RIGHT OF FIRST REFUSAL AGREEMENT
AGREEMENT dated as of August 15, 1996 by and among Xxxxx X. Xxxxxx ("Teller"),
an individual residing at 000 Xxxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Xxxxxx X. Xxxxxx ("Xxxxxx"), an individual residing at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000, and Xxxx X. Xxxxxx ("Xxxxxx", and Xxxxxx and Xxxxxx being
referred to herein as the "Stockholders"), an individual residing at 00000
Xxxxxxxxx Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000.
WHEREAS, each of the Stockholders is the owner of substantial blocks of capital
stock (the "Stock") of Alliance Entertainment Corp., a Delaware corporation (the
"Company");
WHEREAS, Teller is to serve as the Chief Executive Officer of the Company and
will be the owner of a significant block of capital stock of the Company;
WHEREAS, Teller wishes to retain shares of capital stock of the
Company in the hands of the Company's management;
WHEREAS, pursuant to the Restated and Amended Stockholders Agreement, dated as
of November 30, 1993, as amended (the "Stockholders Agreement"), by and among
the Company, Xxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxx, X. Xxxxxx Xxxxxx, Xxxx
X. Xxxxxxxx, Xxxxxx X. Xxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxxx
Xxxxxxxx, BT Capital Corporation, BCI Growth L.P., CIG & Co., The Chase
Manhattan Bank, N.A., Xxxxxx Xxxxxxx Incorporated, PaineWebber Incorporated,
Bear Xxxxxxx & Co., Inc. and the other signatories thereto (collectively, the
"1993 Stockholders"), each of the parties thereto has the right in certain
instances, upon the disposition of Stock by another party thereto, of
transferring a portion of their Stock to the contemplated transferee ("Co-Sale
Rights");
WHEREAS, pursuant to the Inducement Agreement dated July, 1996 among Xxxxxx, XX
Capital Partners, Inc. ("BTC") and BCI Growth IV, L.P. ("BCI"), each of BTC and
BCI has Co-Sale Rights in certain instances (BTC and BCI, together with the 1993
Stockholders, being hereinafter referred to collectively as the "Other
Stockholders"); and
WHEREAS, in order to accomplish the foregoing, each of the Stockholders is
willing to provide Teller with a right of refusal on any bona fide offer to
transfer Stock to a third-party purchaser.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Restriction on Transfer of Stock. Except in accordance with Section 3 hereof,
each of the Stockholders agrees that he will not at any time or in any manner
sell, assign, convey, transfer, donate or otherwise dispose of, or pledge,
hypothecate or otherwise encumber, any Stock owned by him except in accordance
with this Agreement. As used herein, "Stock" shall include Common Stock issuable
upon the exercise of Options.
2. Right of Refusal on Disposition of Stock. If a Stockholder (the "Offeror")
shall at any time desire to sell, assign, transfer or otherwise dispose of any
or all of the Stock owned by him (the "Offered Stock") pursuant to the terms of
a bona fide cash offer received in writing from a third party (the "Proposed
Purchaser"):
a. The Offeror shall give written notice (the "Offer Notice") to Teller of his
desire to sell, assign, transfer or otherwise dispose of his Stock, which notice
shall (i) state the name and address of the Proposed Purchaser and (ii) the cash
purchase price and the other terms and conditions (if any) on which the Offeror
proposes to sell the Offered Stock to the Proposed Purchaser (the "Third Party
Terms"). The Offer Notice shall constitute an offer to sell to Teller all of the
Offered Stock, at the election of Teller, upon the Third Party Terms.
x. Xxxxxx shall have a period of ten (10) days after his receipt of the Offer
Notice within which to accept such offer by giving notice to such effect to the
Offeror within such period.
c. If Teller shall accept the offer made by the Offer Notice, then the Offeror
shall sell to Teller, and Teller shall purchase from the Offeror, the Offered
Stock upon the Third Party Terms. Upon purchasing the Offered Stock, Teller
shall also have the right to purchase, in accordance with the Stockholders
Agreement or Inducement Agreement (as applicable), any Stock offered for sale by
the Other Stockholders (and any other stockholders having Co-Sale Rights with
respect to such sale, transfer or disposition of Stock by the Offeror) on the
Third Party Terms.
d. If Teller shall not accept the offer made by the Offer Notice, then within
the ninety (90) day period after the giving of the Offer Notice, the Offeror
shall have the right to sell all, but not less than all, of the Offered Stock to
the Proposed Purchaser; provided, however, that any such sale shall be at the
price, upon the terms and in the manner set forth in the Offer Notice. If the
Offeror shall not so sell the Offered Stock to the Proposed Purchaser within the
ninety (90) day period specified in this Section 2(d), the Offeror shall
continue to hold the Offered Stock subject to all of the terms and conditions of
this Agreement.
3. Permitted Transfers. Notwithstanding anything herein to the contrary, the
provisions of Section 2 hereto shall not apply to: (a) any sale of Stock by a
Stockholder which represents less than 5% of the Stock owned by such Stockholder
as the date hereof, which sale is made in a public market transaction; (b) any
transfer of Stock by a Stockholder by gift or bequest or through inheritance to,
or for the benefit of, any member or members of his immediate family; (c) any
transfer of Stock by a Stockholder to a trust in respect of which he serves as
trustee, provided that the trust instrument governing said trust shall provide
that such Stockholder, as trustee, shall retain sole and exclusive control over
the voting and disposition of said Stock until the termination of this
Agreement; (d) any sale or transfer of Stock to the Company pursuant to the
terms of a stock restriction or stock repurchase agreement; (e) the pledge of
Stock pursuant to third party margin transactions with a bank or broker-dealer;
and (f) any transfer of Stock pursuant to a court order or marital settlement.
In the event of any such transfer under clause (b), (c) or (d), the transferee
of the Stock shall hold the Stock so acquired subject to the restrictions
imposed by this Agreement.
4. Stockholders Agreement. Teller's prior written consent shall be required to
terminate or amend Section 6 of the Stockholders Agreement, and Xxxxxx and
Xxxxxx shall not take any action to terminate or amend said Section 6 without
Teller's prior written consent.
5. Termination. This Agreement shall terminate at such time as Teller ceases to
serve as the Chief Executive Officer of the Company.
6. Assignments. This Agreement shall be binding upon and inure to the benefit of
Teller, Xxxxxx and Xxxxxx and
their respective heirs, legal representatives, successors and permitted assigns,
and shall apply to any Stock which may here after be acquired by the
Stockholders.
7. Notices. All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, first class mail (registered or
certified, return receipt requested), telecopy or commercial courier
guaranteeing next-day delivery, to Teller, Xxxxxx or Xxxxxx at his address set
forth in the preamble hereof, or at such other address as such party may have
furnished in writing to the other parties.
All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered; five business days after
having been deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged (verbally or electronically), if telecopied; and the next busi ness
day after timely delivery to the courier, if sent by com mercial courier
guaranteeing next-day delivery.
8. Entire Agreement; Amendment and Waiver. All prior or contemporaneous
agreements, contracts, promises, representations and statements, if any, among
the parties hereto, or their representatives, relating to the subject matter of
this Agreement are merged into this Agreement and this Agreement shall
constitute the entire agreement between them. This Agreement constitutes the
entire understanding among the parties. Any term of this Agreement may be
amended and the observance of any term hereof may be waived (either
prospectively or retroactively and either generally or in a particular instance)
only with the written consent of each party hereto.
9. Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed wholly therein.
11. Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, are held to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way
affected thereby.
---------------------
---------------------PB
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
/s/Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
/s/Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
/s/Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
