
intent of this Agreement.
8.3 INDEMNIFICATION. Paradise agrees to indemnify and hold PCC
harmless against any and all claims and liability, including reasonable legal
costs and expenses arising out of or in any way relating to the Documents and
the transactions contemplated by the Documents, except if such claims and
liability arise from the gross negligence or willful misconduct of PCC. PCC
shall be entitled to appear in any action or proceeding to defend itself against
any such claims, and, if Paradise is not named and served as a party to such
action or proceeding, PCC agrees to promptly notify Paradise of the pendency of
such action or proceeding and cooperate with Paradise to permit Paradise to
intervene therein. All costs incurred by PCC in connection with any such action
or proceeding, including attorneys' fees, shall be reimbursed by Paradise to PCC
within thirty (30) days after presentment.
8.4 NOTIFICATION OF COMMON STOCK ISSUANCE. Paradise shall
notify PCC in writing at least five (5) days in advance of each and every
issuance by Paradise of any shares of Common Stock of Paradise or options,
warrants or other agreements by Paradise to issue its shares of Common Stock.
8.5 DELIVERY OF ESCROW STOCK. Paradise shall deliver to Maxim
the Escrow Stock in accordance with Paragraph 3 above.
8.6 DELIVERY OF THE CERTIFICATES. Paradise shall deliver to
Maxim pursuant to Paragraph 6 above, the Certificates by not later than June 1,
2004.
8.7 REGISTRATION RIGHTS. PCC shall have piggyback registration
rights to any unregistered Common Stock with registration costs to be borne by
Paradise. The Certificates shall be registered by Paradise as soon as
practicable, but in no event later than the first registration statement filed
by the Paradise subsequent to the Closing Date.
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9. EVENTS OF DEFAULT AND REMEDIES.
9.1 DEFAULT. The occurrence of any one or more of the following
at the option of PCC constitutes an event of default ("Event of Default")
hereunder:
(a) Paradise defaults in the payment of principal or
interest on the Obligation when and as the same shall become due and payable
whether by acceleration thereof or otherwise;
(b) Paradise defaults in the performance or observance
of any of the covenants and agreements contained in the Documents (other than
those relating to payment) and same shall remain unremedied for a period of five
(5) business days after Paradise shall receive written notice of such default
from PCC, unless such cure cannot reasonably be completed within said period,
then if a remedy is not commenced within said time period and diligently and
continuously prosecuted to completion within sixty (60) days following the
default;
(c) Paradise defaults in the performance or observance
of any of the covenants and agreements contained herein or in any other
contracts or agreements between Paradise and PCC;
(d) Paradise makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as they
become due; or Paradise files any petition for relief under the federal
Bankruptcy Code; or any order, judgment or decree is entered adjudicating
Paradise bankrupt or insolvent;
(e) Paradise petitions or applies to any tribunal for
the appointment of a trustee, receiver or liquidator of Paradise, or of any
substantial part of the assets of or any proceedings for the voluntary
liquidation and dissolution of Paradise under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect;
(f) any such petition or application is filed, or any
such proceedings are commenced, against Paradise and Paradise by any act
indicates its approval thereof, consent thereto or acquiescence therein, or any
order, judgment or decree is entered appointing any such trustee, receiver or
liquidator, or approving the petition in any such proceedings and such order,
judgment or decree remains unstayed and in effect for more than thirty (30)
days;
(g) any order, judgment or decree is entered in any
proceeding against Paradise decreeing the dissolution of Paradise and such
order, judgment or decree remains unstayed and in effect for more than thirty
(30) days; or
9.2 REMEDIES. Upon the occurrence of any Event of Default as
defined in Paragraph 10.1 hereof, PCC may exercise any or all of the following
rights and remedies as PCC, in its sole discretion, may deem necessary or
appropriate:
(a) Declare the Obligation which is then unpaid,
immediately due and payable without reduction pursuant to Paragraph 1 hereof and
without notice or demand, and accelerate payment of the Obligation
notwithstanding contrary terms of payment stated in any of the
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Documents, and exercise all rights and remedies available under any of the
Documents, at law, in equity or otherwise.
(b) Institute appropriate proceedings for injunctive
relief (including specific performance of the obligations of Paradise
hereunder).
(c) Terminate any further obligations of PCC under this
Agreement.
No failure by PCC to exercise and no delay in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other, further or additional exercise thereof.
10. MISCELLANEOUS.
10.1 GOVERNING LAW. This Agreement and all matters relating to
the Loan shall be governed by the laws of the State of Connecticut.
10.2 MODIFICATION; WAIVER; CONSENT. Any modification, or waiver
of any provision of this Agreement, or any consent to any departure by Paradise
therefrom, shall not be effective unless the same is in writing and signed by
PCC, and then such modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose given. The giving by PCC of
any notice to or demand on Paradise not specifically required of PCC hereunder
shall not entitle Paradise to any other or further notice or demand in the same,
similar or other circumstances.
10.3 COMMUNICATIONS. All notices, requests, demands,
instructions and other communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly given
(i) upon hand delivery, (ii) upon receipt by facsimile, (iii) the next business
day after delivery to a reputable overnight courier which provides for
acknowledgement of receipt, or (iv) three (3) days after deposit in the United
States mail by first-class, postage prepaid, registered or certified mail,
return receipt requested, as follows:
(i) If to PCC, to:
Mr. Xxxxxx Xxxxxx
Xxxxxx Capital Corporation
00-X Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax No. (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxx & Associates, P.C.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Fax No. (000) 000-0000
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(ii) If to Paradise, to:
Xx. Xxxxx X. Xxxxxx,
President Paradise Music & Entertainment, Inc.
PMB 300 1630 A 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
With a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxx & Xxxxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
10.4 ASSIGNMENT. This Agreement may be assigned at any time, in
whole or part, by PCC. Paradise may not assign, pledge or hypothecate this
Agreement or any interest herein to any person without the prior written consent
of PCC.
10.5 TIME OF ESSENCE. Time is of the essence hereof.
10.6 SEVERABILITY; TITLES. In case any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect by any court or other entity having the authority
to do so, the validity of the remaining provisions hereof shall be in no way
affected, prejudiced or disturbed. The titles of the Paragraphs hereof are for
reference purposes only and do not constitute part of this Agreement.
10.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one agreement.
10.8 ENTIRE AGREEMENT. This Agreement, together with the other
Documents, contains the entire agreement between PCC and Paradise with respect
to the subject matter hereof and except as specifically set forth herein
supersedes and cancels any prior understandings and agreements between PCC and
Paradise with respect to the subject matter hereof.
10.9 CONFLICT WITH OTHER DOCUMENTS. In the event any provision,
term or condition of this Agreement conflicts with the terms or conditions of
the other Documents, the terms and conditions of this Agreement shall control.
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10.10 BINDING EFFECT; BENEFIT. This Agreement shall be binding
upon and shall inure to the benefit of the successors and permitted assigns of
PCC and the successors and permitted assigns of Paradise.
10.11 ATTORNEYS' FEES. If any legal action is brought to enforce
the terms of this Agreement or for damages resulting from a default in the
performance of any party's obligations hereunder, the prevailing party shall be
entitled to collect its court costs and reasonable attorneys' fees and expenses
incurred in the prosecution of such legal action.
10.12 CONSTRUCTION. Each party has been advised by counsel of its
choice, and each knowingly and intentionally waives the applicability of any
rule of construction which provides that in the event of ambiguity, the
provision in question is to be construed to the detriment of the party
responsible for the drafting of the document. This provision shall be applicable
to the construction of all of the Documents.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
PARADISE MUSIC & ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Chairman and President
XXXXXX CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: CEO
The provisions of Paragraph 8.2 agreed to:
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX, Individually
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EXHIBIT "A"
ESCROW AGREEMENT
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