Exhibit 99.1
EXECUTION COPY
TERMINATION AND RELEASE AGREEMENT
TERMINATION AND RELEASE AGREEMENT dated as of November 8, 2002 (the
"Agreement") among Liquid Audio, Inc., a Delaware corporation ("Liquid Audio"),
April Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Liquid Audio ("Merger Sub"), and Alliance Entertainment Corp., a Delaware
corporation ("Alliance"). Liquid Audio, Merger Sub and Alliance are referred to
collectively herein as the "Parties".
RECITALS
WHEREAS, Alliance and Liquid Audio have previously entered
into a Confidentiality Agreement in October 2000, as amended in March 2002 (the
"Confidentiality Agreement");
WHEREAS, the Parties have entered into an Amended and Restated
Agreement and Plan of Merger dated as of June 12, 2002 and as amended and
restated as of July 14, 2002 (the "Merger Agreement");
WHEREAS, in connection with the Merger Agreement, AEC
Associates, LLC, a Delaware limited liability company, entered into a Voting
Agreement (the "Voting Agreement") with Liquid Audio;
WHEREAS, pursuant to Section 7.1(a) of the Merger Agreement,
the Parties have agreed to terminate the Merger Agreement.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the Parties, on their behalf and on behalf of their respective
companies, subsidiaries, parent companies, affiliated companies, directors,
officers, agents, employees, representatives, attorneys, predecessors,
successors and assigns (and any reference to a Party includes each of these
related persons and entities), agree as follows:
1. Termination. Pursuant to Section 7.1(a) of the Merger
Agreement, effective the date hereof, the Parties do hereby terminate the Merger
Agreement, and each Party does hereby relinquish any and all rights such Party
has had, now has, or may ever have under the Merger Agreement and agrees,
together with the other Parties thereto, that the Merger Agreement is void and
of no further force and effect. The Parties agree that the Voting Agreement is
hereby terminated in accordance with its terms as set forth in Section 11(e)
thereof and each Party does hereby relinquish any and all rights such Party has
had, now has, or may ever have under the Voting Agreement and agrees, together
with the other Parties thereto, that the Voting Agreement is void and of no
further force and effect.
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2. Payment to Alliance.
(a) Promptly, but in no event later than one business day
after the date of this Agreement, Liquid Audio shall pay to Alliance in
immediately available funds to the account designated by Alliance on Schedule A
hereto the amount of $2,100,000; and
(b) The Parties agree that the payment provided in Section
2(a) above is in full satisfaction and discharge of the obligations of Liquid
Audio under the Merger Agreement in respect of the termination fees thereunder
as well as all other Claims (as defined below) by Alliance against Liquid Audio
in respect of the Merger Agreement. "Claims" shall mean any and all charges,
complaints, claims for fees, compensation or reimbursements of any kind, claims,
liabilities, obligations, promises, agreements, controversies, damages, losses
(including lost profits and lost opportunities), actions, causes of action,
debts, suits, rights, demands and expenses (including any and all claims for
reasonable attorney fees and costs incurred) of any nature whatsoever.
3. Release.
(a) Effective the date hereof, Liquid Audio and Merger Sub,
and each of their respective successors and assigns, hereby agrees not to xxx
and forever releases and discharges Alliance, each of Alliance's subsidiaries
and each of their respective successors and assigns (together with any present
and former officers, directors, advisors (including financial advisors),
employees, representatives and agents of each of the foregoing) from all Claims,
known or unknown, which each now has or hereafter can, shall or may have by
reason of any matter, cause or thing whatsoever relating to or arising out of
the Merger Agreement, the Voting Agreement or the agreements or instruments
ancillary thereto or the transactions contemplated thereby, or any action or
failure to act under the Merger Agreement, the Voting Agreement or in connection
therewith, or in connection with the events leading to the termination of the
Merger Agreement, the Voting Agreement and the transactions contemplated thereby
and the termination of the Merger Agreement and the Voting Agreement, excepting
only any claim, action, cause of action or suit arising out of an undertaking or
promise contained in this Agreement or the Confidentiality Agreement.
(b) Effective the date hereof, Alliance, and each of its respective
successors and assigns, hereby agrees not to xxx and forever releases and
discharges Liquid Audio and Merger Sub and each of their respective successors
and assigns (together with any present and former officers, directors, advisors
(including financial advisors), employees, representatives and agents of each of
the foregoing) from all Claims, known or unknown, which each now has or
hereafter can, shall or may have by reason of any matter, cause or thing
whatsoever relating to or arising out of the Merger Agreement, the Voting
Agreement or the agreements or instruments ancillary thereto or the transactions
contemplated thereby, or any action or failure to act under the Merger
Agreement, the Voting Agreement or in connection therewith, or in connection
with the events leading to the termination of the Merger Agreement, the Voting
Agreement and the transactions contemplated thereby and the termination of the
Merger Agreement and the Voting Agreement, excepting only any claim, action,
cause of action
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or suit arising out of an undertaking or promise contained in this Agreement or
the Confidentiality Agreement.
(c) Each of Liquid Audio, Merger Sub and Alliance represents
and warrants that it has not sold, assigned, transferred, conveyed or otherwise
disposed of any Claim, demand or cause of action or any part thereof relating to
any matter covered by this Section 3.
4. Authorization.
(a) Each of Liquid Audio and Merger Sub represents and
warrants to Alliance that it has all requisite corporate power and authority to
enter into this Agreement and to take the actions contemplated hereby. The
execution and delivery of this Agreement and the actions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Liquid Audio and Merger Sub. This Agreement has been duly executed and delivered
by Liquid Audio and Merger Sub and constitutes a valid and binding agreement of
Liquid Audio and Merger Sub, enforceable against them in accordance with its
terms.
(b) Alliance represents and warrants to Liquid Audio that it
has all requisite corporate power and authority to enter into this Agreement and
to take the actions contemplated hereby. The execution and delivery of this
Agreement and the actions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Alliance. This Agreement has been duly
executed and delivered by Alliance and constitutes a valid and binding agreement
of Alliance, enforceable against it in accordance with its terms.
5. Confidentiality. The Parties agree that the Confidentiality
Agreement shall remain in force in accordance with its terms.
6. Expenses and Fees. Liquid Audio and Merger Sub, on one hand, and
Alliance, on the other hand, shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
in any way relating to the Confidentiality Agreement or the Merger Agreement;
provided that the fees and expenses of the financial printer incurred in
connection with the preparation of the Registration Statement and the
Prospectus/Proxy Statement (each as defined in the Merger Agreement) shall be
paid separately by Alliance and Liquid Audio pursuant to the separate invoices
submitted or to be submitted to each of them by such financial printer, and that
neither Alliance nor Liquid Audio shall have any liability to the other for any
such invoiced fees and expenses.
7. Costs and Expense of Enforcement. This Agreement is and may be
pleaded as a full and complete defense against, and is and may be used as the
basis for an injunction against prosecution of any Claim which seeks recovery or
relief contrary to the terms of this Agreement. Should any Party retain counsel
for the purpose of restraining, enjoining, or otherwise preventing the breach
of, or enforcing, this Agreement, including without limitation the commencement
of any action or proceeding to enforce any provision of this Agreement or to
obtain (a) damages by reason of any alleged breach of any provision hereof, (b)
a declaration of the rights or obligations of any Party or (c) any other
judicial remedy in connection therewith, the prevailing Party shall be entitled,
in addition to such other relief as may be granted in such
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action or proceeding, whether at trial or an appeal, to be reimbursed by the
other Party for all costs and expenses incurred as a result thereof, including
without limitation reasonable attorneys' fees.
8. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF LIQUID AUDIO OR ALLIANCE IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
9. Admissions. Nothing herein shall constitute an admission or
concession of wrongdoing by any Party.
10. Complete Agreement. This Agreement constitutes the entire agreement
among the Parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the Parties
with respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall survive any termination of this Agreement.
11. No Modifications. This Agreement may not be modified, altered,
amended or changed, except by written agreement signed by the Parties hereto.
12. Binding Agreement. Subject to Section 13 hereof, this Agreement
shall inure to the benefit of, and shall be binding upon, the Parties hereto and
their respective successors and assigns.
13. Assignment. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties. Any purported assignment in violation of this shall be
void.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
15. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Party, it being understood that all
parties need not sign the same counterpart.
16. Third-Party Beneficiaries. This Agreement is not intended to confer
upon any other Person, other than the Parties hereto, any rights or remedies
hereunder.
17. Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the
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application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the Parties hereto. The
Parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
greatest extent possible, the economic, business and other purposes of such void
or unenforceable provision.
18. Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a Party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such Party, and the exercise by a Party of any one
remedy will not preclude the exercise of any other remedy. The Parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or agents in several counterparts as
of the date first written above.
LIQUID AUDIO, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
of Business Development
ALLIANCE ENTERTAINMENT CORP.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
(SIGNATURE PAGE CONTINUED)
APRIL ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
of Business Development
(SIGNATURE PAGE CONTINUED)