UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
ALLIANCE ENTERTAINMENT CORP.
(Name of Issuer)
Common Stock, Par Value, $.0001 per share
(Title of Class of Securities)
018593103
(CUSIP Number)
Joseph J. Bianco
Alliance Entertainment Corp., 110 East 59th Street, New York, New York 10022
(212) 935-6662
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 27, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / / .
<PAGE>
Schedule 13D
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CUSIP No. 018593103 Page 2 of 28 Pages
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1. NAME OF REPORTING PERSON - S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON.
Joseph J. Bianco
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b)/ X /
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH PERSON WITH
7. SOLE VOTING POWER
7,616,750
8. SHARED VOTING POWER
3,306,972
9. SOLE DISPOSITIVE POWER
4,455,226
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,250,388
12. CHECK BOX IF THE AGREEMENT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.95%
14. TYPE OF REPORTING PERSON*
IN
<PAGE>
AMENDMENT NO. 1 TO SCHEDULE 13D
This Amendment No. 1 to Schedule 13D amends and restates in its entirety
the Schedule 13D filed by Joseph J. Bianco with the Securities and Exchange
Commission on June 12, 1995.
Item 1. Security and Issuer.
This statement relates to shares of Common Stock, par value $.0001
per share (the "Common Stock"), of Alliance Entertainment Corp., a Delaware
corporation ("Alliance Entertainment" or the "Company"), which has its principal
executive offices at 110 East 59th Street, New York, New York 10022.
Item 2. Identity and Background.
(a) This amended statement is being filed by Joseph J. Bianco.
Mr. Bianco may be deemed to constitute a "group" for purposes of Section
13(d)(3) and Rule 13d-5(b) of the Exchange Act of 1934 (the "Act") with the
following entities: (i) Bain Capital Fund IV L.P. ("BCF-IV"), a Delaware limited
partnership; (ii) Bain Capital Fund IV-B L.P. ("BCF-IV-B"), a Delaware limited
partnership; (iii) BCIP Associates ("BCIP"), a Delaware partnership; and (iv)
BCIP Trust Associates, L.P. ("BCIPT"), a Delaware limited partnership. BCF-IV,
BCF-IV-B, BCIP, and BCIPT are hereinafter referred to as the "Bain Group," Mr.
Bianco may be deemed to constitute a "group" with the Bain Group by virtue of an
Amendment to Restated Stockholders Agreement among the Company, Mr. Bianco, the
Bain Group and certain stockholders of the Company. Joseph J. Bianco expressly
disclaims that they have agreed to act as a group other than as described in the
Amendment to Restated Stockholders Agreement. Furthermore, Mr. Bianco may be
deemed to constitute a "group" for purposes of Section 13(d)(3) and Rule
13d-5(b) of the Act with the following stockholders of the Company's Common
Stock: (1) Anil K. Narang; (2) Jerry Bassin; (3) Alan Shapiro; (4) Lawrence
Burstein; and (5) Barry Goldin (the "Stockholders") by virtue of a Restated
Stockholders Agreement among the Company, Mr. Bianco and the Stockholders. Mr.
Bianco expressly disclaims that they have agreed to act as a group other than as
set forth in the Restated Stockholders Agreement as amended by the Amendment to
Restated Stockholders Agreement.
On August 27,1996 Mr. Bianco sold 1,350,000 shares of Common
Stock to Wasserstein & Co., Inc. a Delaware corporation ("WCI") and U.S. Equity
Partners, L.P., a Delaware limited partnership ("USEP Delaware"), U.S. Equity
Partners (Offshore), L.P., a Cayman Islands limited partnership ("USEP Offshore"
and, together with USEP Delaware, "USEP") pursuant to a Stock Purchase Agreement
dated August 15, 1996 (which is attached as Exhibit 3 hereto) (the "Stock
Purchase Agreement"). In addition, pursuant to a Stock Acquisition and Merger
Agreement ("Merger Agreement") dated August 15, 1996, among WCI, Mr. Alvin N.
Teller, and other parties thereto, the Company acquired all of the outstanding
units of Red Ant Box Inc., a Delaware corporation ("Red Ant") from Alvin Teller
and WCI. In connection with the Merger Agreement and the Stock Purchase
Agreement, Messrs. Bianco, John Friedman, Peter Kaufmann, Elliot Newman, Robert
Marx and Alvin Teller, Bain Capital, Inc., BT Capital Partners, Inc., USEP and
WCI entered into Voting Agreement dated as of August 15, 1996, (the "Voting
Agreement"),
<PAGE>
attached as Exhibit 4 hereto, in their capacity as stockholders of the Company.
Although the Voting Agreement is limited in scope, Joseph J. Bianco and the
other parties to the Voting Agreement might be deemed to constitute a "group"
for purposes of Section 13(d)(3) and Rule 13d-5(b) of the Act. Mr. Bianco
expressly disclaims that they have agreed to act as a group with the other
parties to the Voting Agreement other than as described therein.
In connection with the Merger Agreement, Mr. Bianco resigned as Chairman of
the Board and Chief Executive Officer of the Company and Alvin Teller was
appointed Co-Chairman, President and Chief Executive Officer. Mr. Bianco serves
as the Company's other Co-Chairman.
(b) The address of the principal business and principal office
of Mr. Bianco is c/o Alliance Entertainment Corp., 110 East 59th Street, 18th
Floor, New York, New York 10022.
(c) Mr. Bianco's principal employment is as Co-Chairman and a
Director of the Company.
(d) During the last five years, Mr. Bianco has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, Mr. Bianco was not a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which he was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state security laws or finding any violation with respect to such
laws.
(f) Mr. Bianco is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
The sources of funds used to acquire the shares of Company Stock
beneficially owned by Mr. Bianco are as follows: (1) the 3,128,560 shares of
Common Stock currently owned by Mr. Bianco were acquired on November 30, 1993,
upon exchange in the merger of the Company with and into Trinity Capital
Opportunity Corp., or between November 1993 and April 1996 through open market
purchases and exercises of stock options granted by the Company's Compensation
Committee and paid for by personal funds and loans from the Company; (2)
1,326,666 options to purchase shares of Common Stock which are exercisable
within 60 days of August 27, 1996; (3) 7,795,162 shares owned and paid for by
the Stockholders and by the Bain Group which Mr. Bianco has beneficial ownership
pursuant to the Restated Stockholders Agreement as amended by the Amendment to
Restated Stockholders Agreement.
Item 4. Purpose of Transaction.
Mr. Bianco acquired the shares of Common Stock owned by him for his own
account for investment purposes. Mr. Bianco currently intends to retain
beneficial ownership of the shares of Common Stock that he currently holds. Mr.
Bianco may decide at any time to increase or decrease his holdings in the
Company's Common Stock based on, among other factors, the price and
<PAGE>
availability of shares of Common Stock, personal or other investment
requirements, general stock market or economic conditions, or tax
considerations, subject to certain agreements described in Item 6.
Except for plans or proposals formulated in his capacity as
Co-Chairman of the Company, Mr. Bianco has not formulated plans or proposals
which relate to or would result in: (a) the acquisition by any person of
additional securities of Alliance Entertainment, or the disposition of
securities of Alliance Entertainment; (b) an extraordinary corporate
transaction, such as merger, reorganization or liquidation, involving Alliance
Entertainment or any of its subsidiaries; (c) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (d) any change in
the present Board of Directors or management of Alliance Entertainment including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the Board; (e) any material change in the present
capitalization or dividend policy of Alliance Entertainment; (f) any material
change in the Company's business or corporate structure; (g) any material change
in Alliance Entertainment's Certificate of Incorporation or by-laws or other
actions which may impede the acquisition of control of Alliance Entertainment by
any other person; (h) causing a class of securities of Alliance Entertainment to
be delisted from a national securities exchange or to cease to association; (i)
causing a class of equity securities of Alliance Entertainment to become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Act; or (j) any action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) Mr. Bianco is the beneficial owner (as such term is defined
by Rule 13d-3 under the Act) of 12,250,388 shares of Common Stock representing
approximately 26.95% of the Company's Common Stock, which includes 1,326,666
shares of Common Stock issuable pursuant to options which are exercisable within
60 days after August 27, 1996.
(b) Mr. Bianco has (i) sole power to vote 7,616,750 shares of
Common Stock, which includes 3,128,560 shares actually owned by him and
4,488,190 shares owned by the Stockholders, but which excludes 1,326,666 shares
of Common Stock issuable pursuant to options which are exercisable within 60
days after August 27, 1996; (ii) shared power to vote 3,306,972 shares owned by
the Bain Group by virtue of the Amendment to Restated Stockholders Agreement;
and (iii) sole dispositive power to dispose of 4,455,226, shares which includes
3,128,560 shares of Common Stock actually owned by Mr. Bianco and 1,326,666
shares of Common Stock issuable pursuant to options held by Mr. Bianco which are
exercisable within 60 days after August 27, 1996. Mr. Bianco disclaims that he
either has sole or shared power to vote or to direct the vote or the disposition
of the 16,348,660 shares of Common Stock owned by the parties to the Voting
Agreement except that he shares power to vote 3,306,972 shares owned by the Bain
Group.
(c) Except for the transaction described in the second
paragraph of Item 2(a), Mr. Bianco has not effected a transaction in shares of
Common Stock during the past 60 days.
(d) Mr. Bianco has the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the 4,455,226 shares of
Common Stock which Mr. Bianco
<PAGE>
has sole dispositive power as described in Item 5(b). Otherwise, each holder of
shares of Common Stock has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, shares of Common
Stock beneficially owned by Mr. Bianco.
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities of the Issuer.
In connection with the purchase by BT Capital Partners, Inc. ("BT") and
BCI Growth, L.P. ("BCI") of 422,250 shares of the Company's Series A Preferred
Stock, Mr. Bianco entered into an Inducement Agreement dated July 16, 1996
(attached hereto as Exhibit 5), with BT and BCI, whereby Mr. Bianco agreed to
certain limitations on his ability to sell stock.
Mr. Bianco, together with Anil Narang, entered into a Right of First
Refusal Agreement dated as of August 15, 1996 with Alvin Teller, whereby Messrs.
Bianco and Narang agreed to give Alvin Teller a right of refusal on any bona
fide offer to transfer shares of the Common Stock to a third-party purchaser. A
copy of the Right of First Refusal Agreement is attached hereto as Exhibit 6.
Except as otherwise set forth in this statement and exhibits hereto,
there are no other contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 above regarding the
shares of Common Stock beneficially owned by Mr. Bianco.
Item 7. Material to be filed as Exhibits.
1. Restated Stockholders' Agreement dated November 30, 1993, among Alliance
Entertainment Corp. and the Stockholders.*
2. Amendment to Restated Stockholders Agreement dated May 18, 1995, among
Alliance Entertainment Corp. and the Stockholders.*
3. Stock Purchase Agreement dated as of August 15, 1996, among Wasserstein
& Co., Inc., U.S. Equity Partners, L.P., U.S. Equity Partners (Offshore), L.P.
and Joseph Bianco.
4. Voting Agreement dated as of August 15, 1996, among Joseph Bianco, John
Friedman, Peter Kaufmann, Elliot Newman, Robert Marx, Alvin Teller, Bain
Capital, Inc., BT Capital Partners, Inc., U.S. Equity Partners, L.P., U.S.
Equity Partners (Offshore), L.P. and Wasserstein & Co., Inc.
5. Inducement Agreement dated as of July 16, 1996, among Joseph Bianco, BT
Capital Partners, Inc., and BCI Growth, L.P.
6. Right of First Refusal Agreement dated as of August 15, 1996, among
Alvin Teller, Joseph Bianco and Anil Narang.
- -----------------------------------
* Previously Filed as an exhibit to Mr. Bianco's Schedule 13D filed June
12, 1995.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
September 20, 1996
By:/s/Joseph J. Bianco
-------------------
Joseph J. Bianco
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
1 Restated Stockholders' Agreement dated
November 30, 1993, among AEC and the
Stockholders.*
2 Amendment to Restated Stockholders
Agreement dated May 18, 1995 among AEC
and the Stockholders.*
3 Stock Purchase Agreement dated as of
August 15, 1996, among Wasserstein & Co.,
Inc., U.S. Equity Partners, L.P., U.S. Equity
Partners (Offshore), L.P. and Joseph
J. Bianco.
4 Voting Agreement dated as of August 15,
1996, among Joseph Bianco, John Friedman,
Peter Kaufmann, Elliot Newman, Robert
Marx, Alvin Teller, Bain Capital, Inc., BT
Capital Partners, Inc., U.S. Equity Partners,
L.P., U.S. Equity Partners (Offshore), L.P.
and Wasserstein & Co., Inc.
5 Inducement Agreement dated as of July 16,
1996, among Joseph Bianco, BT Capital
Partners, Inc., and BCI Growth, L.P.
6 Right of First Refusal Agreement dated as of
August 15, 1996, among Alvin Teller,
Joseph Bianco and Anil Narang.
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*Previously filed as an exhibit to Mr. Bianco's Schedule 13D
filed June 1, 1995.
Exhibit 3
STOCK PURCHASE AGREEMENT
between
WASSERSTEIN & CO., INC.,
U.S. EQUITY PARTNERS
and
JOSEPH J. BIANCO
Dated
August 15, 1996
<PAGE>
STOCK PURCHASE AGREEMENT
AGREEMENT, dated August 15, 1996, by and between WASSERSTEIN & CO.,
INC., a Delaware corporation ("WCI") and U.S. EQUITY PARTNERS, L.P., a Delaware
limited partnership ("USEP Delaware"), U.S. EQUITY PARTNERS (OFFSHORE), L.P., a
Cayman Islands limited partnership ("USEP Offshore" and together with USEP
Delaware, "USEP," and USEP and WCI are collectively referred to herein as the
"Buyers"), and JOSEPH J. BIANCO (the "Seller").
The Seller is the record and beneficial owner of 1,350,000 shares of
common stock, par value $.0001 per share (the "Common Stock"), of Alliance
Entertainment Corp., a Delaware corporation ("Company") (the "Shares"). The
Seller wishes to sell the Shares and the Buyers wish to purchase the Shares upon
the terms and subject to the conditions of this Agreement. Capitalized terms
used herein but not otherwise defined shall have the meanings given them in
Section 7.1 hereof.
Accordingly, the parties agree as follows:
1. Sale and Purchase of Shares.
1.1 Sale and Purchase of Shares. At the Closing (as hereinafter defined),
(i) the Seller shall sell,and the Buyers shall purchase, all of the Shares, free
of any Liens, (ii) the Seller shall deliver or cause to be delivered to the WCI
and USEP certificates representing 499,500 and 850,500, respectively, of the
Shares accompanied by stock powers duly executed in blank, in proper form for
transfer, and with all appropriate stock transfer tax stamps affixed, and (iii)
the Buyers shall deliver the Purchase Price (as hereinafter defined) to the
Seller.
1.2 Purchase Price. The aggregate purchase price for the
Shares (the "Purchase Price") shall be $6.00 per share (the "Closing Payment").
The Buyers shall pay the Closing Payment to the Seller, against receipt of the
Shares at the Closing, by a certified or official bank check, or cash by wire
transfer of immediately available funds.
2. Closing; Closing Date. The closing of the purchase and sale of
the Shares (the "Closing") shall take place simultaneously with the closing of
the transactions (the "Acquisition") contemplated by the Stock Acquisition and
Merger Agreement dated as of the date hereof (the "Acquisition Agreement") among
Company, Acquisition Sub, USEP, WCI, AT and AT Sub at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York 10005 or at such other
place and time as the parties may agree in writing (such time and date being
referred to herein as the "Closing Date"). The Closing shall be effective as of
the close of business on that date.
3. Representations and Warranties of Seller. The
Seller represents and warrants to the Buyers as follows:
3.1 Title to the Shares. As of the Closing Date, the Seller
shall own of record, free and clear of any Lien, the Shares, and, upon delivery
of and payment for such Shares as herein provided, the Seller will convey to the
Buyers good and valid title thereto, free and clear of any Lien.
<PAGE>
3.2 Authority to Execute and Perform Agreement. The Seller has
the full legal right, power and all authority required to enter into, execute
and deliver this Agreement and to perform fully the Seller's obligations
hereunder. This Agreement has been duly executed and delivered by the Seller and
(assuming the due authorization, execution and delivery hereof by the Buyers) is
a legal, valid and binding obligation of Seller enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
and to general equity principles (regardless of whether enforcement is sought in
a proceeding at law or in equity).
3.3 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 3 shall be true on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
4. Conditions Precedent to the Obligation of the Buyers to Close.
The obligation of the Buyers to enter into and complete the Closing is subject,
at the option of the Buyers, to the fulfillment on or prior to the Closing Date
of the following conditions, any one or more of which may be waived by it:
4.1 Representations and Warranties. The representations and
warranties of the Seller contained in this Agreement shall be true on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date.
4.2 No Orders. There shall be no Order of any
nature in effect that prevents the consummation of the
transactions contemplated hereby.
4.3 Tag-Along Rights. All tag-along or similar rights relating
to the Shares shall have been waived, expired or lapsed, and to the knowledge of
the Buyers and the Seller, no claim of tag-along or similar rights relating to
the Shares shall have been made.
4.4 Acquisition. The Acquisition shall be
consummated at the same time as the Closing.
5. Conditions Precedent to the Obligation of the
Seller to Close. The obligation of the Seller to enter into
<PAGE>
and complete the Closing is subject, at the option of the Seller, to the
fulfillment on or prior to the Closing Date of the condition, which may be
waived by the Seller, that the Acquisition shall be consummated at the same time
as the Closing.
6. Termination of Agreement.
This Agreement shall terminate prior to the Closing as
follows:
(i) upon the termination of the
Acquisition Agreement; or
(ii) at any time on or prior to the Closing
Date, by mutual written consent of the Seller and the Buyers.
7. Miscellaneous.
7.1 Certain Definitions. (a) As used in this
Agreement, the following terms have the following meanings:
(i) "Lien" means any lien, pledge,
mortgage, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.
(ii) "Order" means any order, judgment,
injunction, award, decision, determination, decree or writ.
(iii) "Person" means any individual,
corporation, partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
7.2 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mails, as follows:
(i) if to any of the Buyers, to:
31 West 52nd Street
New York, New York 10019
Attention: W. Townsend Ziebold
Facsimile: (212) 969-7879
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Peter Lyons, Esq.
Facsimile: (212) 848-7179
<PAGE>
(ii) if to the Seller, to:
Joseph J. Bianco
Alliance Entertainment Corp.
110 East 59th Street
New York, New York 10022
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Stephen A. Greene, Esq.
Facsimile: (212) 269-5420
Any party may by notice given in accordance with this Section to the other
parties designate another address or Person for receipt of notices hereunder.
7.3 Entire Agreement. This Agreement contains the entire
agreement among the parties with respect to the purchase of the Shares and
supersede all prior agreements, written or oral, with respect thereto.
7.4 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the Buyers and the Seller or, in the case
of a waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
7.5 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.
7.6 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and legal representatives. This Agreement is not assignable, except
that the Buyers may assign its rights hereunder to any of its affiliates.
7.7 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
7.8 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
7.9 Headings. The headings in this Agreement
are for reference only, and shall not affect the interpretation
of this Agreement.
<PAGE>
7.10 Severability of Provisions. If any provision or any
portion of any provision of this Agreement, or the application of any such
provision or any portion thereof to any Person or circumstance, shall be held
invalid or unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, and the application of such provision or
portion of such provision as is held invalid or unenforceable to Persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
WASSERSTEIN & CO., INC.
By:/s/ Vincent J. Capurso
----------------------
Name: Vincent J. Capurso
Title: Vice President
U.S. EQUITY PARTNERS, L.P.
by its general partner,
W.P. Management Partners, L.L.C.
By:/s/ Vincent J. Capurso
----------------------
Name: Vincent J. Capurso
Title: Vice President
U.S. EQUITY PARTNERS (OFFSHORE),
L.P. by its general partner,
W.P. Management Partners, L.L.C.
By:/s/Vincent J. Capurso
-----------------------
Name: Vincent J. Capurso
Title: Vice President
/s/Joseph J. Bianco
--------------------------
Joseph J. Bianco
Exhibit 4
VOTING AGREEMENT
Voting Agreement, dated as of August 15, 1996 (this "Agreement") among
Joseph Bianco, John Friedman, Peter Kaufmann, Elliot Newman, Robert Marx, Alvin
Teller, Bain Capital, Inc., BT Capital Partners, Inc., U.S. Equity Partners,
L.P., U.S. Equity Partners (Offshore), L.P., and Wasserstein & Co. Inc.
(individually a "Party", and collectively "Parties") which are or will become
record or beneficial owners of Common Stock, par value $.0001 per share ("Common
Stock") of Alliance Entertainment Corp., a Delaware corporation (the "Company").
WHEREAS, pursuant to a Stock Acquisition and Merger Agreement dated as of
August 15, 1996, among Alvin Teller ("AT"), Wasserstein & Co., Inc., ("WCI"),
U.S. Equity Partners, L.P. ("USEP Delaware"), U.S. Equity Partners (Offshore),
L.P. ("USEP Offshore" and, together with USEP Delaware, "USEP"), the Company and
the parties thereto (the "Acquisition Agreement"), AT, USEP, and WCI will
receive shares of Common Stock of the Company, and
WHEREAS, pursuant to Stock Purchase Agreements dated as of August 15,
1996, WCI and USEP will purchase from certain officers of the Company an
aggregate of 1,850,000 shares of Common Stock, and
WHEREAS, the Parties are the owners of, or by proxy or otherwise
exercise irrevocable voting control over shares of Common Stock of the Company
as set forth in Exhibit A hereto,
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the Parties hereby agree
as follows:
1. Voting of Shares by Parties. Each Party agrees to vote all of the shares
of Common Stock which are now or hereafter owned by such Party, beneficially or
of record, or which he or it is entitled to vote by proxy or otherwise,
including without limitation those shares identified on Exhibit A attached
hereto, at any special or annual meeting of the stockholders of the Company, or
by any written consent, whereat or whereby the same are considered for approval
by the stockholders of the Company, for (a) the approval of the conversion
rights of the Series A Convertible Preferred Stock issued to BT Capital
Partners, Inc. and BCI Growth IV, L.P. (the "Purchasers") pursuant to a
Preferred Stock Purchase Agreement dated July 16, 1996, as set forth in the
Certificate of Designations attached thereto, (b) the approval of the Company's
issuance of Common Stock pursuant to any Party's exercise of any such conversion
rights, (c) the approval of the Acquisition Agreement and the transactions
contemplated thereby, including the issuance of the contingent shares of Common
Stock as contemplated by Sections 1.9 and 2.4 thereof,
<PAGE>
and (d) the election of directors of the Company designated by WCI and AT
pursuant to Section 9.2 of the Acquisition Agreement, two (2) directors
designated by BT Capital Partners, Inc., one (1) director designated by Bain
Capital Inc. and the remainder of the directors designated by Joseph Bianco.
2. Changes in Common Stock. In the event that subsequent to the date of
this Agreement any shares or other securities (other than any shares or
securities of another corporation issued to the stockholders of the Company
pursuant to a plan of merger) are issued on, or in exchange for, any of the
shares of the Common Stock or Preferred Stock held by the Parties by reason of
any stock divided, stock split, consolidation of shares, reclassification, or
consolidation involving the Company, such shares or securities shall be deemed
to be Common Stock for purposes of this Agreement.
3. Representations of Parties. Each Party hereby represents and warrants
that (i) such Party owns and/or has the right to vote the number of shares of
the Common Stock set forth opposite his or its name on Exhibit A attached
hereto, (ii) such Party has full power to enter into this Agreement and has not,
prior to the date of this Agreement, executed or delivered any proxy or entered
into any other voting agreement or similar arrangement that would conflict with
the purposes or provisions of this Agreement, (iii) such Party will not take any
action inconsistent with the purposes and provisions of this Agreement and (iv)
this Agreement is a valid, binding and enforceable obligation of such Party.
4. Proxy. Joseph Bianco agrees to use his best efforts to cause each of the
signatories to the Restated and Amended Stockholders' Agreement dated as of
November 30, 1993, as amended on May 18, 1995 (the "Stockholders' Agreement"),
who granted an irrevocable proxy to Joseph Bianco with respect to the shares of
stock of the Company which they own, to grant an irrevocable proxy to Al Teller
with respect to the shares of stock of the Company which they own to the same
extent as set forth in the Stockholders' Agreement; provided, that such proxy
shall be effective only upon the death of Mr. Bianco. Mr. Bianco shall also use
his best efforts to cause such persons to agree that they shall not grant any
other proxy with respect to their shares of stock.
5. Enforceability. Each Party expressly agrees that this Agreement shall be
specifically enforceable in any court of competent jurisdiction in accordance
with its terms against each of the parties hereto.
6. Benefit. This Agreement shall be binding upon and inure to the benefit
of the respective parties hereto and their successors.
7. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within the State of New York.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first above written.
/s/Joseph Bianco
---------------------------
Joseph Bianco
/s/John Friedman
---------------------------
John Friedman
/s/Peter Kaufmann
---------------------------
Peter Kaufmann
/s/Robert Marx
---------------------------
Robert Marx
/s/Elliot Newman
---------------------------
Elliot Newman
/s/Alvin Teller
---------------------------
Alvin Teller
BAIN CAPITAL, INC.
/s/Robert Gay
---------------------------
By: Robert Gay
Title: Managing Director
BT CAPITAL PARTNERS, INC.
/s/Robert Marakovitz
---------------------------
By: Robert Marakovitz
Title: Managing Director
U.S. EQUITY PARTNERS, L.P.
by its general partner,
W.P. Management Partners, L.L.C.
/s/Vincent J. Capurso
---------------------------
By: Vincent J. Capurso
<PAGE>
Title: Vice President
U.S. EQUITY PARTNERS (OFFSHORE),
L.P. by its general partner,
W.P. Management Partners, L.L.C.
/s/Vincent J. Capurso
------------------------------
By: Vincent J. Capurso
Title: Vice President
WASSERSTEIN & CO., INC.
/s/Vincent J. Capurso
------------------------------
By: Vincent J. Capurso
Title: Vice President
<PAGE>
Exhibit A
Common Stock
Joseph Bianco 7,604,250
John Friedman 101,000
Peter Kaufmann 315,000
Robert Marx 60,000
Elliot Newman 112,000
Alvin Teller 760,823*
Bain Capital, Inc. 3,306,972
BT Capital Partners, Inc. 3,974,937
U.S. Equity Partners, L.P. 4,903,162*
Wasserstein & Co., Inc. 2,904,766*
- -------------------
* Shares to be acquired upon the closing of the Acquisition
Agreement.
EXHIBIT 5
INDUCEMENT AGREEMENT
July 16, 1996
BT Capital Partners, Inc.
130 Liberty Street, 25th Floor
New York, New York 10006
BCI Growth IV, L.P.
Glenpointe Centre West
Teaneck, New Jersey 07666-6883
Dear Sirs:
This is in connection with the Preferred Stock Purchase
Agreement dated as of the date hereof (the "PURCHASE AGREEMENT"), between
Alliance Entertainment Corp. (the "COMPANY") and the Purchasers named therein.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to them in the Purchase Agreement.
Pursuant to the Purchase Agreement, BT Capital Partners, Inc.
("BTC") and BCI Growth, L.P. ("BCI") propose to purchase from the Company an
aggregate of 422,500 shares of the Company's Series A Convertible Preferred
Stock, par value 0.01 per share ("PREFERRED STOCK"), for an aggregate purchase
price of Forty Two Million Two Hundred and Fifty Thousand Dollars. The Preferred
Stock is convertible into shares of the Company's Common Stock, par value 0.0001
per share ("COMMON STOCK").
The undersigned (the "MANAGEMENT STOCKHOLDER") is the Chairman
and Chief Executive Officer of the Company, and owns or has the right to acquire
under stock options at least 6,137,500 shares of its Common Stock. As a result,
the Management Stockholder will obtain a valuable benefit from BTC's investment
in the Preferred Stock. The Purchasers have informed the Management Stockholder
that they are not willing to make such
<PAGE>
Page 2
investment without the assurance that he will continue to have a substantial
economic stake in the Company.
In order to induce the Purchasers to purchase the Preferred
Stock, the Management Stockholder hereby agrees with the Purchasers as follows:
1. CONTINUED OWNERSHIP. The Management Stockholder
agrees with BTC that:
(a) Subject to paragraph 4(e) below, from and after the date
hereof the Management Stockholder will continue to own, beneficially and of
record, determined on a fully-diluted basis, taking into account options,
warrants and convertible securities held by him as though exercised or
converted, (i) until the Preferred Stock becomes convertible in accordance with
Section 4.1(a) of the Certificate of Designations, at least 6,138,000 shares of
Common Stock, and (ii) after the Preferred Stock becomes convertible in
accordance with Section 4.1(a) of the Certificate of Designations, at least
4,910,000 shares of Common Stock. The numbers of shares set forth in this
paragraph shall be appropriately adjusted to take into account stock dividends,
stock splits, recapitalizations, exchanges or reorganizations of the Company's
Common Stock.
(b) Notwithstanding the foregoing, the Management Stockholder
may (i) sell shares of Common Stock in an aggregate number sufficient to fund
the $600,000 exercise price of options exercised by him prior to the date hereof
in 1996, and (ii) transfer shares of Common Stock pursuant any final order or
decree of a court in any action or proceeding in which the Management
Stockholder is a party.
2. CO-SALE RIGHTS. The Management Stockholder agrees
with the Purchasers that:
(a) In the event that the Management Stockholder proposes to
transfer shares of Common Stock in any transaction or series of related
transactions in which Common Stock (or options therefor) having at least 50
percent of the voting power of all Common Stock outstanding is to be transferred
(a "SALE OF CONTROL"), then the Management Stockholder (or his
<PAGE>
Page 3
representative) shall deliver to each of the Purchasers a written notice (the
"SALE NOTICE") to such effect, containing a description of the proposed
transaction and the terms thereof. Upon delivery of the Sale Notice each
Purchaser shall have the right to require the Management Stockholder to arrange
for the sale to the proposed transferee(s) of a percentage of such Purchaser's
shares of Common Stock equal to the percentage of the Management Stockholder's
holdings of Common Stock (including options therefor) that the Management
Stockholder desires to sell or transfer to the transferee(s), on terms and
conditions at least as favorable to the Purchaser as the terms and conditions
set out in the Sale Notice.
(b) If the transferee(s) will not purchase all of the Common
Stock which the Management Stockholder and each Purchaser desire to sell or
transfer pursuant to this paragraph 2, then the number of shares which the
Management Stockholder and each Purchaser shall be permitted to sell or transfer
to such transferee(s) shall be the same proportion of the aggregate number of
shares to be sold or transferred as the shares held by the Management
Stockholder or the Purchaser bear to all shares held by the Management
Stockholder and all of the Purchasers desiring to participate in the sale or
transfer to the transferee(s). The sales or transfers by the Purchasers shall be
for the same consideration and otherwise on the same terms and conditions as
specified in the Sale Notice.
(c) Each Purchaser may exercise its right under this paragraph
2 by written notice to the Management Stockholder given within ten (10) days
after the date on which such Purchaser receives the Sale Notice.
3. VOTING FOR DIRECTORS.
(a) VOTING BY MANAGEMENT STOCKHOLDER. Subject to paragraph
4(e) below, at each meeting of the stockholders of the Company, and at such
other times as may be reasonably required, the Management Stockholder shall vote
all Shares of Common Stock held by him (or which he is otherwise entitled to
vote) for, and shall otherwise exert reasonable best efforts to cause (i) the
election of the directors of the Company designated by the Purchasers under
Section 4.4 of the Purchase Agreement, and (ii)
<PAGE>
Page 4
the approval of the conversion of Preferred Stock and the issuance of Common
Stock pursuant to any such conversion, as contemplated by Section 4.7 of the
Purchase Agreement.
(b) PURCHASERS' PROXIES. Each of the Purchasers, severally,
does hereby irrevocably constitute and appoint the Management Stockholder its
true and lawful attorney, with full right of substitution, in its name, place
and stead, to vote the Common Stock owned by such Purchaser or standing in its
name, as such Purchaser's proxy, for the election of directors at any annual or
special meeting of Stockholders of the Company, as fully and with like effect as
such Purchaser might or could have done if personally present, hereby ratifying
and confirming any vote that such attorney may cast for the election of
directors in such Purchaser's name, place or stead. Notwithstanding the
foregoing, within thirty (30) days after a Purchaser has been notified in
writing of any annual or special election of directors (such notice including an
accurate and complete identification of the directors to be elected), such
Purchaser may revoke this proxy, for purposes of such election, by giving
written notice of such revocation to the Management Stockholder. Except as
provided in the preceding sentence, this proxy, being coupled with an interest,
is irrevocable.
4. GENERAL PROVISIONS.
(a) SUCCESSORS AND ASSIGNS. The provisions of this
agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective personal representatives,
heirs, successors and assigns.
(b) EQUITABLE RELIEF. The parties agree that legal remedies
may be inadequate to enforce the provisions of this agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this agreement.
(c) GOVERNING LAW. This agreement shall be construed in
accordance with and governed by the laws of the State of New York, except to the
extent the general corporation law of the Company's state of incorporation is
required to govern.
<PAGE>
Page 5
(d) COUNTERPARTS. This agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
(e) TERMINATION. This agreement shall terminate at any time
agreed upon in writing by the Management Stockholder and the holders of a
majority of the shares of Preferred Stock held by the Purchasers, or if no
Preferred stock is outstanding, a majority of the Common Stock held by the
Purchasers. The obligations of the Management Stockholder under paragraph 1(a)
of this agreement shall terminate at such time as either (i) BTC holds fewer
than 2,900,000 shares of Common Stock (including for this purpose Conversion
Shares obtainable upon conversion of Preferred Stock held by it), or (ii) the
net proceeds of all sales of Common Stock by BTC completed after the date of
this agreement are, in the aggregate, $75,000,000 or more. The obligations of
the Management Stockholder under paragraph 3(a)(i) of this agreement shall
terminate at such time as the covenants contained in the Purchase Agreement
terminate pursuant to Section 8 of the Purchase Agreement.
Please confirm our agreement on these matters by signing a copy of this
letter in the space provided below.
Sincerely,
/s/Joseph J. Bianco
Joseph J. Bianco
ACKNOWLEDGED AND
AGREED:
BT CAPITAL PARTNERS, INC.
By:/s/ Robert Marakovits
Title:
BCI GROWTH IV, L.P.
By:/s/Stephen Eley
General Partner
Managing Member
RIGHT OF FIRST REFUSAL AGREEMENT
AGREEMENT dated as of August 15, 1996 by and among Alvin N. Teller ("Teller "),
an individual residing at 900 Stradella Road, Los Angeles, California 90077,
Joseph J. Bianco ('Bianco'), an individual residing at 23 West 12th Street, New
York, NY 10012 and Anil K. Narang ("Narang", and Narang and Bianco being
referred to herein as the "Stockholders"), an individual residing at 22575
Esplanada Circle West, Boca Raton, Florida 33433.
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, Bianco, Jerry Bassin, Alan Shapiro, Narang, R. Tobias Knobel, John
H. Friedman, Robert O. Marx, Elliot Newman, Alan Tuchman, Barry Goldin, Lawrence
Burstein, BT Capital Corporation, BCI Growth L.P., CIG & Co., The Chase
Manhattan Bank, N.A., Tucker Anthony Incorporated, PaineWebber Incorporated,
Bear Stearns & Co., Inc. and the other signatories thereto (collectively, the
'1993 Stockholders'), each of the parties thereto have 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 '); and
WHEREAS, pursuant to the Inducement Agreement dated July, 1996 among
Bianco, BT Capital Partners, Inc. ('BTC ') and BCI Growth IV, L.P. ('BCI'), each
of BTC and BCI have Co-Sale Rights in certain instances (BTC and BCI, together
with the 1993 Stockholders, being hereinafter referred to collectively as the
'Other Stockholders');
WHEREAS, in order to accomplish the foregoing, each of the Stockholders is
willing to provide Teller with a right of refusal on any bona bide 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"):
<PAGE>
(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.
(b) Teller 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 1.02(d), the Offeror shall
continue to hold the Offered Stock subject to all of the terms and conditions of
this Agreement.
3. Permitted Transfer. 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) pursuant to court order or marital settlement. In the event of any such
transfer under clauses (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 Bianco and
Narang 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, Bianco and Narang and their respective heirs, legal
representatives, successors and permitted assigns, and shall apply to any Stock
which may hereafter be acquired by the Stockholders.
<PAGE>
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, Bianco or Narang 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
been deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged (verbally or electronically), if telecopied; and the next business
day after timely delivery to the courier, if sent by commercial 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, is 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
/s/Alvin N. Teller
----------------------------------------------------
Alvin N. Teller
/s/Joseph J. Bianco
----------------------------------------------------
Joseph J. Bianco
/s/Anil K. Narang
----------------------------------------------------
Anil K. Narang
