SETTLEMENT AGREEMENT AND RELEASE
SETTLEMENT AGREEMENT AND RELEASE made as of the 10th day of
March, 1997 by and between ALLIANCE ENTERTAINMENT CORP., a Delaware corporation
(hereinafter referred to herein as "Alliance"), on the one hand, and XXXXX X.
XXXXXXX, XXXX XXXXXXXXXX and XXXXX XXXXX (hereinafter sometimes referred to
collectively as the "Shareholders"), on the other hand,
WHEREAS, Alliance and the Shareholders are parties to a merger
agreement dated as of September 1, 1995 (the "Merger Agreement") among Alliance,
One Way Acquisition, Inc., a New York corporation, One Way Records, Inc., a New
York corporation, and the Shareholders;
WHEREAS, pursuant to Section 2.2 of the Merger Agreement,
Alliance agreed to pay to the Shareholders certain additional consideration in
certain circumstances specified in the Merger Agreement (the "Additional One Way
Merger Consideration" as defined in Section 2.2 of the Merger Agreement), but a
dispute has arisen between Alliance and the Shareholders as to the amount, if
any, of Additional One Way Merger Consideration that is owed by Alliance to the
Shareholders; and
WHEREAS, after good faith negotiations between the parties with
respect to the amount, if any, of Additional One Way Merger Consideration that
is owed by Alliance to the Shareholders, the parties have agreed to settle the
amount due and payable under Section 2.2 of the Merger Agreement and provide for
payment to the Shareholders of the settlement amount, upon terms and conditions
set forth herein;
NOW THEREFORE, in consideration of the agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby covenant
and agree as follows:
1. Settlement
1.1 Delivery of Shares. The Shareholders agree that Alliance's
obligation to pay the Additional One Way Merger Consideration shall be fulfilled
to the Shareholders' full satisfaction by the transfer and delivery to the
Shareholders or their designees of 225,352 shares of Alliance Common Stock (the
"Settlement Shares") upon the execution and delivery of this Agreement. The
Settlement Shares shall be transferred and delivered to the individual
Shareholders or their designees in the amounts set forth in a letter of
instruction to Alliance signed by the Shareholders. Any such Shareholder
designees shall be considered to be third-party beneficiaries of this Settlement
Agreement and shall exchange appropriate releases with Alliance.
1.2 Issuance of Common Stock. Alliance represents and warrants
that the Settlement Shares of Alliance Common Stock which will be issued to the
Shareholders pursuant to this Agreement will be duly and validly issued and
fully paid and nonassessable, and good and valid title thereto shall be vested
in the Shareholders, free and clear of liens, encumbrances, claims and other
commitments. Alliance shall include such shares of Alliance Common Stock in the
next Registration Statement on Form S-3 filed by Alliance, and take such further
actions as are necessary to effect the registration of such shares of Alliance
Common Stock under the Securities Act of 1933, as amended, and under any
applicable state securities laws.
1.3 Restriction on Transfer. The Shareholders acknowledge that
the certificates representing the Settlement Shares shall bear the following
legend, and agree to abide by the terms thereof:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933. The shares
have been acquired for investment and may not be sold,
transferred of assigned in the absence of an effective
registration statement for these shares under the Securities
Act of 1933 or an opinion of the Corporation's counsel that
registration is not required under said Act."
1.4 Compliance with Securities Laws. Alliance represents and
warrants that the issuance to the Shareholders of the Settlement Shares of the
Alliance Common Stock, and the consummation of the transactions contemplated
hereby, are in compliance with all applicable federal and state securities laws.
2. Mutual Releases.
2.1 Upon the execution and delivery of this Agreement and
delivery of the Settlement Shares, each of the parties hereto: (a) individually
and for each of its direct and. indirect parent corporations, subsidiaries,
affiliates, directors, officers, employees, successors and assigns, forever
releases, remises, and discharges the other parties hereto and any of the other
parties' parent corporations, subsidiaries and affiliates, officers, directors,
shareholders, agents, employees, predecessors, successors, and assigns, from and
against any and all claims, demands, debts, damages, liabilities, costs and
expenses (including attorneys fees), actions, causes of action, suits, sums of
money accounts, covenants, agreements, contracts and promises in law or in
equity of every nature whatsoever, which the releasing party now has, has had or
at any time may have against the other parties (and/or against any of the other
parties' parent corporations, subsidiaries and affiliates, officers, directors,
shareholders, agents, employees, predecessors, successors and assigns) arising
out of, or in connection with Section 2.2 of the Merger Agreement, whether or
not they have been subject to dispute and whether or not known or unknown or
suspected or unsuspected, by reason of any matter, cause or thing whatsoever
from the beginning of the world to the date of these presents; and (b) hereby
covenants and agrees that he or it shall not initiate, institute, reinstitute,
maintain, prosecute or voluntarily aid in the initiation, institution,
reinstitution, maintenance or prosecution of, any action, claim, suit,
proceeding, arbitration or cause of action of any kind whatsoever, in any court,
administrative agency or other forum, against any person or entity released
pursuant to subsection 2.1(a) hereof, to recover damages, attorneys fees,
expenses of any type or any other losses allegedly sustained as a result of
Section 2.2 of the Merger Agreement or the transactions contemplated thereby.
2.2 The foregoing provisions shall not bar any claims arising
out of or relating to a breach of this Agreement.
3. No Admissions. This Agreement, and the payments and other consideration
delivered hereunder, are solely for the purpose of compromising and settling
disputed claims, and do not constitute any admission of liability or of the
truth or validity of any claims or assertions.
4. Notices. All notices given to the parties hereunder and all statements
and payments hereunder shall be addressed to the parties at the address set
forth below or at such other addresses as shall be designated in writing from
time to time:
If to the Shareholders or their designees: Xxxxx X. Xxxxxxx
One Way Records, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
P.O. Box 6429
Albany, New York 12206
with a copy to: Xxxx X. Xxxxxxxxxx, Esq.
Couch, White, Xxxxxxx, Xxxxxx
& Xxxxxxxxxx, LLP
000 Xxxxxxxx, Xxx 00000
Xxxxxx, Xxx Xxxx 00000-0000
If to Alliance: Alliance Entertainment Corp.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
with a copy to: Alliance Entertainment Corp.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
All notices shall be in writing and shall be personally delivered, or sent by
certified mail, return receipt requested, or by overnight mail service such as
Federal Express, all charges pre-paid. Except as otherwise provided herein, such
notices shall be deemed given upon personal delivery, five (5) days after
mailing or one (1) day after delivery to an overnight mail service, as
applicable, except that notices of change of address shall be effective only
after actual receipt thereof. The failure of the recipient to accept or receive
notice given by certified mail, return receipt requested, postage pre-paid, or
by overnight mail service does not affect the validity of the notice.
5. Authority. The parties hereto represent and warrant to each
other that they have the authority to enter into and perform this Agreement;
that they comprehend the effect of this Agreement; and that they have executed
this Agreement and consented to its contents under the exercise of their own
free will without the coercion, duress or undue influence or the part of any
person or entity.
6. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto relating to the subject matter hereof. No
modification, amendment, waiver, termination or discharge of this Agreement or
any of the terms or provisions hereof shall be binding upon either party unless
confirmed by a written instrument signed by the parties hereto. No waiver by any
party of any term or provision of this Agreement or any default hereunder shall
affect the parties' respective rights thereafter to enforce such term or
provision or to exercise any right or remedy in the event of any other default,
whether or not similar. Except as expressly modified herein, the Merger
Agreement shall remain in full force and effect and binding according to its
terms, and nothing in Section 2 hereof shall constitute a release of any party
or any obligation under the Merger Agreement beyond that which is expressly
stated in Section 2 hereof.
7. Governing Law. This Agreement shall be subject to and
interpreted under the laws of the State of New York without regard to the
conflict of laws provisions related thereto. If any provision of the Agreement
shall be held void, invalid or inoperative, no other provision of this Agreement
shall be affected as a result thereof, and accordingly, the remaining provisions
of this Agreement shall remain in full force and effect as though such void,
invalid or inoperative provisions had not been contained herein, provided that
the commercial purpose of this Agreement is not materially altered. The parties
hereby consent to the sole jurisdiction of the New York State or Federal counts
for the adjudication of any disputes hereunder.
8. Confidentiality. The parties acknowledge that the terms of this
Agreement and the circumstances giving rise thereto will remain of a
confidential nature. Accordingly, the parties agree that no information
pertaining to this Agreement or the circumstances giving rise thereto shall be
disclosed, except to their respective Settlement Share recipient designees and
to their respective attorneys, accountants and business advisors on a "need to
know" basis, or to the extent required by applicable law or legal process.
9. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
ALLIANCE ENTERTAINMENT CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name: Xxxxxxxxxxx X. Xxxxx
Title: Executive Vice President/General Counsel
XXXXX X. XXXXXXX
By: /s/ Xxxxx X. Xxxxxxx
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XXXX XXXXXXXXXX
By: /s/ Xxxx Xxxxxxxxxx
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XXXXX XXXXX
By: /s/ Xxxxx Xxxxx
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