EXPENSE ALLOCATION AGREEMENT
AGREEMENT entered into as of October 9, 1996, by and among PARADISE
MUSIC & ENTERTAINMENT, INC., a Delaware corporation (the "COMPANY"), ALL ACCESS
ENTERTAINMENT MANAGEMENT GROUP, INC., a New York corporation ("ALL ACCESS"),
XXXX XXXXXXX MUSIC, INC. d/b/a RAVE MUSIC GROUP, INC., a New York corporation
("RAVE"), PICTURE VISION, INC., a Tennessee corporation ("PICTURE VISION") and
XXXXXX XXXXX ("Xxxxx"). All Access, Rave and Picture Vision are collectively
referred to herein as the "ENTITIES."
W I T N E S S E T H:
WHEREAS, the Company is contemplating an Initial Public Offering of
its Common Stock, $.01 par value per share (the "IPO"); and
WHEREAS, the Company and the individuals who own all of the
outstanding capital stock of the Entities have entered into a certain Exchange
Agreement dated as of October 9, 1996 (the "EXCHANGE AGREEMENT"); and
WHEREAS, the Company, the Entities and Xxxxx wish to set forth the
terms and conditions of an agreement allocating among the Entities and Xxxxx
expenses to be incurred by the Company in connection with and related to the IPO
(the "EXPENSES") should the IPO not occur or should an Entity and/or Xxxxx
withdraw from the transactions contemplated by the Exchange Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. EXPENSE LIABILITY OF THE ENTITIES. (a) If (i) the IPO is not
consummated or (ii) one or more of the Entities withdraws from the transactions
contemplated by the Exchange Agreement, then the Entities, if the IPO does not
occur, or the Entity or Entities withdrawing, shall each be liable as follows:
Xxxxx shall be liable for 10% of the Expenses and Entities shall be liable for
30% of the Expenses (the "EXPENSE LIABILITY"); PROVIDED, HOWEVER, that the
Expense Liability for Xxxxx shall not exceed $25,000 and the Expense Liability
for each of the other Entities shall not exceed $41,666.67 per Entity.
(b) The Company represents, warrants and covenants that except to
the extent provided herein that it has given no investor in the Company's
private placement or any professional or other person, firm or entity performing
services to or for the Company (a "Professional") any representation or
commitment that any signatory hereto (or any officer, director, agent, or
shareholder thereof) shall be liable to any such investor or Professional for
any
obligation.
2. DURATION OF THE ENTITIES' LIABILITY. Each of the Entities
shall be liable for the Expense Liability actually incurred up to the sooner of
the date that such Entity is no longer involved in the transactions contemplated
by the Exchange Agreement or the date on which it is determined by the Company
that the IPO will not occur.
3. EXPENSE LIABILITY OF XXXXX. If (i) the IPO is not consummated
or (ii) Xxxxx withdraws from the transactions contemplated by the Exchange
Agreement, then Xxxxx'x liability with respect to the Expenses shall not exceed
$25,000.
4. DURATION OF XXXXX'X LIABILITY. Xxxxx shall be liable pursuant to
Section 3 above up to the sooner of the date that he is no longer involved in
the transactions contemplated by the Exchange Agreement or the date on which it
is determined by the Company that the IPO will not occur.
5. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
6. ENTIRE AGREEMENT. This agreement represents the entire agreement
between the Company and the Entities with respect to the subject matter hereof,
and any and all prior agreements relating to the allocation of expenses among
the Entities in connection with the IPO, written or oral, are nullified and
superseded hereby.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first above written.
PARADISE MUSIC & ENTERTAINMENT, INC.
By:
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Name:
Title:
ALL ACCESS ENTERTAINMENT MANAGEMENT
GROUP, INC.
By:
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Name:
Title
XXXX XXXXXXX MUSIC, INC.
By:
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Name:
Title:
PICTURE VISION, INC.
By:
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Name:
Title:
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Xxxxxx Xxxxx
