EXHIBIT 10.2
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made and entered into
this 22 nd day of September 1999, by and among:
- Capital Media Group Limited (the "Company") on behalf of
itself and each of its subsidiaries, (collectively referred to
as the "Companies") on the one hand, and
- Diamond Productions ("Diamond"), Gilles Assouline
(Gassouline) and Anne-Marie Assouline ("AMassouline")
collectively referred to as the "Assoulines", and Michel
Assouline ("Massouline") on behalf of themselves and as
representatives of Diamond and sometimes collectively referred
to as the "Unimedia Principal Stockholders" on the second
hand,
WHEREAS, in July and September 1997, the Company acquired 81.6% of the
oustanding common stock of Unimedia in exchange for 7,026,600 shares of the
Company's common stock (the "Unimedia Share Exchanges") pursuant to the terms of
that certain Agreement and Plan of Reorganization, dated effective as of March
4, 1997, as amended (the "Reorganization Agreement"). Under the Reorganization
Agreement, claims for breaches of the representations and warranties made in
such agreement were required to be made before July 31, 1999, and
WHEREAS, subsequent to the closing of the Unimedia Share Exchanges, Gassouline
has been the Chairman and CEO of the Company, Massouline has been the Vice
President and Chief Operating Officer of the Company and the General Manager of
the Company's principal operating subsidiary, Onyx Television GmbH, and
AMassouline has been the General Manager of Unimedia. Further, two of the
Company's principal stockholders, Groupe AB and David Ho, have funded the
Company's survival through loans automatically convertible into Company common
stock (once the Company's authorized common stock is increased), and will own
more than 80% of the Company's common stock once their debt is converted into
common stock ; and
WHEREAS, since the completion of the Unimedia Share Exchanges, the Company has
faced substantial operational and financial problems. Its management, with the
assistance of its funding sources, have worked hard over the last two years to
resolve these problems. To facilitate the conversion of the debt due to Groupe
AB and David HO, the Company has been seeking to hold a stockholders meeting at
which it will propose an increase in its authorized common stock ; and
WHEREAS, the Company's stockholders' meeting has been substantially delayed for
various reasons. However, the Company has now set October 22, 1999 as the date
for its stockholders' meeting. The Company expects that at the meeting, its
stockholders will approve a proposal increasing the Company's authorized common
stock available for issuance, allowing the Company to be successfully
recapitalized and allowing the Company to move forward with its business plans
under the direction of its Board of Directors and control stockholders; and
WHEREAS, one issue which remains to be resolved are disputes between the
Assoulines on the one hand, and the Companies on the other hand, relating to the
Reorganization Agreement. In that regard: (i) on June 29, 1999, the Assoulines
notified the Company in a letter that they claim "indemnifiable damages" under
the Reorganization Agreement (the "June 29 Letter"), and (ii) on July 30, 1999,
two of the Company's directors asserted a protective claim on behalf of the
Company against the Unimedia Principal Stockholders under the Reorganization
Agreement (the "July 30 Letter"). The June 29 Letter and the July 30 Letter are
sometimes collectively referred as to the "Letters".
WHEREAS, these disputes have the potential of dragging the Company and its
current and former management into substantial litigation, with claims against
the Company by the former management for indemnification and likely cross claims
between all of the parties involved. This litigation will likely be
substantially damaging to the company and all of its shareholders whatever the
outcome, and is likely to be very costly and very time consuming; and
WHEREAS, the parties believe that it is in the best interests of the Company for
there to be a global resolution of these issues, which will allow the Company to
proceed with its business plans without becoming embroiled in these disputes.
Such a settlement is intented to bring these issues to resolution without
determining the viability of the claims which have been asserted, by seeking to
resolve these issues on the basis that whatever the outcome of the disputes,
their impact will likely have a serious and adverse effect upon the Company,
sapping the Company's limited financial resources and management time and making
it difficult if not impossible for the Company to execute its business plan
while these disputes are pending.
NOW THEREFORE, in order to resolve these disputes, for 10 $ and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. WITHDRAWAL OF CLAIMS.
After consideration of the terms set forth herein, the Assoulines hereby
withdraw their claims as made in the June 29 Letter and the Company, and each of
its directors including Kornfeld and Hollander hereby withdraw their claims as
made in the July 30 Letter. Since the date on or before which claims had to be
made under the Reorganization Agreement is July 31st, 1999 and by reason of this
action, each of the parties hereto acknowledges that it is their respective
intent to reflect their agreement that all claims for damages by any of them
under the Reorganization Agreement are now barred.
2. FULL INDEMNIFICATION
(a) The Company hereby irrevocably, knowingly, voluntary, absolutely and
unconditionally agrees and commits to:
- fully indemnify and hold fully harmless Gassouline,
AMassouline, Massouline and Diamond (collectively the
"Indemnified Parties") against any losses, claims, damages or
liabilities, joint or several, to which the Indemnified
Parties may become subject, to the extent that such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are related (in any way) to (i) the Purchase
and/or the Subscription of Unimedia shares and/or shares of
the Company by any individual or entity else than the
Indemnified Parties and which took place prior to the date of
the present agreement, and/or (ii) the Unimedia Share
Exchanges and/ or (iii) the Reorganization Agreement and /or
(iv) this Agreement, whether such claims arise against an
Indemnified Party by reason of a claim against such party by a
current or former Unimedia and/or CMG Stockholder (or any
other party), whether such claims relate to an action by any
of the Indemnified Parties prior to or after the Unimedia
Share Exchanges and /or whether or not the alleged actions for
which the claim has been brought were taken by an Indemnified
Party in their capacity as management of any of the Companies,
and/or as management of Unimedia and/or in their individual
and/or representative capacity, hereinafter (the
"Indemnifiable Liabilities").
- and to immediately provide the Indemnified Parties with the
necessary financial support to cover and pay for all legal
fees and other expenses incurred by the Indemnified Parties in
connection with investigating or defending any such loss,
claim, damage, liability or action.
(b) Within ten (10) business days after receipt by an Indemnified Party
under this Agreement of notice of the commencement of any action, such
indemnified Party will, if a claim in respect thereof is to be made
against the Company under this Agreement, notify in writing the Company
of the commencement thereof ; but the omission to so notify the Company
will not relieve the Company from any liability under this Agreement so
long as the Company is
not prejudiced by the failure to so notify. In case any such action is
brought against any Indemnified Party, and it notifies the Company of
the commencement thereof, the Company will cover all legal and other
expenses as described in a) above and will be entitled to participate
therein, and to the extent that it may wish, to directly assume its
defense thereof with counsel who shall be to the reasonable
satisfaction of such Indemnified Party. Anything in this subsection to
the contrary notwithstanding, the Company shall not be liable for any
settlement of any claim or action effected without its written consent,
provided, however, that such consent was not unreasonably withheld.
3. RELEASES
(a) The Company also acting on behalf of each of its subsidiaries
(including CM (UK), Unimedia, and Onyx) hereby knowingly, voluntary,
absolutely and unconditionally release and discharge Gassouline ,
AMassouline, Massouline, Diamond and Unimedia as well as each of their
respective attorneys, successors, and other legal representatives and
permitted assigns from any and all obligations arising under or
relating to the Unimedia Share Exchanges and/or the Reorganization
Agreement; and
(b) Gassouline, Massouline, AMassouline and Diamond hereby knowingly,
voluntary, absolutely and unconditionally release and discharge the
Company and each of its respective subsidiaries (including CM (UK),
Unimedia, and Onyx) as well as each of their respective attorneys,
successors, and other legal representatives and permitted assigns from
any and all obligations arising under or relating to the Unimedia Share
Exchanges and/or the Reorganization Agreement.
(c) The Company also acting on behalf of each of its subsidiaries
(including CM (UK), Unimedia, and Onyx) hereby knowingly, voluntary,
absolutely and unconditionally release and discharge each of
Gassouline, MAssouline, AMassouline and Diamond and each of their
respective subsidiaries affiliates, officers, directors, trustees,
shareholders, agents, employees, consultants, attorneys, successors and
other legal representatives and permitted assigns (both in their
official and individual capacities) from any and all obligations
claims, liabilities or what so ever nature (and whether actual,
contingent or otherwise, in connection with, arising from, or relating
to Gassouline's and / or Massouline and / or AMassouline's services as
an officer or director of any of the Companies until now .
4. MATERIAL BREACH
Notwithstanding anything contained herein, the claims stated in the Letters
shall not be deemed barred in the event of a material breach of any material
obligation by the Company. However, in the event of a failure, the Company will
have a 15 day period to remedy.
5. OTHER CONSIDERATIONS
a) The parties expressly agree that neither this Agreement nor the
negotiations or proceedings leading up to this Agreement, nor any
consideration received pursuant to this Agreement, shall be taken to be
an admission of any kind by any party.
b) This Agreement shall be considered to have been jointly drafted and
shall not be construed against any party.
c) This Agreement shall inure to and shall be binding on all heirs,
successors and interests, assigns and legal representatives of the
parties.
d) By executing this Agreement, each party expressly acknowledges that it
has had the advice of counsel regarding the effect of the execution and
delivery of this Agreement, the releases and consequences of all of the
provisions of the Agreement and the releases.
e) Each party warrants that it is fully empowered and authorized to enter
into this Agreement and to perform and discharge the obligations
hereunder.
f) This Agreement may not be modified or amended except by an agreement in
writing signed by all parties. The parties may waive any of the
conditions contained herein or any of the obligations of any other
party hereunder, but any such waiver shall be effective if in writing,
signed by all parties of this Agreement.
g) Any headings, sections, paragraph numbers or other descriptions are
inserted in this Agreement for convenience only shall not control or
affect the meaning or construction of any of the provisions herein.
h) This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter and supersedes all prior and
contemporaneous agreements and understandings of the parties, unless
expressly adopted and referred to in this Agreement.
i) For the convenience of the parties, this agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute the same binding agreement
of the parties.
j) This Agreement shall be governed by the laws of New York, without
regard to the choice of law provisions.
k) The Parties agree to execute any and all documents and to do and
perform any and all acts and things that are reasonably necessary or
proper to effectuate or further evidence the terms and provisions of
this Agreement.
l) Should it become necessary for any party to institute legal action to
enforce the terms and conditions of this Agreement, the successful
party will be awarded reasonable attorney's fees and costs at all trial
and appellate levels.
The Company, the Indemnified Parties and the other undersigned as directors of
the Company, hereby enter into this Agreement effective as of the day and year
set forth above.
/s/ /s/
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STANLEY HOLLANDER STEPHEN KORNFELD
DIRECTOR DIRECTOR
/s/ /s/
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DAVID HO JEAN-FRANCOIS KLEIN
DIRECTOR DIRECTOR
/s/ /s/
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JEAN-PIERRE SOUVIRON CAPITAL MEDIA GROUP
DIRECTOR DIRECTOR
/s/ /s/
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GILLES ASSOULINE MICHEL ASSOULINE
/s/ /s/
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ANNE-MARIE ASSOULINE DIAMOND PRODUCTIONS