EXHIBIT 2.2
FORM OF VOTING AND CONVERSION AGREEMENT
VOTING AND CONVERSION AGREEMENT (the "Agreement"), dated as of June 12,
2002, between the undersigned stockholder (the "Stockholder") of Alliance
Entertainment Corp., a Delaware corporation ("Alliance") and Liquid Audio, Inc.,
a Delaware corporation ("Liquid"). Except as otherwise provided herein,
capitalized terms that are used but not otherwise defined herein shall have the
meaning assigned to such terms in the Merger Agreement (as defined below).
WHEREAS, contemporaneously with the execution of this Agreement, Alliance
and Liquid have entered into an Agreement and Plan of Merger (the "Merger
Agreement"), providing for, among other things, the merger of a wholly-owned
subsidiary of Liquid into Alliance (the "Merger") and the conversion of the
outstanding shares of common stock of Alliance into the right to receive shares
of common stock of Liquid pursuant to the Merger, and setting forth certain
representations, warranties, covenants and agreements of the parties thereto in
connection therewith; and
WHEREAS, the Merger Agreement contemplates the execution and delivery of
this Agreement; and
WHEREAS, in order to induce Liquid to enter into the Merger Agreement, the
Stockholder are entering into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. The Stockholder represents and warrants
to Liquid that (a) the Stockholder lawfully owns beneficially (as such term is
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) and of record that number of shares of Alliance Preferred Stock
and Alliance Common Stock, set forth on Exhibit A hereto (collectively, the
"Shares"), respectively, free and clear of any mortgage, pledge, security
interest, encumbrance, charge or other lien (whether arising by contract or
operation of law) and, except for this Agreement, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character to
which the Stockholder is a party relating to the pledge, disposition or Voting
(as defined herein) of any shares of capital stock of Alliance and there are no
Voting trusts, proxies or Voting agreements with respect to such Shares, other
than as set forth on Exhibit A, (b) the Stockholder does not beneficially own
(as such term is defined in Rule 13d-3 under the Exchange Act) any additional
shares of Alliance Preferred Stock or Alliance Common Stock other than the
Shares and, except as set forth in Exhibit A, does not have any options,
warrants or other rights to acquire any additional shares of capital stock of
Alliance or any security exercisable for or convertible into shares of capital
stock of Alliance, and (c) the Stockholder has full power and authority to enter
into, execute and deliver this Agreement and the Proxy (as such term is defined
in Section 3 hereof) and to perform the Stockholder's obligations hereunder and
thereunder. The Stockholder further represents and warrants to Liquid that the
execution and delivery of this
Agreement does not and the execution and delivery of the Proxy (as defined
below) by the Stockholder and the performance of this Agreement and the Proxy by
the Stockholder will not: (a) conflict with or violate any law, rule,
regulation, order, decree or judgment applicable to the Stockholder or by which
it or any of its assets is or may be bound or affected; (b) result in or
constitute (with or without notice or lapse of time) any breach of or default
under, or give to any other individual or entity (with or without notice or
lapse of time) any right of termination, amendment, acceleration or cancellation
of, or result (with or without notice or lapse of time) in the creation of any
encumbrance or restriction on any of the Subject Securities (as defined herein)
pursuant to, any contract to which the Stockholder is a party or by which the
Stockholder or any of the Stockholder's affiliates or assets is or may be bound
or affected; or (c) require any consent or approval of any other Person. For
purposes of this Agreement, "Vote" shall include voting of Shares in person or
by proxy in favor of or against any action or consenting to any action in
accordance with Delaware General Corporation Law, and "Voting" shall have a
correlative meaning. For purposes of this Agreement, "Subject Securities" shall
mean: (i) all securities of Alliance (including all shares of capital stock of
Alliance and all options, warrants and other rights to acquire shares of capital
stock of the Alliance) owned beneficially or of record by the Stockholder as of
the date of this Agreement; and (ii) all additional securities of the Company
(including all additional shares of capital stock of Alliance and all additional
options, warrants and other rights to acquire shares of capital stock of
Alliance) of which the Stockholder acquires or becomes the owner beneficially or
of record during the period from the date of this Agreement through the
Termination Date (as defined in Section 11(e)).
2. Agreement to Vote Shares. During the period from the date of this
Agreement through the Termination Date, the Stockholder hereby agrees to vote
all Subject Securities (to the extent then entitled to Vote) at every meeting of
the Stockholder of Alliance and at any adjournment or postponement thereof, and
on every matter related to Sections 2(a) and 2(b) below submitted for action or
approval by written consent of the Stockholder of Alliance (a) IN FAVOR OF the
approval and adoption of the Merger Agreement and the approval of the Merger,
each of the other actions contemplated by the Merger Agreement and any action in
furtherance of any of the foregoing and (b) AGAINST any action or agreement that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation of Alliance under the Merger Agreement. The
agreement contained in this Section 2 is irrevocable to the extent permitted
under Delaware law.
3. No Voting Trusts. The Stockholder agrees that, prior to the Termination
Date, the Stockholder will not, nor will the Stockholder permit any Person under
the Stockholder's control to, deposit any of the Subject Securities in a voting
trust or subject any of the Subject Securities to any proxy or arrangement with
respect to the Voting of the Subject Securities other than agreements entered
into with Liquid.
4. No Dissenters' Rights; No Solicitation The Stockholder hereby
irrevocably and unconditionally waives, and agrees that the Stockholder will not
assert, nor will the Stockholder permit any Person under the Stockholder's
control to assert, any "appraisal rights" pursuant to the Delaware General
Corporation Law, any rights of appraisal or any other similar rights in
connection with the Merger. The Stockholder further agrees that the Stockholder
shall not directly or indirectly take any action that would cause Alliance to
violate Section 5.2(b) of the Merger Agreement.
5. Transfer and Encumbrance. The Stockholder agrees that, prior to the
Termination Date, the Stockholder shall not transfer, sell, offer, exchange,
pledge or otherwise dispose of or encumber (or enter into an agreement to do any
of the foregoing) any of the Subject Securities.
6. Legending of Shares; Other Actions. If so requested by Liquid, the
Stockholder agrees that the Shares shall bear a legend stating that they are
subject to this Agreement and to the Proxy. From time to time and without
additional consideration, the Stockholder shall execute and deliver, or cause to
be executed and delivered, such additional proxies, consents and other
instruments, and shall take such further actions, as Liquid may reasonably
request for the purpose of carrying out and furthering the intent of this
Agreement.
7. Conversion of Preferred Stock. The Stockholder (a) agrees that
immediately prior to the Effective Time, all such shares of Alliance Preferred
Stock owned by the Stockholder (including those Shares set forth in Exhibit A)
shall be automatically converted into Alliance Common Stock at the respective
conversion prices determined in accordance with Alliance's Certificate of
Incorporation, as amended, or as determined by the board of directors of
Alliance, (b) agrees that the Stockholder shall execute and deliver any and all
documents necessary to confirm Stockholder's agreement herein to effect the
conversion of such shares of Alliance Preferred Stock and (c) acknowledges that
pursuant to this Section 8, the Stockholder shall be deemed to have irrevocably
delivered its written consent authorizing and approving (and to otherwise have
voted in favor of) the conversion of all outstanding shares of Alliance
Preferred Stock pursuant to Alliance's Certificate of Incorporation, as amended,
or as determined by the board of directors of Alliance.
8. Specific Performance. The Stockholder hereto acknowledges that it will
be impossible to measure in money the damages to Liquid if the Stockholder fails
to comply with any of the obligations imposed by this Agreement and that, in the
event of any such failure, Liquid will not have an adequate remedy at law or
damages. Accordingly, the Stockholder hereto agrees that injunctive relief or
other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that Liquid has an adequate remedy at law.
9. Entire Agreement, Amendment, Waiver. This Agreement (including the
exhibits hereto) supersedes all prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter hereof. This
Agreement may not be amended, supplemented or modified, and no provisions hereof
may be modified or waived, except by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party shall be deemed
a waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
10. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by fax
or like transmission and on the next business day when sent by Federal Express,
Express Mail or other reputable overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to Liquid:
Liquid Audio, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
With copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Xxx Xxxxxx, Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Stockholder, to the address or fax number set forth for on the
signature page hereof, or to such other addresses as may be designated in
writing by the party to receive such notice as provided above.
11. Miscellaneous.
(a) Governing Law. This agreement and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with and
subject to the laws of the State of Delaware, without reference to conflicts of
laws principles.
(b) Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11(b).
(c) Severability. In the event that any provision of the Agreement
is held to be illegal, invalid or unenforceable in a final, unappealable order
or judgment (each such provision, an "invalid provision"), then such invalid
provision shall be severed from this Agreement and shall be inoperative and the
parties promptly shall negotiate in good faith a lawful, valid and enforceable
provision that is as similar to the invalid provision as may be possible and
that preserves the original intentions and economic positions of the parties as
set forth herein to the maximum extent feasible, while the remaining provisions
of this Agreement shall remain binding on the parties hereto.
Without limiting the generality of the foregoing sentence, in the event a change
in any applicable law, rule or regulation makes it unlawful for a party to
comply with any of its obligations hereunder, the parties shall negotiate in
good faith a modification to such obligation to the extent necessary to comply
with such law, rule or regulation that is as similar in terms to the original
obligation as may be possible while preserving the original intentions and
economic positions of the parties as set forth herein to the maximum extent
feasible.
(d) Counterpart. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(e) Termination. This Agreement shall terminate upon the earlier
to occur of (i) the Effective Time and (ii) the date of the termination of the
Merger Agreement pursuant to Article VII of the Merger Agreement (the
"Termination Date").
(f) Headings, Recitals. All Section headings and the recitals
herein are for convenience of reference only and are not part of this Agreement,
and no construction or reference shall be derived therefrom.
(g) Third Party Beneficiaries. Nothing in this agreement, express
or implied, is intended to confer upon any third party any rights or remedies of
any nature whatsoever under or by reason of this agreement.
EXECUTED as of the date first set forth above.
LIQUID AUDIO, INC.
By:
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Name:
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Title:
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AEC ASSOCIATES LLC,
a Delaware limited liability company
By: ___________________________________
Name: _________________________________
Title: ________________________________
Address:
________________________________________
________________________________________
EXHIBIT A
Shares of Alliance A-1 Preferred Stock: 18,000*
Shares of Alliance A-2 Preferred Stock: 21,747*
Shares of Alliance B Preferred Stock: 4,467,256*
Shares of Alliance Common Stock: 45,811,560
*excluding any accrued dividends or preferences
Pursuant to a capital call by Alliance, the Stockholder may purchase
approximately $3.6 million worth of additional shares of Alliance's Series B
Preferred Stock pursuant to its existing capital commitment in connection with
the Alliance Series B Rights Offering.
Stockholder Agreements
Digital Stockholders Agreement, between Alliance, the Stockholder and certain
other stockholders of Alliance, including certain former stockholders of Digital
On-Demand, Inc.
Institutional Stockholders Agreement, between Alliance, the Stockholder and
certain other stockholders of Alliance, including certain financial
institutions.
Strategic Stockholders Agreement, between Alliance, the Stockholder and certain
other stockholders of Alliance, including certain of the major labels and other
content providers.
