ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of the
29th day of April, 1998, by and among BLACKSTONE ENTERTAINMENT, LLC, a
Massachusetts limited liability company (the "Seller"), the members of the
Seller listed on Schedule A hereto (the "Members"), for the specific limited
purposes set forth in this Agreement, DLC ACQUISITION CORP., a Delaware
corporation (the "Buyer"), and SFX ENTERTAINMENT, INC., a Delaware corporation
and corporate parent of the Buyer ("SFX").
WITNESSETH:
WHEREAS, the Seller is in the ticketing and concert production and
promotion business (the "Business"), which Business includes the operation of
the Great Xxxxx concert facility ("Great Xxxxx"), and the Harborlights concert
facility ("Harborlights");
WHEREAS, the Members own one hundred percent (100%) of the outstanding
membership interests in the Seller, in the respective percentages set forth
opposite each Member's name on Schedule B hereto; and
WHEREAS, the Buyer desires to purchase from the Seller, and the Seller
desires to sell to the Buyer, substantially all of the assets of the Seller,
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE.
1.1. Acquired Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing (as defined in Section 4.1 hereof), the Seller
shall sell, convey, assign, transfer and deliver to the Buyer, and the Buyer
shall purchase, acquire and take assignment and delivery of, all of the assets
of the Seller (other than the Excluded Assets specified in Section 1.2 hereof)
(all of which assets are hereinafter referred to collectively as the "Acquired
Assets").
1.2. Excluded Assets. Notwithstanding anything to the contrary set
forth in this Agreement, the Seller is not selling and the Buyer is not
purchasing pursuant to this Agreement, and the term "Acquired Assets" shall not
include, any of the following assets (collectively, the "Excluded Assets"):
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(a) any of the Seller's right, title and interest under that
certain lease of the office building located at 00 Xxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Cambridge Office Building"),
presently occupied by the Seller (the "Existing Cambridge Office
Lease"), which Existing Cambridge Office Lease will be terminated as
provided in Section 5.5 hereof;
(b) the Seller's beneficial interests in those certain nightclubs
located in Boston, Massachusetts and listed on Schedule 1.2(b) hereto;
provided, that the Buyer is satisfied at Closing that such nightclubs
will not compete in any material respect with the Buyer's efforts to
attract performing artists;
(c) the name "Blackstone";
(d) the name "Xxx Xxx Company" following the termination of the
Employment/Management Agreement (as defined in Section 5.1 hereof);
(e) the land and improvements located in Mansfield, Massachusetts
and more particularly described and denoted on Schedule 1.2(e) hereto,
which land and improvements have been designated for the so-called
"Great Waves" water park facility (the "Water Park");
(f) any Permits (as defined in Section 6.11 hereof) not
transferable by the Seller to the Buyer;
(g) any contracts or agreements designated on Schedule 6.16
hereto as not being material to the Business which the Seller is
unable to transfer to the Buyer at Closing (the "Excluded Contracts");
(h) if elected by the Buyer pursuant to Section 5.9 hereof, the
Seller's right, title and interest under that certain lease of the
Harborlights facility located in Boston, Massachusetts (the
"Harborlights Lease"), together with any and all other assets of the
Seller utilized exclusively with respect to the Harborlights Lease
(collectively, the "Harborlights Assets"); and
(i) the name "Great Waves."
2. ASSUMPTION OF OBLIGATIONS. At the Closing, the Buyer shall assume,
and agree to pay, perform, fulfill and discharge, all of the obligations and
liabilities of the Seller of any nature, fixed or contingent, known or unknown,
including, without limitation, all obligations and liabilities of the Seller
under the Employee Benefit Plans (as defined in Section 6.17 hereof), and under
all of the Seller's contracts and agreements which are not Excluded Contracts
(collectively, the "Assumed Obligations"), but which Assumed Obligations shall
specifically exclude
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any of the foregoing related to the Excluded Assets (it being agreed, however,
that such exclusion shall not apply to any of the foregoing obligations and
liabilities which shall exist as of the Closing Date related to the Excluded
Assets under Sections 1.2(a) and (g) hereof, and under Section 1.2(h) in the
event the Harborlights Assets are Excluded Assets, which obligations and
liabilities shall be included in the Assumed Obligations).
3. PURCHASE PRICE.
3.1. Purchase Price. The aggregate purchase price for the Acquired
Assets shall equal $80,000,000, subject to adjustment in accordance with
Section 3.3 hereof, plus the amount of the Assumed Obligations (the "Purchase
Price"). SFX shall cause the Purchase Price (other than the Assumed
Obligations) to be paid by the Buyer as follows: (a) $100,000 has been paid by
the Buyer as a non-refundable deposit ("Deposit") upon the execution of this
Agreement (which Deposit is non-refundable under all circumstances); (b) a
portion of the balance of the Purchase Price, in an amount not less than
$64,000,000 (plus the amount of any positive Net Working Capital Amount (as
defined in Section 3.3(b) hereof)), as determined by the Buyer within ten (10)
days prior to the Closing, shall be paid at the Closing by certified or bank
check or wire transfer pursuant to wire transfer instructions furnished by the
Seller (such portion being referred to herein as the "Cash Portion"); and (c)
in the event that the Buyer elects not to pay the entire Purchase Price in cash
as provided in clause (b) above (such portion not so paid being referred to
herein as the "Non-Cash Portion"), the Non-Cash Portion shall be paid by SFX's
delivering to the Seller, at the Closing, such number of unregistered shares of
SFX's Class A Common Stock, $.01 par value per share (the "Class A Stock") (the
certificates for which shall bear a usual and customary legend restricting
transfer under securities laws, and a legend denoting restrictions under the
Registration Rights Agreement (as defined in Section 5.4 hereof)), determined
as hereinafter provided. The number of shares of Class A Stock (the "Stock
Portion") shall equal the quotient obtained by dividing (i) the Non-Cash
Portion, by (ii) $30.0875 (the "Per Share Price"). Notwithstanding the
foregoing, the Purchase Price and the Cash Portion may be reduced in accordance
with Section 5.9 hereof.
3.2. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Acquired Assets in the manner mutually determined by the
Seller and the Buyer prior to the Closing; provided, that in all events, the
allocation of the Purchase Price shall be consistent (in a manner reasonably
acceptable to Mugar MLW LLC) with the valuations used to adjust the bases of
property under Sections 743(b) and 754 of the Internal Revenue Code of 1986, as
amended (the "Code"), upon the transfer of membership interests in the Seller
to Mugar MLW LLC in October 1997. At the Closing, the Buyer and the Seller
shall duly execute and deliver certificate setting forth the foregoing
allocation (the "Allocation Certificate"). The Buyer and the Seller shall
report the purchase and sale of the Acquired Assets, including,
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without limitation, in all federal, foreign, state, local and other tax returns
prepared and filed by or for either of the Buyer or the Seller, in accordance
with the basis set forth in the Allocation Certificate.
3.3. Adjustment to Purchase Price.
(a) If (i) the Net Working Capital Amount (as determined in
accordance with Section 3.3(b) hereof) is a negative number, the
Purchase Price payable at the Closing shall be reduced by the amount
thereof, and (ii) the Net Working Capital Amount is a positive number,
the Purchase Price payable at the Closing shall be increased by the
amount thereof. Any increase or decrease in the Purchase Price in
accordance with this Section 3.3 shall be made to the Cash Portion.
(b) Within ten (10) days prior to the Closing, the Seller shall
cause to be prepared and delivered to the Buyer (i) a pro forma
balance sheet of the Seller (the "Closing Balance Sheet") as of the
close of business on the Closing Date (referred to herein as the
"Calculation Date"), prepared in accordance with GAAP (as defined in
Section 11 hereof), and (ii) a certificate of the chief financial
officer of the Seller, certifying (A) that the Closing Balance Sheet
was prepared on the basis described in clause (i) above, and (B) the
amount of Net Working Capital (as defined in Section 11 hereof) of the
Seller as of the Calculation Date (the "Net Working Capital Amount").
The Buyer shall have five (5) days after its receipt of the Closing
Balance Sheet (the "Review Period") to review same and the Seller's
calculation of the Net Working Capital Amount, and to notify the
Seller of its agreement or disagreement with Seller's calculation of
the Net Working Capital Amount. If the Buyer does not notify the
Seller within the Review Period that it disagrees with all or any part
of the Seller's calculation of the Net Working Capital Amount, then
the Net Working Capital Amount so determined by the Seller shall be
deemed conclusive and binding upon the parties for all purposes of
this Agreement. If, however, the Buyer objects in a timely manner as
aforesaid, then the parties shall promptly endeavor to agree, within
the five (5) day period prior to the Closing (the "Resolution
Period"), on the disputed portion of the Net Working Capital Amount
(the "Disputed Amount"). If the Buyer and the Seller are unable during
the Resolution Period to agree on the Disputed Amount, then an amount
of cash equal to the Disputed Amount shall be deposited into escrow by
the Buyer pursuant to a mutually agreeable escrow agreement pending
resolution of the Disputed Amount as follows. Within ten (10) days
after the Closing, the Seller and the Buyer shall select a nationally
recognized independent accounting firm (other than the Seller's
independent accountants and the Buyer's independent accountants) to
resolve the Disputed Amount, which firm shall conclusively resolve the
Disputed Amount within thirty (30) days thereafter. Upon resolution of
the Disputed Amount by such accounting
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firm, the Disputed Amount shall either be retained by the Buyer or
remitted to the Seller, as appropriate. The fees and expenses of such
accounting firm shall be paid jointly by the Buyer and the Seller.
4. CLOSING.
4.1. Time and Place. The closing of the purchase and sale of the
Acquired Assets (the "Closing") shall be held at the offices of Xxxxxxx Xxxx
LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, at 10:00 a.m. on July 1, 1998,
or at such other time and place as the Buyer and the Seller may mutually agree,
subject to the provisions of Section 16 hereof; provided, however, that if as
of July 1, 1998 the Seller shall not have entered into a new lease for
Harborlights on terms and conditions acceptable to the Buyer, then, at the
Buyer's option, so long as all of the respective conditions to Closing of the
parties have been satisfied as of such date, the Closing may be extended to
August 1, 1998, in which case the Buyer shall make an election in accordance
with Section 5.9 hereof. The Closing shall be deemed to be effective for
purposes of this Agreement as of the close of business on the day immediately
preceding the date on which the Closing is actually held hereunder, which for
all purposes of this Agreement shall be deemed the "Closing Date."
4.2. Transactions at Closing. At the Closing:
(a) The Seller shall duly execute and deliver to the Buyer or its
nominee such deeds, certificates of title and other instruments of
assignment and transfer with respect to the Acquired Assets as the
Buyer may reasonably request and as may be necessary to vest in the
Buyer all of the Sellers' right, title and interest in and to the
Acquired Assets, free and clear of all liens and encumbrances except
for Permitted Encumbrances (as defined in Section 6.12 hereof).
(b) The Buyer shall, and SFX shall cause the Buyer to, deliver to
the Seller the Purchase Price (Cash Portion and, if applicable, Stock
Portion).
(c) The Buyer shall duly execute and deliver to the Seller such
instruments of assumption with respect to the Assumed Obligations as
the Seller may reasonably request.
(d) The Buyer and Xxxxxx X. Law, Jr. ("Law") shall duly execute
and deliver the Employment/Management Agreement (as defined in Section
5.1 hereof).
(e) SFX shall have granted Law the initial Option (as defined in
Section 5.2 hereof) pursuant to the Employment/Management Agreement.
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(f) SFX and Law shall duly execute and deliver the
Non-Competition Agreement (as defined in Section 5.3 hereof).
(g) If applicable, the Seller, the Members and SFX shall duly
execute and deliver the Registration Rights Agreement (as contemplated
by Section 5.4 hereof).
(h) The Buyer and the Cambridge Office Building Owner (as defined
in Section 5.5 hereof) shall duly execute and deliver the New
Cambridge Office Lease (as defined in Section 5.5 hereof).
(i) The Buyer and the Members shall duly execute and deliver the
Repurchase Agreement (as defined in Section 5.6 hereof).
(j) The Buyer and the Members shall duly execute and deliver the
Access Agreement (as defined in Section 5.8 hereof).
5. ANCILLARY MATTERS. At the Closing, the parties shall take (or cause
to be taken) the following actions:
5.1. Employment/Management Agreement. The Buyer, SFX and Law shall
enter into an employment/management agreement upon mutually agreeable terms and
conditions (the "Employment/Management Agreement"), but which shall
specifically include the terms and conditions set forth on Exhibit A hereto.
5.2. Stock Option. The Buyer shall grant to Law options (the
"Options") pursuant to the Employment/Management Agreement as set forth on
Exhibit A hereto.
5.3. Non-Competition Agreement. SFX and Law shall duly execute and
deliver a non-competition agreement upon mutually agreeable terms and
conditions (the "Non-Competition Agreement"), but which shall specifically
provide that (a) SFX shall restrict any of its and its Affiliates' employees
who are presently responsible for the day-to-day operation and/or day-to-day
management of the concert promotion business in the New York metropolitan area
(the "Key SFX Employees") from participating in the management of any Acquired
Assets utilized by the Buyer or SFX; (b) SFX and its Affiliates shall not sell
or transfer (whether by stock sale, merger or consolidation, sale of assets, or
otherwise) any of its assets in the states of Maine, Massachusetts and Rhode
Island (including the Acquired Assets) to any Key SFX Employees; and (c) in the
event that SFX or any of its Affiliates shall sell or transfer (whether by
stock sale, merger or consolidation sale of assets or otherwise) any of its
assets in the states of Maine, Massachusetts and Rhode Island (including the
Acquired Assets) to any third Person other than a Key SFX Employee, SFX shall
require, as a condition to any such sale or transfer, that the terms and
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conditions of such sale or transfer shall include a restriction prohibiting the
particular buyer (or any subsequent buyer) from selling or transferring any of
the purchased assets to any Key SFX Employee.
5.4. Registration Rights Agreement. In the event that there is a Stock
Portion comprising part of the Purchase Price, the Seller, the Members and SFX
shall duly execute and deliver a registration rights agreement with respect to
the shares of Class A Stock comprising the Stock Portion, upon mutually
agreeable terms and conditions (the "Registration Rights Agreement"), but which
shall specifically include the following: (a) a twelve (12) month lock-up
period (provided that nothing shall prohibit the Seller and the Members from
engaging in hedging and other derivative transactions or the like, or in other
transactions with Affiliates); (b) a single demand registration right; (c)
unlimited piggyback registration rights (which shall not be exercisable in the
event disposition of the Members' Class A Stock is available under Rule 144 and
145 of the 1933 Act (as defined in Section 7.7 hereof)); and (d) usual and
customary underwriting restrictions with respect to the foregoing demand and
piggyback registration rights.
5.5. New Cambridge Office Lease. The Buyer and the owner of the
Cambridge Office Building (the "Cambridge Office Building Owner") shall duly
execute and deliver a new lease for the Cambridge Office Building (the "New
Cambridge Office Lease") upon mutually agreeable terms and conditions
consistent in all material respects with those set forth in the Existing
Cambridge Office Lease, but which shall specifically include an initial five
(5) year term with rent in accordance with the Existing Cambridge Office Lease,
and a five (5) year renewal option with rent at the then fair market value. In
connection therewith, the Existing Cambridge Office Lease shall be terminated
effective as of the Closing Date.
5.6. Rights of First Offer and Refusal. The Buyer and the Members
shall duly execute and deliver an agreement granting the Members rights of
first offer and refusal ("Repurchase Rights"), for a period of two (2) years
after the Closing Date, with respect to any sale by the Buyer of any Acquired
Assets (whether by stock sale, merger or consolidation, sale of assets, or
otherwise), upon mutually agreeable terms and conditions (the "Repurchase
Agreement"), but which shall specifically include the following: (a) the right
of the Buyer to transfer Acquired Assets to its Affiliates; provided the
Acquired Assets so transferred remain subject to the Repurchase Rights; (b) the
right of the Buyer to transfer Acquired Assets to any Affiliate as part of an
initial public offering of the common stock of such Affiliate; and (c) if the
Members shall fail to execute their Repurchase Rights with respect to any
transfer of Acquired Assets, such Repurchase Rights with respect to such
transferred Acquired Assets shall terminate.
5.7. Access to Owners' Boxes and Tickets. From and after the Closing
Date, each of Xxxxx Xxxxx ("Xxxxx") and Xxxxxxx Xxxx ("Xxxx") shall have the
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continued rights, during the 1998, 1999 and 2000 Great Xxxxx and (so long as
the Harborlight Assets are not Excluded Assets) Harborlights concert seasons
(the "Seasons"), to utilize at no cost one (1) luxury box with eight (8) seats,
plus (subject to there being no objection by the particular performing artist)
eight (8) Section 2 row seats, during the Seasons for each concert or event (it
being agreed that Mugar shall receive luxury box #1 during the Seasons.) With
respect to Wolf, in the event a luxury box is not available, eight (8) Section
2 row seats may be substituted. In addition, each of Mugar and Wolf shall have
the right to purchase such number of additional tickets as shall be agreed by
the Buyer or SFX at the same sale price as to the public.
5.8. Access Agreement. The Buyer acknowledges and agrees that the
Seller has informed the Buyer of the intention of the Seller (or the Seller's
nominee or lessee) to construct the Water Park adjacent to Great Xxxxx. In
connection with such construction and as a condition to Closing, the Seller and
the Buyer shall execute and deliver an irrevocable reciprocal easement
agreement that is in form and substance reasonably satisfactory to the parties
hereto (the "Access Agreement") which (a) grants the Buyer parking and access
to the Water Park for no additional consideration (including, without
limitation, the parking presently existing on Lot 1 of the Plan), and the right
to modify or amend the zoning for Great Xxxxx provided such modification or
amendment does not materially adversely impact the use, operation and
maintenance (and necessary replacements) of the Water Park, (b) grants the
Seller (in consideration of the Seller's agreeing to consummate the
transactions contemplated under this Agreement) the right to draw water from a
well located on Great Xxxxx at "safe yield" rate, the right to pass utilities
reasonably required for the operation of the Water Park in a manner that would
not materially adversely impact the use, operation and maintenance (and
necessary replacements) of the Great Xxxxx amphitheater and related
improvements (as currently conducted), and (in consideration of an annual
payment of $200,000), provided the Seller as a condition thereto shall provide
the Buyer with an opinion of counsel that the Seller has obtained a final
special permit under applicable zoning allowing same, ingress and egress
through Great Xxxxx and parking and access to Great Xxxxx (subject to the
agreements set forth below), and (c) containing restrictive covenants relating
to the Water Park which shall provide (i) the use for which the Water Park
shall be used or occupied will be in material compliance with all applicable
laws and in a manner that will not materially adversely impact (or compete
with) the use, operation and maintenance (and necessary replacements) of the
Great Xxxxx amphitheater and related improvements (as currently conducted),
(ii) the hours of operation of the Water Park shall end at the later of (A)
4:00 p.m. (Boston time), and (B) one hour prior to the time that event parking
at Great Xxxxx is permitted under applicable laws, rules and regulations, and
(iii) the Seller will construct the Water Park in material compliance with all
applicable laws and in a manner that would not materially adversely impact the
use, operation and maintenance (and necessary replacements) of the Great Xxxxx
amphitheater and related improvements as
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currently conducted, and the Seller will use the well as co-permitee to the
extent a permit is necessary.
5.9. Harborlights Assets. At the Closing, the Buyer shall have the
option to either acquire and take assignment of the Harborlights Assets as the
same may exist on the Closing Date, in which event the Harborlights Assets
shall be included in the Acquired Assets, or (b) not acquire and take
assignment of the Harborlights assets as the same may exist on the Closing
Date, in which event the Harborlights Assets shall be deemed Excluded Assets,
the Purchase Price and the Cash Portion shall be reduced by $8,000,000, and the
Schedules and Exhibits hereto shall be deemed amended to delete any and all
references to the Harborlights Assets.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer as follows (which representations and warranties
shall be true and correct in all material respects as of the date of this
Agreement and at and as of the Closing Date):
6.1. Organization; Authority. The Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts. The Seller has the full power and authority
to own and hold the Acquired Assets owned or held by it, to conduct the
Business as such business is now conducted, and to execute and deliver this
Agreement and the other documents, instruments and agreements contemplated
hereby (collectively, the "Transaction Documents") to which it is a party, and
to consummate the transactions contemplated thereby. The Seller has delivered
to the Buyer a complete and correct copy of the Seller's operating agreement,
as amended to date (the "Operating Agreement").
6.2. Subsidiaries. Except as set forth on Schedule 6.2 hereto, the
Seller does not own or hold, of record and/or beneficially, any shares of any
class of the capital stock of any corporation or any legal and/or beneficial
interests in any partnerships, limited liability companies, business trusts or
joint ventures or in any unincorporated trade or business enterprises.
6.3. Corporate Approval; Binding Effect. The Seller has obtained (or
will have obtained as of the Closing) all necessary authorizations and
approvals from its governing body in accordance with the terms of the Operating
Agreement required for the execution and delivery by the Seller of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby. Each of the Transaction Documents to which
the Seller is a party has been duly executed and delivered by the Seller and
constitutes the legal, valid and binding obligation of the Seller, enforceable
against it in accordance with its terms, except to the extent such
enforceability may be limited by any applicable bankruptcy, reorganization,
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insolvency or other laws affecting or relating to creditors' rights generally
or by general principles of equity.
6.4. Non-Contravention. Neither the execution and delivery by the
Seller of the Transaction Documents to which the Seller is a party, nor the
consummation by the Seller of the transactions contemplated thereby, will
constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any lien, claim or
encumbrance upon any property of the Seller which would have a Material Adverse
Effect pursuant to, (a) the Operating Agreement, (b) except as disclosed on
Schedule 6.5 hereto, any material agreement or commitment to which the Seller
is a party or by which the Seller or any of its properties is bound or any of
such properties is subject or (c) subject to any required consents, approvals,
authorizations, registrations, qualifications or filings disclosed in Section
6.5 hereof, any statute or any judgment, decree, order, regulation or rule of
any court or governmental authority or third Person applicable to the Seller.
6.5. Consents and Approvals. Subject to the expiration of any waiting
period under the HSR Act, and except as disclosed on Schedule 6.5 hereto, no
consent, approval or authorization of, or registration, designation,
declaration, qualification or filing with, any governmental agency or authority
or third Person, is required for the execution and delivery by the Seller of
the Transaction Documents to which the Seller is a party, or for the
consummation by the Seller of the transactions contemplated thereby.
6.6. Financial Statements. The Seller has delivered to the Buyer the
Seller's unaudited financial statements for its fiscal year ended December 31,
1997 (the "Financial Statements"), copies of which are attached hereto as
Schedule 6.6. The Financial Statements have been prepared and reviewed in
accordance with GAAP; the balance sheet contained in the Financial Statements
fairly presents the financial condition of the Seller as of December 31, 1997;
and the statement of income and retained earnings contained in the Financial
Statements fairly presents the results of operations of the Seller for the
3-month period ended December 31, 1997.
6.7. Taxes. The Seller has duly filed with the appropriate government
agencies (including the timely filing of extensions) all of the income, sales,
use, employment and other tax returns and reports required to be filed by it.
No waiver of any statute of limitations relating to taxes has been executed or
given by the Seller. All taxes, assessments, fees and other governmental
charges upon the Seller or upon any of the properties, assets, revenues, income
and franchises which are currently owed by the Seller with respect to any
periods ending on or before the date hereof have been paid, other than those
currently payable without penalty or interest. To the Seller's knowledge, the
Seller has withheld and paid all taxes required to be withheld or paid in
connection with amounts paid or owing to any employee, creditor, independent
contractor or third party. No federal tax return of the Seller is currently
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under audit by the IRS (as defined in Section 11 hereof), and no other tax
return of the Seller is currently under audit by any other taxing authority.
Neither the IRS nor any other taxing authority is now asserting or, to the
Seller's knowledge, threatening to assert, against the Seller any deficiency or
claim for additional taxes or interest thereon or penalties in connection
therewith.
6.8. Recent Changes. Except as set forth on Schedule 6.8 hereto, since
December 31, 1997, there has not been:
(a) any Material Adverse Effect, whether or not arising in the
ordinary course of business;
(b) any event, occurrence, development, state or circumstances
which could reasonably be expected to materially adversely affect the
Buyer's ability to operate the Business with the Acquired Assets after
the Closing;
(c) any transactions, commitments, contracts or agreements
entered into by the Seller or any relinquishment by the Seller of any
contract or other right (other than contracts with respect to the
booking of performing artists in the ordinary course of business)
having a value of or involving annual payments in excess of $100,000
in the aggregate, or having a term of more than five (5) years;
(d) any increase in the compensation, bonus or other benefits
payable or to become payable by the Seller to any of its Members,
managers, officers or employees in excess of $25,000 per person;
(e) any entering into or granting by the Seller of any new
employment contracts (other than extensions of existing employment
contracts in the ordinary course of business), any new employee
benefit, deferred compensation or other similar employee benefit
arrangements, or any new consulting agreements, or any grant of any
severance or termination pay to any manager, officer or employee of
the Seller (other than in the ordinary course of business), or any
material increase in benefits payable under existing severance or
termination pay policies or employment contracts;
(f) any entering into material amendment or termination of any
agreements listed in the Schedules hereto, required to be listed in
such Schedules or any amendment of, or change in, the Operating
Agreement;
(g) any incurrence of any indebtedness, commitment to borrow
money or assumption or guarantee of any indebtedness for borrowed
money entered into by the Seller other than under existing lines of
credit as set forth on Schedule 6.16 hereto;
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(h) any change in any accounting method or practice followed by
the Seller;
(i) any granting or imposition of any lien or other encumbrance
on any of the Acquired Assets;
(j) any making of any loan, advance or capital contributions to
or investments in any Person by the Seller;
(k) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the Business or Acquired Assets
which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect; or
(l) any dispute or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Seller or
threats thereof by or with respect to any employees of the Seller.
6.9. Litigation. Except as set forth on Schedule 6.9 hereto, no
action, suit, proceeding or investigation is pending or, to the knowledge of
the Seller, threatened, against the Seller or relating to the Acquired Assets,
or which might have a Material Adverse Effect on the ability of the Seller to
enter into the Transaction Documents to which it is a party and consummate the
transactions contemplated thereby.
6.10. Conformity to Law. The Seller has complied with, and is in
compliance with, all laws, statutes and governmental regulations and all
judicial or administrative tribunal orders, judgments, writs, injunctions or
decrees applicable to the Business and the Acquired Assets (including, without
limitation, with respect to the Seller's ticket sales practices), except where
any or all failures of such compliance, either individually or in the
aggregate, would not have a Material Adverse Effect. Except as set forth on
Schedule 6.10 hereto, the Seller has not been charged with any violation of any
provision of any federal, state or local law or administrative regulation in
respect of the Business.
6.11. Licenses. Set forth on Schedule 6.11 hereto are all of the
licenses, authorizations, franchises, orders, approvals and permits
(collectively, "Permits") of any federal, state, local or foreign governmental
or regulatory body, including, but not limited to, licenses issued by OSHA or
otherwise relating to employment and environmental matters, that are material
to the conduct of the Business, or would, if not obtained by the Buyer, result
in a material liability to the Buyer. The Seller holds all Permits necessary to
operate the Business with the Acquired Assets as presently conducted and as
currently contemplated to be conducted, except where the failure to hold such
Permit would not have a Material Adverse Effect, and such Permits are in
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full force and effect. No material violations are or have been recorded with
any governmental or regulatory body in respect of any Permit, and no proceeding
is pending or, to the knowledge of the Seller, threatened, to revoke or limit
any Permit. Except as set forth on said Schedule 6.11, all of the Permits are
transferable to the Buyer.
6.12. Title to Acquired Assets. The Seller is the lawful owner of, and
has good and valid record and marketable title to, all of the Acquired Assets,
and has the full right to sell, convey, transfer, assign and deliver the
Acquired Assets, without the need to obtain the consent or approval of any
third party, except as disclosed on Schedule 6.12 hereto. Except for liens and
security interests described on said Schedule 6.12 (the "Permitted
Encumbrances," which term shall specifically be deemed to include any liens and
encumbrances disclosed in the title insurance policy (the "Title Policy")
relating to the Seller's real property, specifically the First American Title
Insurance Company Policy No. 20287494 dated October 1, 1997, Schedule B-1,
Items 2 through 6, and 8 through 23 (provided the Buyer shall be reasonably
satisfied with said liens and encumbrances after its due diligence
investigation pursuant to Section 9.8 hereof), and liens and encumbrances for
real estate taxes not yet due and payable), all of the Acquired Assets are free
and clear of any liens, encumbrances and security interests of any kind, or
restrictions against the transfer or assignment thereof. At and as of the
Closing, the Seller will convey the Acquired Assets to the Buyer by deeds,
bills of sale, certificates of title and other instruments of assignment and
transfer effective in each case to vest in the Buyer, and the Buyer will have,
good and clear title to all of the Acquired Assets, free and clear of all liens
and encumbrances of any nature, except the Permitted Encumbrances.
6.13. Hazardous Materials. Except in accordance in all material
respects with applicable law or except as set forth on Schedule 6.13 hereto,
the Seller has not used, treated, stored, disposed of, handled, discharged,
released or emitted into the environment any Hazardous Materials (as
hereinafter defined), nor contracted or otherwise arranged for any of the
foregoing, which has or may form the basis for any claim, demand, action or
liability, or which has or may give rise to any obligation to engage in or
compensate any party for, any investigation, cleanup, removal, remediation or
abatement of such substances on or in any property, structure, building,
equipment, soil, surface water, groundwater, sediments, ambient air or other
medium. To the Seller's knowledge, there are no and have been no underground
storage tanks at any property currently or formerly owned, leased, occupied or
used by the Seller, except as set forth in Schedule 6.13 hereto. For purposes
of this Agreement, the term "Hazardous Materials" shall mean and include any
(a) "hazardous waste" as defined in either the United States Resource
Conservation and Recovery Act or regulations adopted pursuant to said Act, (b)
"hazardous substances" or "hazardous materials" as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act, (c)
"hazardous material" or "oil" as defined in M.G.L. c. 21E, Sec. 2 and (d) any
waste, material or substance
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which is or contains asbestos, asbestos-containing materials, flammable
explosives, radioactive materials, ureaformaldehyde, polychlorinated
bi-phenyls, lead or petroleum products.
6.14. Condition of Real and Personal Property.
(a) The machinery, equipment, furniture, leasehold improvements,
fixtures, vehicles, structures, any related capitalized items and
other tangible property included in the Acquired Assets ("Tangible
Property"), are in good operating condition and repair, ordinary wear
and tear excepted, and are adequate, fit and suitable for the
particular purposes for which they are presently used, are performing
satisfactorily, and are available for immediate use in the conduct of
the Business. All such Tangible Property and the state of maintenance
thereof are in compliance in all material respects with all applicable
federal, state and local statutes, ordinances, rules and regulations.
(b) The real property owned by the Seller, and to the Seller's
knowledge, the real property leased by the Seller, is in compliance in
all material respects with all applicable federal, state and local
statutes, ordinances, rules and regulations; all buildings and
structures and, except for immaterial deviations, other improvements,
are located completely within the boundary lines of the real property;
and to the Seller's knowledge, no buildings, structures or other
improvements owned by others encroach onto or under such real
property. All improvements constructed on such real property and
building systems incorporated in such improvements, are structurally
sound and in good operating condition and repair, ordinary wear and
tear excepted.
6.15. Insurance. All insurance policies held by the Seller with
respect to the Acquired Assets and the Business are listed on Schedule 6.15
hereto (the "Insurance Policies") and are in full force and effect. Except as
set forth on said Schedule 6.15, there are no pending claims against the
Insurance Policies by the Seller as to which the insurers have denied liability
and, to the Seller's knowledge, with respect to which there is a reasonable
likelihood of a settlement or determination adverse to the Seller. Except as
set forth on said Schedule 6.15, (a) there exist no material claims under the
Insurance Policies that have not been properly filed by the Seller; (b) no
insurance company has refused to renew any material insurance policy of the
Seller during the past twelve (12) months; and (c) there have been no material
rate or premium increases or written notice of prospective changes therein on
general liability, property or directors and officers liability Insurance
Policies during the past twelve (12) months. Schedule 6.15 hereto also includes
a list of all agents utilized by the Seller with respect to each Insurance
Policy.
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6.16. Contracts. Schedule 6.16 hereto lists the following contracts
and other agreements to which the Seller is a party or to which the Seller is
subject:
(a) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect;
(b) any employment contract, oral or written, with any employee
or with any agent or consultant involving annual payments of over
$100,000;
(c) any plan, contract, practice, policy or arrangement, oral or
written, formal or informal, providing for bonuses, pensions, options,
deferred compensation, retirement payments, insurance, legal services
or medical or dental or hospitalization or disability benefits,
profit-sharing or the like involving annual payments of over or having
a value in excess of $100,000, or any non-competition agreement
requiring payment or performance by the Seller;
(d) any contract or agreement with or binding commitment to any
labor union;
(e) any lease of machinery, equipment or other personal property
involving payment by the Seller of annual rentals in excess of
$100,000 or any lease of real property involving payments by the
Seller of annual rentals in excess of $50,000;
(f) any contract relating to concessions, merchandise or
sponsorships involving payment by or to the Seller, individually or in
the aggregate, of more than $50,000;
(g) any contract for the purchase of equipment or other assets or
other contract or agreement not in the ordinary course of business or
involving any capital expenditure by the Seller of more than $50,000;
(h) any agreement or instrument evidencing or related to
indebtedness for borrowed money or to a leasing transaction required
to be capitalized in an amount in excess of $50,000 or pursuant to
which the Seller is obligated or entitled to borrow money or to enter
into such a leasing transaction;
(i) any license, franchise agreement or agreement in respect of
similar rights with third parties relating to any trade name,
trademark, copyright, patent or other intellectual property, either as
licensor or licensee or as franchisor or franchisee, which is material
to the conduct of the Business;
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(j) any joint venture contract or arrangement or any other
agreement involving a sharing of efforts or profits;
(k) any advertising, marketing, promotion, endorsement, sales
agency, bartering arrangement, brokerage or distribution contract
involving annual payments or having a value in excess of $100,000;
(l) any contract, arrangement or other agreement containing
provisions limiting the freedom of the Seller or Law to compete in any
line of business or with any Person;
(m) any contract or commitment regarding charitable
contributions;
(n) any guarantee of the obligations of any other Person
involving an absolute or contingent liability in excess of $100,000;
or
(o) any lease, option, occupancy agreement or arrangement or
other agreement granting any interests in, or any rights with respect
to, real property of the Seller.
The Seller has delivered to the Buyer a correct and complete copy of
each written agreement listed on Schedule 6.16 hereto (as amended to date), and
disclosed the terms and conditions of each oral agreement referred to on said
Schedule 6.16. Except as disclosed on said Schedule 6.16, to the knowledge of
the Seller, with respect to each such agreement: (i) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (ii) subject to
obtaining the necessary consents disclosed in Schedule 6.5 hereto, the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical material terms following the consummation of the
transactions contemplated hereby; (iii) no party is in material breach or
default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, material
modification or acceleration under the agreement; (iv) no party has repudiated
any material provisions of the agreement and (v) such agreement is not, when
considered singly or in the aggregate with others, unduly burdensome, onerous
or will have a Material Adverse Effect.
6.17. Employee Benefit Plans. Schedule 6.17 hereto sets forth a
complete list of all pension plans, deferred compensation arrangements,
supplemental income arrangements, vacation plans, severance pay policies and
other employee plans or arrangements (the "Employee Benefit Plans") of the
Seller. Except as set forth on said Schedule 6.17, each such Employee Benefit
Plan is in material compliance with the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and the Code. The Seller is not subject to any
liability under ERISA or the Code relating
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to any of the Employee Benefit Plans, except such liability that would not have
a Material Adverse Effect.
6.18. Trademarks, Patents, Etc. Schedule 6.18 hereto sets forth a list
of (a) all patents, trademarks, trade names and copyrights registered in the
name of the Seller and all applications therefor, and (b) all material written
agreements relating to technology, know-how and processes which the Seller has
licensed or authorized to use by others, or which the Seller has licensed or
authorized for use by others. Except to the extent set forth on said Schedule
6.18 the Seller owns or has permission to use all patents, trademarks, trade
names and copyrights material to, and used in the ordinary course of, the
operation of the Seller's Business as presently conducted. No claims are
pending against the Seller by any Person regarding the use of any such
trademarks, trade names, copyrights, technology, know-how or processes, or
challenging or questioning the validity or effectiveness of any such license or
agreement, which either individually or in the aggregate, would have a Material
Adverse Effect.
6.19. Absence of Undisclosed Liabilities. The Seller has no liability
required to be disclosed under GAAP (and, to the Seller's knowledge, there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against any of them giving
rise to any liability), except for (a) liabilities disclosed in the Financial
Statements or for which adequate reserves have been set aside, (b) operating
costs and expenses and general and administrative expenses which have arisen
after December 31, 1997 in the ordinary course of business and consistent with
past practices, (c) additional borrowings under lines of credit existing at
December 31, 1997 and other contracts and claims as disclosed on Schedule 6.16
hereto, and (d) liabilities disclosed on the Seller's Schedules to this
Agreement.
6.20. Labor Relations. The Seller is in compliance in all material
respects with all federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and
nondiscrimination in employment, except where any or all failures of such
compliance, either individually or in the aggregate, would not have a Material
Adverse Effect, and is not engaged in any unfair labor practice which would
have a Material Adverse Effect. There is no charge pending or, to the knowledge
of the Seller, threatened, against the Seller, alleging unlawful discrimination
in employment practices before any court or agency, and there is no charge of
or proceeding with regard to any unfair labor practice against the Seller
pending before the National Labor Relations Board. There is no labor strike,
dispute, slow-down or work stoppage actually pending or, to the knowledge of
the Seller, threatened, against or involving the Seller, other than disputes
with individual employees or as otherwise described on Schedule 6.20 hereto.
Except as set forth on said Schedule 6.20, none of the employees of the
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Seller is covered by any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by the Seller.
6.21. Brokers. The Seller has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
6.22. Affiliated Transactions. Except as set forth on Schedule 6.22
hereto, the Seller is not a party to or bound by any contract, commitment or
understanding with any of the Members, managers or officers of the Seller, or
any member of any such individual's family, and none of the Members, managers
or officers of the Seller, or any member of any such individual's family, owns
or otherwise has any rights to or interests in any Acquired Asset.
6.23. Accounts Receivable. The accounts receivable reflected on the
balance sheet contained in the Financial Statements (except those collected
since such date), and such additional accounts receivable as are reflected on
the books of the Seller as of date hereof, net of applicable reserves therefor,
represent obligations due to the Seller arising in the ordinary course of
business.
6.24. All Assets Necessary to Conduct Business. The Acquired Assets,
when utilized with a labor force substantially similar to that currently
utilized by the Seller, constitute all of the assets of the Seller which are
necessary to the conduct of Business (excluding the Excluded Assets).
6.25. Illegal Payments. None of the Seller and the Members who
previously owned the Acquired Assets has at any time during the past five (5)
years (a) made any unlawful contribution to any candidate for foreign office,
or failed to disclose fully any contribution in violation of law, or (b) made
any payment to any federal or state governmental officer or official, or other
person charged with similar public or quasipublic duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
6.26. Distributors, Customers, etc. The Seller's relations with each
of its distributors, customers, vendors, venues and suppliers, including,
without limitation, suppliers of concessions and merchandise, are good and no
material dispute with any such Person exists. To the knowledge of the Seller,
the Seller has not been threatened or notified, orally or in writing, by one or
more distributors, customers, vendors, venues or suppliers, that any such
Person intends to terminate or is considering terminating its business
relationship with the Seller. To the knowledge of the Seller, none of such
Persons is modifying its business relationship with the Seller in a manner
which is less favorable in any material respect to the Seller or the Business,
or has agreed not to or will agree not to do business with the Seller on and
after the Closing on such terms and subject to conditions at least as favorable
as
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provided to the Seller prior to the Closing, and the Seller has no knowledge
of any facts which would form the basis therefor.
6.27. Real and Leased Property.
(a) Set forth on Schedule 6.27(a) is a true complete and correct
list of all leases, subleases, licenses and/or other occupancy
agreements entered into by the Seller as lessee (individually, a
"Lease" and collectively, the "Leases") affecting the real property
described in such Schedule (all such property subject to a Lease is
referred to as the "Leased Real Property");
(b) Set forth on Schedule 6.27(b) is a true, complete and correct
list of all real property in which the Seller has an ownership
interest in fee title (collectively, the "Owned Real Property") (the
Owned Real Property and the Leased Real Property is sometimes
collectively referred to as the "Real Property");
(c) The Seller has not received any written notice of a pending
or contemplated annexation or condemnation or similar proceedings
affecting, or which may affect, all or any portion of the Owned Real
Property;
(d) All utilities reasonably required for the existing operation
of the Owned Real Property either enter the Owned Real Property
through adjoining public streets or, if they pass through adjoining
private land, do so in material compliance with valid public easements
or private easements; all of said public utilities are installed and
operating; and all installation and connection charges that are
currently due as payable have been or will be paid in full prior to
the Closing Date;
(e) The Seller has received no written notices of default from
any third party who shall be benefited by any covenant, restriction,
condition or agreement contained in any instrument affecting in any
material respect the Owned Real Property, and, to the Seller's
knowledge, there is no material violation of any such covenant,
restriction, condition or agreement;
(f) The Seller has not received any written notice from any
insurance company which has issued a policy with respect to the Real
Property or from any landlord of the Real Property requesting
performance of any structural or other material repairs or alterations
to the Real Property;
(g) The Seller is not a foreign person within the meaning of
Section 1445 of the Code. At the Closing, the parties shall deliver an
executed certificate in the applicable form set forth in Treasury
Regulation Section 1.1445-2(b)(2); and
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(h) The Seller has not received any written notice of any
pending, threatened or contemplated changes to any zoning, building or
similar law, ordinance, order or regulation which may materially
affect the maintenance, operation or use of the Real Property.
6.28. Accredited Investor. The Seller is an "accredited investor"
under Rule 501(a) of the 0000 Xxx.
6.29. Disclosure. Neither this Agreement, nor anything in writing
furnished to the Buyer by or on behalf of the Seller in connection with this
Agreement and the transactions contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact within the knowledge of the Seller which has not been disclosed
herein or in writing by it to the Buyer and which may, insofar as the Seller
can now foresee, have a Material Adverse Effect.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND SFX. The Buyer and
SFX, jointly and severally, represent and warrant to the Seller as follows
(which representations and warranties shall be true and correct in all material
respects as of the date of this Agreement and at and as of the Closing Date,
and as to representations and warranties applying to SFX, shall also apply to
its predecessor-in-interest):
7.1. Organization and Standing of Buyer. Each of the Buyer and SFX is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Buyer and SFX has the full power and
authority under its respective charter documents and By-laws and applicable
laws to own and hold all of its respective assets and properties, to conduct
its respective business as such business is now conducted, and to execute and
deliver the Transaction Documents to which it is a party and to consummate the
transactions contemplated thereby.
7.2. Corporate Approval; Binding Effect. Each of the Buyer and SFX has
obtained all necessary authorizations and approval from its respective Board of
Directors and stockholders required for the execution and delivery by each of
the Buyer and SFX, as the case may be, of the Transaction Documents to which
each is a party and the consummation of the transactions contemplated thereby.
Each of the Transaction Documents to which the Buyer and SFX , as the case may
be, is a party has been duly executed and delivered by such party and
constitutes the legal, valid and binding obligation of such party, enforceable
against it in accordance with its terms, except to the extent such
enforceability may be limited by any applicable bankruptcy, reorganization,
insolvency, or other laws affecting or relating to creditor's rights generally
or by general principles of equity.
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7.3. Non-Contravention. Neither the execution and delivery by the
Buyer and SFX of the Transaction Documents to which each is a party, nor the
consummation by the Buyer and SFX of the transactions contemplated thereby,
will constitute a violation of, or be in conflict with, or constitute or create
a default under, or result in the creation or imposition of any liens, claim or
encumbrances upon any of the respective property of the Buyer or SFX which
would have a Buyer Material Adverse Effect pursuant to (a) the respective
charter documents or By-laws of the Buyer and SFX, each as amended to date; (b)
any material agreement or commitment to which either of the Buyer or SFX is a
party or by which the Buyer or SFX or any of their respective properties is
bound or any of such properties is subject; or (c) subject to any required
consents, approvals, authorizations, registrations, qualifications of filings
disclosed in Section 7.5 hereof, any statute or any judgment, decree, order,
regulation or rule of any court or governmental authority applicable to the
Buyer or SFX.
7.4. Consents and Approvals. Subject to the expiration of any waiting
period under the HSR Act, and except as disclosed on Schedule 7.5 hereto, no
consent, approval or authorization of, or registration, designation,
declaration, qualification or filing with, any governmental agency or authority
or third Person, is required for the execution and delivery by the Buyer and
SFX of the Transaction Documents to which each is a party, or for the
consummation by the Buyer and SFX of the transactions contemplated thereby.
7.5. Class A Stock. The shares of Class A Stock to be issued to the
Seller, if and when issued to the Seller in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
non-assessable, and not subject to any options, warrants, preemptive rights of
other statutory or contract rights of any Person.
7.6. Litigation. No action, suit, proceeding or investigation is
pending or, to the knowledge of the Buyer and SFX, threatened, against the
Buyer or SFX, which might materially and adversely affect the ability of the
Buyer or SFX to enter into the Transaction Documents to which each is a party
and consummate the transactions contemplated thereby.
7.7. SEC Filings. SFX has made all filings (collectively, the "Public
Reports") with the Securities and Exchange Commission (the "SEC") that it has
been required to make under the Securities Act of 1933, as amended (the "1933
Act"), and the Securities Exchange Act of 1934 (the "1934 Act"). Each of the
Public Reports has complied with the 1933 Act and the 1934 Act, as applicable,
in all material respects. All registration statements ("Registration
Statements") filed, and presently intended to be filed, by SFX with the SEC,
have complied and will comply with the 1933 Act in all material respects. None
of the Public Reports or the Registration
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Statements, as the case may be, as of their respective dates, contained or will
contain any untrue statement of a material fact, or omitted or will omit to
state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were or are to be made, not
misleading.
7.8. Brokers. The Buyer has not retained, utilized or been represented
by any broker or finder in connection with the transactions contemplated by
this Agreement, except for Xxxxxxx Xxxxxxx as to whom the Buyer shall be solely
responsible for the payment of any brokerage fees owing on account of the
consummation of said transactions.
7.9. Disclosure. Neither this Agreement, nor anything in writing
furnished to the Seller by or on behalf of the Buyer or SFX in connection with
this Agreement and the transactions contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact within the knowledge of the Buyer or SFX which has not been
disclosed herein or in writing by them to the Seller and which may, insofar as
they can now foresee, materially adversely affect the business, assets,
prospects or financial condition of SFX.
8. CONDUCT OF BUSINESS PENDING CLOSING. The Seller covenants and
agrees that, from and after the date of this Agreement and until the Closing,
except as otherwise specifically consented to or approved by the Buyer in
writing:
8.1. Access. The Seller shall afford to the Buyer and its authorized
representatives access during normal business hours to all properties, books,
records, contracts and documents of the Seller, and an opportunity to make such
investigations as they shall reasonably desire to make of the Seller (provided
that such investigations shall be conducted so as to minimize any disruption to
the Business), and the Seller shall furnish or cause to be furnished to the
Buyer and its authorized representatives all such information with respect to
the Business and the Acquired Assets as the Buyer may reasonably request.
8.2. Carry on in Regular Course. The Seller shall maintain the
Acquired Assets in accordance with its historical maintenance practices and
conduct the Business only in the ordinary course and substantially in the same
manner as heretofore conducted.
8.3. Contracts and Commitments. The Seller shall not enter into any
contract or commitment, including, without limitation any employment contracts
(other than extensions of existing contracts in the ordinary course of
business), or engage in any transaction not contemplated by this Agreement or
not in the usual and ordinary course of business and consistent with its normal
business practices.
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8.4. Preservation of Organization. The Seller shall use its
commercially reasonable efforts to preserve its business organization intact
and to preserve for the Buyer the Seller's present relationships with its
suppliers and customers and others having business relations with the Seller.
8.5. Consents of Third Parties. The Seller shall use its commercially
reasonable efforts to obtain the consent to the assignment to the Buyer of all
contracts and agreements set forth on Schedule 6.16 hereto, and all leases of
real property utilized by the Seller.
8.6. Pay-Off Letters. The Seller shall use its commercially reasonable
efforts to obtain from any Persons having any liens or encumbrances on the
Acquired Assets payoff letters setting forth the total amount of indebtedness
of the Seller to be owing to such Persons as of the Closing Date, and
containing agreements from such Persons to release without liability Law and
Wolf from the Personal Guaranties (as defined in Section 17 hereof).
8.7. Water Park Operation. On or before May 15, 1998, the Seller shall
provide the Buyer with a general scheme of operation and maintenance of the
Water Park in reasonable detail to allow the Buyer to conduct its due diligence
review of same.
8.8. Registration of Land. The Seller shall use its commercially
reasonable efforts to cause its engineer or surveyor to complete a land court
level subdivision plan with respect to the division of the registered land
shown on the Plan, approval thereof by the land court engineer and the
subsequent filing thereof.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions (to the extent
noncompliance thereof is not waived in writing by the Buyer):
9.1. Representations and Warranties True at Closing. The
representations and warranties made by the Seller in or pursuant to this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given at and as of the Closing Date.
9.2. Compliance With Agreement. The Seller shall have performed and
complied with all of its obligations under this Agreement to be performed or
complied with by it on or prior to the Closing Date.
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9.3. Closing Certificate. The Seller shall have delivered to the Buyer
in writing, at and as of the Closing, a certificate from its chief executive
officer, in form and substance satisfactory to the Buyer, certifying that the
conditions in each of Sections 9.1 and 9.2 hereof have been satisfied.
9.4. No Material Adverse Change. There shall have been no change as of
the Closing Date, since December 31, 1997, in the Business or the Acquired
Assets which either individually or in the aggregate would have a Material
Adverse Effect.
9.5. No Restraining Order. No restraining order or injunction shall
prohibit the consummation of the transactions contemplated by this Agreement.
9.6. Opinion of Counsel. Xxxxxxx Xxxx LLP, special counsel to the
Seller, shall have delivered to the Buyer a written opinion, addressed to the
Buyer and dated the Closing Date, in form and substance satisfactory to the
Buyer.
9.7. Regulatory and Other Consents. Any applicable waiting period
under the HSR Act, including any extension, shall have expired, or shall have
been earlier terminated, and the Seller shall have obtained all necessary
governmental and other third party consents and approvals required with respect
to the Seller's consummation of the transaction contemplated under this
Agreement, in order to so consummate said transactions (including, without
limitation, with respect to the assignment to the Buyer of all contracts and
agreements set forth on Schedule 6.16 hereto, and all leases of real property
utilized by the Seller (which consents from Fine Host Corporation and Windsum
Limited Partnership shall contain usual and customary estoppel
representations), as the Buyer in its reasonable discretion deems material to
the Buyer's operation of the Business with the Acquired Assets).
9.8. Due Diligence. The Buyer shall have completed a due diligence
investigation, reasonably satisfactory to the Buyer, of the Acquired Assets and
the Business, including, without limitation, an environmental investigation by
outside consultants of the real property owned or leased by the Seller;
provided, however, that the condition set forth in this Section 9.8 shall be
deemed to be waived by the Buyer if the Buyer shall have not completed said due
diligence investigation on or before June 15, 1998.
9.9. Audited Financial Statements. The Buyer shall have received the
financial statements of the Seller for its 1997 fiscal year, audited by Ernst &
Young.
9.10. Opinion of Counsel Relating to Zoning. The Buyer shall have
received an opinion of the Seller's real estate counsel (a) that the existing
improvements on the Owned Real Property and the current use, operation and
maintenance thereof is in material compliance with all applicable zoning laws;
(b) the creation of the subdivision shown on the Plan does not adversely affect
any existing, legally
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established non-conformity of the Great Xxxxx amphitheater and related
improvements, or create any new non-conformity or otherwise cause the Owned
Real Property to fail to comply with applicable zoning; (c) upon the filing of
the subdivision plan and the conveyance of the Water Park parcel, Great Xxxxx
and the Water Park will constitute two (2) separate zoning lots; and (d) the
use of the existing parking on the Water Park parcel by the Buyer pursuant to
the easement granted under the Access Agreement will comply with applicable
zoning.
9.11. Title Insurance. At the Buyer's option, the Buyer at Closing
shall have received a title insurance policy for all Owned Real Property issued
in its favor containing exceptions only for Permitted Encumbrances.
9.12. Tax Apportionment and Subdivision Agreement. The Buyer and the
Seller shall have executed and delivered a Tax Apportionment and Subdivision
Agreement with respect to the allocation of real estate taxes and the
subdivision of Lot 1 and Lot 2 shown on the Plan as soon as reasonably
practicable, and other mutually agreeable terms and conditions which shall
provide, among other things, that the Seller shall pay all costs, fees and
expenses relating to the necessary tax lot subdivision.
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of
the Seller to consummate the Closing shall be subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (to the extent
noncompliance thereof is not waived in writing by the Seller):
10.1. Representations and Warranties True at Closing. The
representations and warranties made by the Buyer and SFX in or pursuant to this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given at and as of the Closing Date.
10.2. Compliance with Agreement. The Buyer and SFX shall have
performed and complied with all of their respective obligations under this
Agreement to be performed or complied with by them on or prior to the Closing
Date.
10.3. Officer's Certificates. Each of the Buyer and SFX shall have
delivered to the Seller in writing, at and as of the Closing, a certificate
from its chief executive officer, in form and substance satisfactory to the
Seller, to the effect that the conditions in each of Sections 10.1 and 10.2
hereof have been satisfied.
10.4. No Material Adverse Change. There shall have been no change as
of the Closing Date, since December 31, 1997, in the business or assets of SFX
which either individually or in the aggregate would have a Buyer Material
Adverse Effect.
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10.5. No Restraining Order. No restraining order or injunction shall
prohibit the consummation of the transactions contemplated by this Agreement.
10.6. Opinion of Counsel. General Counsel of SFX and the Buyer shall
have delivered to the Seller a written opinion, addressed to the Seller and
dated the Closing Date, in form and substance satisfactory to the Seller.
10.7. Regulatory and Other Consents. Any applicable waiting period
under the HSR Act, including any extension, shall have expired, or shall have
been earlier terminated, and the Buyer and SFX shall have obtained all
necessary governmental and other third party consents and approvals required
with respect to the Buyer's and SFX's consummation of the transaction
contemplated under this Agreement, in order to so consummate said transactions.
11. CERTAIN DEFINITIONS. As used herein the following terms not
otherwise defined have the following respective meanings:
"Affiliate": As applied to any specified Person, any other Person
controlling, controlled by or under common control with, such specified Person.
"Affiliate Debt": All indebtedness of the Seller to Law and Wolf
evidenced by those certain promissory notes, each dated September 30, 1997 and
each in the original principal amount of $750,000.
"Buyer Material Adverse Effect": A material adverse effect on, or
change in, the business, operations, assets or financial condition of the Buyer
or SFX, as the case may be.
"GAAP": Generally accepted accounting principles applied on a basis
consistent with the applicable Person's past practice over preceding periods.
"HSR Act": The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"IRS": The United States Internal Revenue Service.
"Material Adverse Effect": A material adverse effect on, or change in,
the business, operations, assets or financial condition of the Seller.
"Net Working Capital": As of any date, (a) the sum of (i) cash, (ii)
accounts receivable, (iii) prepaid expenses and (iv) any other current assets,
minus (b) the sum of (i) indebtedness for borrowed money (whether current or
funded, or secured or unsecured), including (A) any prepayment provisions
actually incurred on account of the sale of the Acquired Assets, (B)
obligations under capital leases in respect of
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which the Seller is liable as lessee, and (C) all Affiliate Debt, in excess of
$10,000,000 (ii) trade payables, (iii) accrued expenses and (iv) deferred
revenue from advanced ticket sales, all as determined in accordance with GAAP.
"Person": A corporation, a limited liability company, an association,
a partnership, an organization, a trust, a joint venture, a business or an
individual.
"Plan": That certain "Compiled" Plan of Land in Mansfield, Mass. dated
February 4, 1998, prepared by Xxxxxxx Engineers Co., Inc., a copy of which is
attached as Exhibit B hereto.
12. CERTAIN COVENANTS.
12.1. Confidential Information. The Seller and each of the Members on
the one hand, and the Buyer on the other hand, agrees that any and all
information disclosed by the Buyer to the Seller or the Members regarding the
Buyer, or by the Seller or the Members to the Buyer regarding the Seller and
the Members, as the case may be, as a result of the negotiations leading to the
execution of this Agreement, or in furtherance thereof, or disclosed by either
party(ies) in connection with any of the transactions contemplated hereby,
which information is of a proprietary nature, or was not already know, to the
foregoing parties, as the case may be ("Confidential Information"), shall
remain confidential by the Seller, the Members and the Buyer and their
respective employees, directors, officers, agents and representatives
(collectively, "Related Parties"). The Seller, the Members and the Buyer
further agree that each such Person will not, and will cause each of their
respective Related Parties to not, (a) use, or permit the use of, any
Confidential Information for any purpose other than to evaluate the
transactions contemplated hereby, or (b) disclose, or permit the disclosure of,
any Confidential Information (regarding the fact that discussions and
negotiations relating to the transactions contemplated hereby have been, or are
in the process of being, completed) to any Person, unless (i) in the opinion of
the Sellers or the Buyer, as the case may be, disclosure is required to be made
under the 1933 Act or the 1934 Act, and (ii) the nondisclosing party has been
consulted and been provided with prior written notice thereof. If the Closing
does not take place for any reason, each of the Seller, the Members and the
Buyer agrees not to further divulge or disclose or use for its benefit or
purposes any Confidential Information at any time in the future to be protected
hereby and shall include, but not be public. The information intended to be
protected hereby shall include, but not be limited to financial information,
customers, sales representatives, and anything else having an economic or
pecuniary benefit to the Buyer, the Seller or the Members, respectively.
Notwithstanding anything to the contrary set forth on this Section 12.1,
nothing herein shall prohibit any disclosure under Section 18.11 hereof in
strict accordance with the terms thereof.
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12.2. Non-Competition and Non-Solicitation. Each of the Seller and
each Member agrees that for a period from the Closing Date until the first
anniversary of the Closing Date, the Seller, each Member and such Member's
Affiliates shall not, without the prior written consent of the Buyer, (a)
engage anywhere in the United States, directly or indirectly, alone or as a
shareholder (other than as a holder of SFX capital stock or less than 5% of the
capital stock of any publicly-traded corporation), member, partner, manager,
officer, director, employee or consultant, in any business organization that is
engaged or become engaged in the Business, except for Law pursuant to and to
the extent set forth in the Employment/Management Agreement, (b) divert to any
competitor of the Seller or any Affiliate of any such competitor any customer
or sponsor of the Seller, or (c) solicit or encourage any employee of the
Seller to leave its employ for employment by or with any Member or any
competitor of the Seller or any of their Affiliates. If at any time the
provisions of this Section 12.2 shall be determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration or
scope of activity, this Section 12.2 shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court
or other body having jurisdiction over the matter; and the Seller and the
Members agree that this Section 12.2 as so amended shall be valid and binding
as though any invalid or unenforceable provisions had not been included
therein. Notwithstanding anything to the contrary under this Section 12, the
non-competition covenants imposed upon the Seller and the Members under this
Section 12 (i) shall terminate and be no longer applicable with respect to any
Acquired Assets repurchased by the Members under the Repurchase Agreement, and
(ii) shall not prohibit in any manner the Seller's (or its nominee's or
assignee's) operation of Harborlights and use and enjoyment of the Harborlights
Assets in the event the Harborlights Assets are Excluded Assets hereunder.
12.3. Equitable Remedies. It is recognized by the parties hereto that
damages for breaches of covenants of the nature contained in this Section 12
are difficult, if not impossible, to ascertain. Accordingly, it is agreed that
the covenants set forth in this Section 12 may be enforceable by any party
hereto by injunction, specific performance and/or equitable relief, in addition
to any other remedies available to such party at law or in equity.
13. HSR ACT. As promptly as practical, and in any event within ten
(10) business days following the date hereof, the Buyer (or SFX) and the Seller
will prepare and file, if required by law, with the United States Department of
Justice and the United States Federal Trade Commission, the Notification and
Report Form required to be filed by them under the HSR Act concerning the
transactions contemplated hereby, and hereby agree that they will promptly
comply with any request by the Department of Justice or the Federal Trade
Commission for additional documents or information so that the waiting period
specified in the HSR Act shall expire as soon as practicable after the
execution and delivery of this Agreement.
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14. EXCLUSIVE DEALING. The Seller and the Members hereby agree that
during the Exclusivity Period (as hereinafter defined), neither the Seller, the
Members nor any of their Related Parties or Affiliates, shall engage in any
negotiations with any Person, other than the Buyer and SFX, concerning the
purchase of all or any substantial portion of the membership interests in, or
assets of, the Seller. The "Exclusivity Period" shall be the period commencing
on the date hereof and ending on the earlier of the Closing Date or the date on
which this Agreement is terminated in accordance with the provisions hereof. In
addition, the Seller and the Members shall promptly notify SFX if the Seller
receives any written proposal, offer or other communication from any Person
with respect to any purchase of the Seller as aforesaid.
15. INDEMNIFICATION.
15.1. Indemnity by the Seller and the Members. Subject to the overall
limitations, the minimum amounts and the time limitations set forth in Section
15 hereof, the Seller and each Member agrees severally, and not jointly, to
indemnify and hold the Buyer harmless from and with respect to any and all
claims, liabilities, losses, damages, costs and expenses, including without
limitation, the fees and disbursements of counsel (collectively, "Damages"),
related to or arising directly or indirectly out of or with respect to (a) any
breach of any representation or warranty, covenant or obligation made by the
Seller or the Members in or pursuant to this Agreement (including the Schedules
and Exhibits hereto), and (b) the Excluded Assets. The amount of any Damages
recoverable under this Section 15.1 shall be calculated net of any insurance
proceeds, tax benefits or other third party recoveries received by the Buyer or
its Affiliates with respect thereto.
15.2. Indemnity by the Buyer and SFX. Subject to the overall
limitations, minimum amounts and time limitations set forth in Section 15
hereof, the Buyer and SFX, jointly and severally, agree to indemnify and hold
the Seller and the Members harmless from and with respect to any and all
Damages related to or arising directly or indirectly out of or with respect to
(a) any breach of any representation or warranty, covenant or obligation made
by the Buyer or SFX in or pursuant to this Agreement (including the Schedules
and Exhibits hereto), (b) the conduct of the Business or use of the Acquired
Assets from and after the Closing Date, and (c) the Assumed Obligations. The
amount of any Damage recoverable under this Section 15.2 shall be calculated
net of any insurance proceeds, tax benefits or other third party recoveries
received by the Seller or the Members with respect thereto.
15.3. Third Party Claims. In the event that any party seeking
indemnification hereunder (an "Indemnified Party") desires to make a claim
against the other party(ies) hereto (an "Indemnifying Party") under Section 15
hereof in connection with any action, suit, proceeding or demand at any time
instituted against or made
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upon the Indemnified Party by any third party for which the Indemnified Party
may seek indemnification hereunder (a "Third Party Claim"), the Indemnified
Party shall promptly notify the Indemnifying Party of such Third Party Claim
and of the Indemnified Party's claim of indemnification with respect thereto.
The Indemnifying Party shall have thirty (30) days after receipt of such notice
to notify the Indemnified Party if the Indemnifying Party has elected to assume
the defense of such Third Party Claim. If the Indemnifying Party elects to
assume the defense of such Third Party Claim, the Indemnifying Party shall be
entitled at its own expense to conduct and control the defense and settlement
of such Third Party Claim through counsel of its own choosing; provided, that
the Indemnified Party may participate in the defense of such Third Party Claim
with its own counsel at its own expense; and provided, further, that the
Indemnifying Party, if it shall have so assumed such defense, shall concede, as
between the Indemnifying Party and the Indemnified Party, liability to the
Indemnified Party with respect to such Third Party Claim. If the Indemnifying
Party fails to notify the Indemnified Party within thirty (30) days after
receipt of the Indemnified Party's notice of a Third Party Claim, the
Indemnified Party shall be entitled to assume the defense of such Third Party
Claim at the expense of the Indemnifying Party (so long as the Third Party
Claim is one with respect to which the Indemnifying Party is responsible under
this Section 15), provided that the Indemnified Party may not settle any Third
Party Claim without the Indemnifying Party's consent, which consent shall not
be unreasonably withheld or delayed.
15.4. Limitations on Indemnification.
(a) No Indemnifying Party shall be required to indemnify an
Indemnified Party hereunder except to the extent that the aggregate
amount of Damages for which the Indemnified Party is otherwise
entitled to indemnification pursuant to Section 15 hereof exceeds
$100,000 (the "Minimum Amount") (it being understood and agreed that
the Minimum Amount is intended as an aggregate deductible, and the
Seller and the Members collectively on the one hand, and the Buyer and
SFX collectively on the other hand, shall not be liable collectively
for the Minimum Amount of Damages for which the others are otherwise
entitled to indemnification). Notwithstanding the foregoing, (i) any
Damages suffered by the Buyer arising from any breach by the Seller of
the representation and warranty contained in Section 6.12 hereof, and
(ii) any Damages suffered by an Indemnified Party arising from any
breach by an Indemnifying Party of any covenant or obligation under
this Agreement (including, without limitation, the obligations of the
Buyer and SFX under Sections 15.2(b), 15.2(c) and 17 hereof, and the
obligations of the Seller and the Members under Section 15.1(b)
hereof), shall be indemnified in their entirety and shall not be
subject to the Minimum Amount deductible.
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(b) Subject to paragraphs (c) and (d) below, notwithstanding
anything to the contrary set forth in this Section 15, the aggregate
amount of Damages payable by the Seller and the Members pursuant to
Section 15 hereof with respect to all claims for indemnification shall
not exceed five percent (5%) of the entire Purchase Price paid to the
Seller, except with respect to claims relating to (i) any breach of
the representation and warranty contained in Section 6.12 hereof, and
(ii) the Excluded Assets, which shall be limited to the entire
Purchase Price paid to the Seller (as the same may be reduced by the
amount of any Damages paid by the Seller and the Members to the Buyer
under this Section 15), and shall not be subject to the limitations
set forth in this Section 15.4(b).
(c) Notwithstanding anything to the contrary set forth in this
Section 15, the maximum liability of any Member with respect to any
claim by the Buyer for Damages shall be such Member's Pro Rata Share
(as hereinafter defined) of the aggregate liability of the Seller and
all of the Members, as specifically provided in Section 15.4(b)
hereof, with respect to such claim. For purposes hereof, a Member's
"Pro Rata Share" shall be the percentage set forth opposite such
Member's name on Schedule B hereto.
(d) Notwithstanding anything to the contrary set forth in this
Section 15, no action or claim for Damages pursuant to this Section 15
shall be brought or asserted by an Indemnified Party against an
Indemnifying Party after the first anniversary of the Closing Date,
except for (i) any action or claim for Damages brought by the Buyer
against the Seller or the Members arising from or with respect to (A)
any breach of the representation and warranty contained in Section
6.12 hereof, and (B) the Excluded Assets, or (ii) any action or claim
for Damages brought by the Seller and/or the Members against the Buyer
or SFX arising from or with respect to (A) the Buyer's conduct of the
Business or use of the Acquired Assets from and after the Closing
Date, (B) the Assumed Obligations or (C) SFX's and the Buyer's
obligations under Section 17 hereof, all of which actions or claims
set forth in clauses (i) and (ii) above may be brought until the
expiration of the applicable statutes of limitation.
(e) All Damages paid by the Seller and the Members to the Buyer
under this Section 15 shall be payable, at the option of the Seller
and the Members, in cash and shares of Class A Stock pro rata in
accordance with the relative proportion of the Cash Portion to the
Stock Portion. For purposes hereof, each share of Class A Stock paid
to the Buyer by the Seller and the Members as aforesaid shall be
valued at the fair market value thereof as of the time the payment
thereof is finally determined to be owing to the Buyer under this
Section 15.
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15.5. Expiration of Representations and Warranties; Scope of Seller's
and Members' Liability. Each of the representations and warranties of the
parties contained in this Agreement shall survive until the last day on which
any action or claim for breach of such representation or warranty may be
brought or asserted pursuant to Section 15.4(d) hereof (the "Expiration Date").
The Buyer and SFX acknowledge and agree that the Buyer's and SFX's sole remedy
against the Seller and the Members for any matter arising out of the
transactions contemplated by this Agreement is set forth in Section 15.1 hereof
and that, except to the extent the Buyer has asserted a claim for
indemnification prior to the applicable Expiration Date, the Buyer and SFX
shall have not remedy against the Seller or the Members for any breach of a
representation or warranty, covenant or obligation made by them in this
Agreement. The Seller, the Members, the Buyer and SFX agree that the purpose of
this Section 15.5 is to make it clear that the Seller and the Members are to
have no liability whatsoever to the Buyer or SFX, except as set forth in
Section 15.1 hereof, and accordingly agree that this Section 15.5 is to be
construed broadly. The Buyer and SFX acknowledge that this Section 15.5 has
been negotiated fully by the Buyer, SFX, the Seller and the Members, and that
the Seller and the Members would not have entered into this Agreement but for
the inclusion of this Section 15.5.
16. RIGHT TO TERMINATE. In the event that the Closing does not occur
on or before July 1, 1998 (or August 1, 1998 in the event the Closing is
extended by the Buyer pursuant to Section 4.1 hereof), either the Seller on the
one hand, or the Buyer (or SFX) on the other hand, may terminate this Agreement
at any time after the close of business on such date by delivering written
notice to the other party, so long as such failure to close is not a result of
a breach by the terminating party of any of its obligations hereunder.
Notwithstanding the foregoing, in the event that all of the respective
conditions to Closing of the parties have been satisfied by July 1, 1998, but
the waiting period under the HSR Act (the "HSR Waiting Period") shall not have
expired or been earlier terminated, then the parties shall execute and deliver
all agreements, documents and instruments required to be executed and delivered
under this Agreement (which shall be undated and thereafter dated the actual
Closing Date), and shall hold all of such agreements, documents and instruments
in escrow under mutually agreeable terms and conditions, pending the expiration
of the HSR Waiting Period; provided, that if the HSR Waiting Period shall not
have expired as of September 15, 1998, the Seller and the Buyer shall
thereafter have the right to terminate this Agreement as hereinabove provided.
17. RELEASE OF PERSONAL GUARANTIES. SFX and the Buyer agree that they
will use their commercially reasonable efforts to cause, within sixty (60) days
after the Closing Date, each of Law and Wolf to be released with no liability
from any and all personal guaranties of the obligations of the Seller to which
they are parties (the "Personal Guaranties"). SFX and the Buyer, jointly and
severally, shall indemnify and hold harmless each of Law and Wolf from and
against any Damages suffered by Law and Wolf under or in respect of the
Personal Guaranties in the event
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that SFX and the Buyer are unable to cause Law and Wolf to be released from the
Personal Guaranties as aforesaid.
18. GENERAL
18.1. Expenses. All expenses of the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby,
including without limitation attorneys', accountants' and outside advisers'
fees and disbursements, shall be borne by (a) SFX if incurred for the account
of SFX or the Buyer, or (b) the Seller if incurred for the account of the
Seller or the Members. Notwithstanding the foregoing, the parties agree that
(i) SFX shall be responsible or all brokerage commissions owing to Xxxxxxx
Xxxxxxx, all real estate title costs and expenses, and all fees and expenses of
Ernst & Young, (ii) the Seller shall be responsible for all real estate
transfer taxes, and (iii) SFX and the Seller shall share equally all HSR Act
filing fees.
18.2. Notices. All notices, demands and other communications hereunder
shall be in writing or by written telecommunication, and shall be deemed to
have been duly given if delivered personally or if mailed by certified mail,
return receipt requested, postage prepaid, or if sent by overnight courier, or
sent by written telecommunication, as follows:
If to the Seller or the Members:
c/o Mugar Enterprises, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxx
with copies sent contemporaneously to:
Xxxxxx X. Xxxx, Esq.
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Xxxxxx Xxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
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If to SFX or the Buyer, to:
SFX Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Legal Department
with a copy sent contemporaneously to:
Xxxxxxx Xxxxxxxxx, Esq.
Xxxxx & XxXxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
18.3. Entire Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof, and shall not be amended
except by a written instrument hereafter signed by all of the parties hereto.
18.4. Governing Law. The validity and construction of this Agreement
shall be governed by the internal laws (and not the choice-of-law rules) of the
Commonwealth of Massachusetts.
18.5. Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other parties hereto.
18.6. Further Assurances. The Seller, the Buyer and SFX shall execute
and deliver to all appropriate other parties such other instruments as may be
reasonable required in connection with the performance of this Agreement and
each shall take all such further actions as may be reasonable required to carry
out the transactions contemplated by this Agreement.
18.7. No Implied Rights or Remedies. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any Person, other than the Seller, the
Members and the Buyer and SFX, and their respective equity holders, any rights
or remedies under or by reason of this Agreement.
-35-
18.8. Knowledge. Whenever the phrase "to the knowledge of the Seller,"
"to the knowledge of the Buyer," or another similar qualification, is used
herein, the relevant knowledge is limited solely to the actual knowledge of the
Seller or the Buyer, as the case may be.
18.9. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18.10. Satisfaction of Conditions Precedent. The Seller, the Buyer and
SFX will use their reasonable efforts in good faith to cause the satisfaction
of the conditions precedent contained in this Agreement; provided, however,
that nothing contained in this Section 18.10 shall obligate either party hereto
to waive any right or condition under this Agreement.
18.11. Public Statements or Releases. Except as other required by
applicable law, the parties hereto each agree that no party to this Agreement
will make, issue or release any public announcement, statement or
acknowledgment of the existence of, or reveal the status of, this Agreement or
the transactions contemplated hereby or any negotiations or discussions related
thereto or hereto, provided without first obtaining the consent of the other
parties hereto, which consent shall not be unreasonably withheld or delayed.
Each of the parties hereto further agrees to provide written notice to the
other parties to this Agreement, immediately upon the knowledge thereof, of any
obligation under applicable law to make, issue or release any such public
announcement, statement or acknowledgment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Schedule A
MEMBERS OF SELLER
1. MUGAR MLW LLC, a Massachusetts limited liability company
2. TIME TRUST ASSOCIATES JOINT VENTURE, a Massachusetts general partnership
3. NEXT TRUST, a Massachusetts business trust with transferable shares
4. HARBORLIGHTS PAVILION TRUST, a Massachusetts business trust with
transferable shares
5. DLC BUSINESS TRUST, a Massachusetts business trust with transferable
shares
6. XXXXXX TRUST LLC, a Massachusetts limited liability company
7. XXXXXXX XXXX, individually
8. ORPHEUM MANAGEMENT TRUST, a Massachusetts business trust with
transferable shares
9. BLACK & COPPER TRUST, a Massachusetts business trust with transferable
shares
10. XXXXXX X. LAW, JR., individually
11. GREAT XXXXX TRUST, a Massachusetts business trust with transferable
shares
Schedule B
OWNERSHIP OF SELLER MEMBERSHIP INTERESTS
MEMBER PERCENTAGE OWNERSHIP PRO RATA SHARE
------ -------------------- --------------
1. MUGAR MLW LLC 50.0% Class A Interest 50.0%
2. TIME TRUST ASSOCIATES JOINT VENTURE 24.495% Class B Interest 24.495%
3. NEXT TRUST 16.465% Class B Interest 16.465%
4. HARBORLIGHTS PAVILION TRUST 5.38% Class B Interest 5.38%
5. DLC BUSINESS TRUST 2.485% Class B Interest 2.485%
6. XXXXXX TRUST LLC .385% Class B Interest .385%
7. XXXXXXX XXXX, individually .385% Class B Interest .385%
8. ORPHEUM MANAGEMENT TRUST .25% Class B Interest .25%
9. BLACK AND COPPER TRUST .11% Class B Interest .11%
10. XXXXXX X. LAW, JR., individually .04% Class B Interest .04%
11. GREAT XXXXX TRUST .005% Class B Interest .005%
TOTAL: 100.00% 100.00%
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed and delivered by
their respective duly authorized officers as of the date first above written.
SELLER:
BLACKSTONE ENTERTAINMENT, LLC
By: /s/ Xxxxxx X. Law, Jr.
-------------------------------
Name: Xxxxxx X. Law, Jr.
-----------------------------
Title: Manager and C.E.O.
----------------------------
BUYER:
DLC ACQUISITION CORP.
By: /s/ Xxxxxx F.X. Sillerman
-------------------------------
Name: Xxxxxx F.X. Sillerman
-----------------------------
Title:
----------------------------
SFX:
SFX ENTERTAINMENT, INC.
By: /s/ Xxxxxx F.X. Sillerman
-------------------------------
Name: Xxxxxx F.X. Sillerman
-----------------------------
Title: Executive Chairman
----------------------------
MEMBERS (for the limited purposes
set forth in this Agreement):
MUGAR MLW LLC
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: Member
----------------------------
-2-
TIME TRUST ASSOCIATES JOINT
VENTURE
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------
Title: Trustee/Partner
----------------------------
NEXT TRUST
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------
Title: Trustee
----------------------------
HARBORLIGHTS PAVILION TRUST
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------
Title: Trustee
----------------------------
DLC BUSINESS TRUST
By: /s/ Xxxxxx X. Law, Jr.
-------------------------------
Name: Xxxxxx X. Law, Jr.
-----------------------------
Title: Trustee
----------------------------
XXXXXX TRUST LLC
By: /s/ Xxxxxx X. Law, Jr.
-------------------------------
Name: Xxxxxx X. Law, Jr.
-----------------------------
Title: Trustee
----------------------------
/s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx Xxxx, individually
-3-
ORPHEUM MANAGEMENT TRUST
By: /s/ Xxxxxx X. Law, Jr.
-------------------------------
Name: Xxxxxx X. Law, Jr.
-----------------------------
Title: Trustee
----------------------------
BLACK AND COPPER TRUST
By: /s/ Xxxxxx X. Law, Jr.
-------------------------------
Name: Xxxxxx X. Law, Jr.
-----------------------------
Title: Trustee
----------------------------
By: /s/ Xxxxxx X. Law, Jr.
-------------------------------
Xxxxxx X. Law, Jr., individually
GREAT XXXXX TRUST
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------
Title: Trustee
----------------------------
