EXHIBIT 10.1
SETTLEMENT AGREEMENT
AND
MUTUAL GENERAL RELEASE
This
Settlement Agreement and Mutual General Release (hereinafter
referred to as the “Settlement Agreement”), is
effective as of June 25, 2008, and is made by and among Kings
Road Entertainment, Inc., a Delaware corporation
(“KREN”), Philip Holmes, individually, and as a
currently officer and director of KREN, H. Martin DeFrank
(a.k.a. Christian DeFrank), individually, and as a shareholder
and a former officer and director of KREN
(“DeFrank”), Sloane Squared Ltd., a purported
United Kingdom limited liability company which is purportedly
owned or controlled by DeFrank (“Sloane”), John
Burnley, individually and as a shareholder of KREN
(“Burnley”) and doing business as Endeavour
Broadcast Services (“Endeavour”) and Millennium
(“Millennium”), and all other entities controlled,
directly or indirectly by DeFrank and/or Burnley (collectively
the “Controlled Entities”). KREN, DeFrank, Sloane,
Burnley, and the Controlled Entities shall hereinafter
collectively be referred to as the “Parties.” This
Agreement is made in consideration of the following facts and
recitals:
AGREEMENT
For
valuable consideration, the receipt and sufficiency of which
is hereby acknowledged the Parties hereto agree as
follows:
1.
Mutual General Release .
1.1
Release by KREN and Holmes .
Except as to such rights or claims as may be created by this
Settlement Agreement or any agreement executed by the Parties
pursuant to this Settlement Agreement, and subject to and
conditioned upon the performance and completion of the undertakings
by DeFrank, Sloane, Burnley and the Controlled Entities as set
forth in Section 2, below, KREN and Holmes hereby discharge and
release DeFrank, Sloane, Burnley and the Controlled Entities and
their assigns, agents, representatives, attorneys, predecessors and
successors in interest, from any and all claims, demands,
obligations, or causes of action of whatever nature or description,
in law or in equity, whether now known or unknown, suspected, or
unsuspected, which now exists, or at any time theretofore has
existed, against any of the parties hereto from the beginning of
time through the date on which all conditions which are the subject
of, and all deliveries to be made pursuant to, this Settlement
Agreement have been satisfied, including, but not limited to,
DeFrank’s relationship with KREN as an independent
contractor, consultant, employee, officer, director, shareholder or
otherwise, Burnley’s relationship with KREN as shareholder,
consultant or otherwise, and the matters set forth in any
Litigation now pending between the Parties.
1.2
Release by DeFrank, Sloane, Burnley and Controlled
Entities .
Except as to such rights or claims as may be created by this
Settlement Agreement or any agreement executed by the Parties
pursuant to this Settlement Agreement, and subject to and
conditioned upon the performance and completion of the undertakings
by KREN as set forth in Section 2, below, DeFrank, Sloane, Burnley
and the Controlled Entities hereby discharge and release KREN,
Holmes and KREN’s current and former officers, directors,
employees, shareholders, attorneys, assigns, agents,
representatives, predecessors and successors in interest, except
for and specifically excluding George Moseman, from any and all
claims, demands, obligations, or causes of action of whatever
nature or description, in law or in equity, whether now known or
unknown, suspected, or unsuspected, which now exists, or at any
time theretofore has existed, against any of the parties hereto
from the beginning of time through the date on which all conditions
which are the subject of, and all deliveries to be made pursuant
to, this Settlement Agreement have been satisfied, including, but
not limited to, DeFrank’s relationship with KREN as an
employee, officer, director or shareholder, Burnley’s
relationship with KREN as shareholder or otherwise, and the matters
set forth in any Litigation now pending between the
Parties.
1.3
Release of Unknown Claims .
The Parties acknowledge and agree that this release applies to all
claims for any injuries, damages, losses or claims, whether known
or unknown, foreseen or unforeseen, patent or latent, that the
Parties hereto now have or may acquire, and each Party hereto
hereby waives application of
California Civil Code Section 1542 ,
and any and all provisions, rights and benefits conferred by any
law of any state or territory of the United States, or principle of
common law, which is similar, comparable or equivalent to
California Civil Code Section 1542 .
(a)
Each Party hereto certifies that such party is aware of the
provisions of
California Civil Code Section 1542 which
states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.
(b)
The Parties understand and acknowledge the significance and
consequences of the waiver of
California Civil Code Section 1542 ;
and that this release and waiver of
California Civil Code Section 1542 is
a significant material part of the consideration of entering into
this Settlement Agreement.
The
Parties expressly acknowledge that this Settlement Agreement except
for ongoing obligations set forth in the attached agreements, is
intended to include a release, without limitation, of all claims,
and acknowledges that the execution of this Settlement Agreement is
entered into for the purpose of extinguishing any such claim or
claims.
(c)
The Parties further understand and acknowledge that if any party
hereto, or such Parties respective officers, directors, employees,
shareholders, attorneys, assigns, agents, representatives,
predecessors and successors in interest, eventually discover
additional damages or claims arising out of the facts and claims
released herein, that Party will not be able to make any claim for
any such losses or damages. Furthermore, the Parties acknowledge
that they intend these consequences even as to claims for losses or
damages that may exist as of the date of this Settlement Agreement
but which the Parties hereto do not presently know to exist, and
which if known, would have materially affected the Party’s
decision to execute this Settlement Agreement.
1.4 The
Parties understand and agree the word “claims” to
include all actions, claims, and grievances, whether actual or
potential, known or unknown, and specifically but not exclusively
all claims arising and relating directly or indirectly out of any
of the facts, acts, omissions, events, damages and/or injuries
arising from or relating in any way to any litigation which is
pending between the Parties, that have arisen, or may arise in the
future, or from or relating directly or indirectly from any and all
events or relationships between the Parties. All such claims
(including related fines, penalties, interest, attorneys’
fees and costs, rights of injunctive relief) are forever barred by
this Agreement and without regard to whether those claims are based
on any alleged breach of a duty arising in a statute, contract, or
tort; any alleged unlawful act, including, without limitation,
fraud and deceit, negligent misrepresentation, conversion of labor,
breach of partnership, intentional interference with business
contract, breach of contract; or any other claim or cause of
action; and regardless of the forum in which it might be
brought.
2.
Agreements and Undertakings of the Parties
.
Concurrently with the execution of this Settlement Agreement, and
as a conditioned precedent to the settlement of the Parties
contemplated by this Settlement Agreement, the Parties shall enter
into the following agreements and undertakings:
2.1
Execution of Stock Purchase Agreement by
DeFrank .
DeFrank shall enter into that certain Stock Purchase Agreement,
attached hereto as
Exhibit 2.1 ,
under which DeFrank agrees to sell an aggregate of 500,000 shares
of common stock of KREN owned by DeFrank, for an aggregate purchase
price of $60,000.
2.2
Execution of Stock Purchase Agreement by
Burnley .
Burnley shall enter into that certain Stock Purchase Agreement,
attached hereto as
Exhibit 2.2 ,
under which Burnley agrees to sell an aggregate of 300,000 shares
of common stock of KREN owned by Burnley, for an aggregate purchase
price of $24,000.
2.3
Execution of Payment Split Agreement
. DeFrank,
Sloane and KREN shall enter into that certain Payment Split
Agreement, attached hereto as
Exhibit 2.3 ,
under which either DeFrank or Sloane as the case may be shall pay
to KREN fifty percent (50%) of all compensation and proceeds,
whether in cash, non-cash or any other form, received by, or
credited to, either DeFrank or Sloan, individually or jointly,
under the “All of Me”/Producer Agreement dated April
23, 2004 by and among Katja Motion Picture Corp., Eclectic
Filmworks, Inc., Sloane Squared, Ltd., Ira Posnansky and Christian
DeFrank.
2.4
Dismissal by KREN of Complaint in the matter of Kings Road
Entertainment, Inc._vs. H. Martin DeFrank, Sloane Squared Ltd., et
al .
Within seven (7) business days of the Closing under the Stock
Purchase Agreement attached hereto as Exhibit 2.1, KREN will
execute, file and deliver a dismissal with prejudice, in the form
attached hereto as
Exhibit 2.4 ,
of the complaint filed by KREN in the matter of
Kings Road Entertainment Inc. vs. H. Martin DeFrank, Sloane Squared
Ltd., et al. ,
Los Angeles County Superior Court Case No. BC372716, and any and
all claims and counterclaims contained therein.
2.5
Dismissal by KREN of Complaint in the matter of Kings Road
Entertainment, Inc._vs. H. Martin DeFrank, John Burnley, et
al .
Within seven (7) business days of the Closing under the Stock
Purchase Agreements attached hereto as Exhibits 2.1 and 2.2, KREN
and Holmes will execute, file and deliver a dismissal with
prejudice, in the forms collectively attached hereto as
Exhibit 2.5 ,
of the complaint filed by KREN, George Moseman and Holmes in the
matter of
Kings Road Entertainment Inc., vs. H. Martin DeFrank, John Burnley,
et al. ,
Court Case No. BC386459, and any and all claims and counterclaims
contained therein.
2.6
Dismissal by DeFrank of the Cross-Complaint in the matter of
DeFrank vs. Kings Road Entertainment, Inc. and Certain
Directors .
Within seven (7) business days of the Closing under the Stock
Purchase Agreement attached hereto as Exhibit 2.1, DeFrank will
execute, or cause to be executed and deliver to litigation counsel
for KREN, in the form attached hereto as
Exhibit 2.6 ,
a dismissal with prejudice of the cross-complaint filed by DeFrank
against KREN, Holmes and Brad Hoffman and a dismissal
without prejudice
against George Moseman in the matter of
Kings Road Entertainment, Inc., vs. H. Martin DeFrank, et.
al. ,
Los Angeles County Superior Court Case No. BC372716, and any and
all claims and counterclaims contained therein.
2.7
Dismissal by Burnley of Complaint in the matter of John Burnley
vs. Kings Road Entertainment, Inc., et al
.
Within seven (7) business days of the Closing under the Stock
Purchase Agreement attached hereto as Exhibit 2.2, Burnley will
execute, or cause to be executed and deliver to litigation counsel
for KREN, a dismissal with prejudice against KREN, Holmes and all
other parties except George Moseman which dismissal against George
Moseman will be without prejudice, in a form satisfactory to
KREN’s litigation counsel, of the complaint and any counter
claims in the matter of
John Burnley vs. Kings Road Entertainment Inc., George Moseman and
Philip Holmes et al. ,
Court Case No. BC374788, and any and all claims and counterclaims
contained therein.
3.
Representations, Warranties and Covenants of
DeFrank .
3.1 DeFrank
represents and warrants that during his tenure as an officer and/or
director of KREN he has made no other statements which have not yet
been disclosed to the current board of directors of
KREN.
3.2 DeFrank
represents and warrants that he has fully disclosed all agreements,
commitments, promises, arrangements that he has made while an
officer or director of KREN or on behalf of KREN and has provided
copies of any such paperwork where these may be documented, and has
not in or on behalf of or in the name of KREN entered into any
other agreement or contract binding KREN.
3.3 DeFrank
represents and warrants that the shares of KREN to be delivered and
transferred are the only shares he owns, and further that there are
no other shares of KREN held beneficially or otherwise by DeFrank,
in the name of any other third party for the benefit of DeFrank or
in the name of any company or other entity in which DeFrank has a
direct or indirect interest. DeFrank agrees that in event that it
is discovered that DeFrank has any direct or indirect interest in
any shares of KREN or that any shares of KREN are presented for
transfer which are determined to be held by or for the benefit of
DeFrank, that KREN through its transfer agent may place a stop
transfer with regard to said shares and that the burden of proof
shall be upon DeFrank or the presenter thereof, to provide
demonstrable evidence that DeFrank has no direct or indirect
interest in said shares. DeFrank individually and on behalf of any
entity in which he has a direct or indirect interest, will not
directly or indirectly acquire any shares of KREN, or any
beneficial or other interest in any shares of KREN. DeFrank
individually and on behalf of any entity in which he has a direct
or indirect interest, agrees that in event that it is discovered
that DeFrank has acquired any shares in KREN, or has any direct or
indirect interest in any shares of KREN or that any shares of Kings
Road are presented for transfer which are determined to be held by
or for the benefit of DeFrank, that KREN through its transfer agent
may place a stop transfer with regard to said shares and that the
burden of proof shall be upon DeFrank or the presenter thereof, to
provide demonstrable evidence that DeFrank has no direct or
indirect interest in said shares.
3.4 DeFrank
individually and on behalf of any entity in which he has a direct
or indirect interest, including without limitation, Sloane, shall
not, for whatever reason, either directly or indirectly solicit,
encourage, participate, entice or otherwise assist any party in
making or filing any claim against KREN and its current or past
officers or directors. DeFrank
further agrees not to
initiate any
claim against George Moseman (other than a cross-complaint or cross
claim in response to a claim or lawsuit filed by George Moseman
against De Frank) which would trigger any rights of indemnification
by KREN of George Moseman.
3.5 DeFrank
shall not, for a period of five (5) years following execution of
this Settlement Agreement, for whatever reason, either
direc
