STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 11th day of October, 1996 by and among DELSENER/XXXXXX
ENTERPRISES, LTD., a New York corporation, BEACH CONCERTS, INC., a New York
corporation, CONNECTICUT CONCERTS, INCORPORATED, a Connecticut corporation,
BROADWAY CONCERTS, INC., a New York corporation, ARDEE PRODUCTIONS, LTD., a
New York corporation, ARDEE FESTIVALS NJ, INC., a New Jersey corporation,
IN-HOUSE TICKETS, INC., a New York corporation, EXIT 116 REVISITED, INC., a
New Jersey corporation and DUMB DEAL, INC., a New York corporation
(collectively, the "Companies"); XXX XXXXXXXX, an individual residing at 0
Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Seller"); XXXXX
XXXXXX, an individual residing at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000
("Xxxxxx") and SFX BROADCASTING, INC., a Delaware corporation having its
principal place of business in New York, New York (the "Buyer"):
WHEREAS, the Seller owns beneficially and of record all of the issued
and outstanding shares of stock (the "Shares") of the Companies; and
WHEREAS, the Companies conduct all of the activities of the Seller
and Xxxxxx in the concert promotion, event production, artist management,
artist development, ticket distribution, corporate sponsorship, venue
operation, concessionaire, parking, security and all similar businesses (the
"Business"); and
WHEREAS, the Seller and Xxxxxx do not receive any income related to
the Business from any source other than the Companies; and
WHEREAS, the Seller desires to sell to the Buyer and the Buyer
desires to purchase from the Seller all of the issued and outstanding Shares
of the Companies;
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WHEREAS, the parties intend for the Buyer to assign its rights and
benefits (but not its obligations) hereunder to its wholly owned subsidiary,
Delsener/Xxxxxx Enterprises, Inc., a Delaware corporation (the "Buyer's Sub");
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and upon the terms and
subject to the conditions hereinafter set forth, the parties hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale of Shares of the Companies. On the Closing Date
(as defined in SECTION 3.1), the Seller shall sell to the Buyer, and the Buyer
shall purchase from the Seller, the Shares for the Purchase Price (as defined
in SECTION 2.1) specified herein. At the Closing (as defined in SECTION 3.1),
the Seller shall deliver to the Buyer certificates representing all of the
Shares which are required to be delivered or are otherwise deliverable by the
Seller pursuant hereto duly endorsed in blank for transfer or accompanied by
duly executed stock powers assigning such Shares in blank, and the Buyer shall
deliver the Purchase Price in accordance with ARTICLE 2 below. In the event
that it is determined, at any time prior to or after the Closing, that any
assets related to the Business or any contractual relationships related to the
Business are owned or are in the name of any person or corporation other than
the Companies, this Agreement shall, at the sole and exclusive option of the
Buyer, be deemed an agreement to acquire such other corporations, assets or
contracts without any additional consideration therefor.
ARTICLE 2
CONSIDERATION
2.1 Purchase Price. The aggregate consideration (the "Purchase
Price") for the Shares shall be the sum of Twenty-Three Million, Nine Hundred
Fifty-Two Thousand and Five Hundred Dollars ($23,952,500). The parties hereto
agree to file their respective tax returns consistent with
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this Section with such amendments thereto as either party shall be directed by
the Internal Revenue Service to submit.
2.2 Payment. The Purchase Price shall be paid as follows:
2.2.1 At the Closing, the Buyer shall pay to the Seller the sum
of Nineteen Million, Nine Hundred Fifty-Two Thousand and Five Hundred Dollars
($19,952,500) (the "Fixed Payment"), in partial payment for the Shares.
2.2.2 In addition to the Fixed Payment, the Buyer shall pay to
the Seller the aggregate sum of Three Million Dollars ($3,000,000), without
interest, in 20 equal quarterly installments over a five (5) year period
commencing on January 1, 1997 (and on the first day of each subsequent quarter
until paid in full) in partial payment for the Shares. Notwithstanding the
foregoing, if at any time prior to January 1, 2002 there shall occur an
Acceleration Event (as defined below), then upon the occurrence of such
Acceleration Event all amounts due but not yet paid or payable pursuant to
this Section shall be immediately remitted to Seller at such time.
2.2.3 In addition to the Fixed Payment, the Buyer shall pay to
the Seller the aggregate sum of One Million Dollars ($1,000,000), without
interest, in 40 equal quarterly installments over a ten (10) year period
commencing on January 1, 1997 in partial payment for the Shares.
Notwithstanding the foregoing, if at any time prior to January 1, 2002 there
shall occur an Acceleration Event (as defined below), then upon the occurrence
of such Acceleration Event all amounts due but not yet paid or payable
pursuant to this Section shall be immediately remitted to Seller at such time.
The deferred Purchase Price payments set forth in this SECTION 2.2.3 and in
SECTION 2.2.2 are referred to herein as the "Deferred Purchase Price
Payments."
2.3 Escrow Account. On the date hereof, the Buyer shall deposit an
irrevocable stand-by letter of credit with a face amount of Two Million
Dollars ($2,000,000) into an escrow account (the "Escrow Account") with The
Chase Manhattan Bank, to be held in escrow in accordance with the
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terms of the escrow agreement dated as of the date hereof among the Buyer, the
Seller and the escrow agent, a copy of which is attached as EXHIBIT A hereto.
After payment of the Fixed Payment by the Buyer at the Closing in accordance
with ARTICLE 2 hereof, the Escrow Deposit shall be returned to the Buyer.
2.4 [RESERVED]
2.5 Xxxxxx Payments. (a) The Buyer hereby agrees pay: (i) to Xxxxxx
the portions of the Deferred Purchase Price Payments identified on EXHIBIT B
hereto as being payable to Xxxxxx and (ii) to withhold from such portions of
the Deferred Purchase Price Payments to be so paid to Xxxxxx all applicable
withholding taxes, such taxes, along with any employer payroll taxes related
thereto (i.e., the applicable FICA taxes), to be remitted by the Buyer on a
timely basis to the appropriate taxing authorities.
(b) The Deferred Purchase Price Payments to be made by the
Buyer to the Seller pursuant to SECTION 2.2 shall be reduced by the portions
thereof payable to Xxxxxx by the Buyer as described in SECTION 2.5(A). The
Seller and the Buyer acknowledge that EXHIBIT B correctly sets forth, after
giving effect to such reductions, the portions of the Deferred Purchase Price
Payments to be so made by the Buyer to the Seller.
2.6 Acceleration Event. The term "Acceleration Event" shall mean any
of the following: (i) a Change in Control (as defined in the Employment
Agreements); (ii) an initial public offering of the Employer Stock (as defined
in the Employment Agreements) and (iii) a termination without Cause, other than
due to death, or a Constructive Termination Without Cause of the Seller's or
Xxxxxx'x employment pursuant to their respective Employment Agreements (such
terms being defined in the Employment Agreements), provided, that the events
described in this clause (iii) shall only be an "Acceleration Event" for the
portions of the Deferred Purchase Price Payments payable to the individual so
terminated.
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2.7 Wire Instructions; Business Days. Payments to be made or caused
to be made hereunder shall be made by wire transfer in immediately available
funds to (i) the Seller to such account as the Seller shall direct and (ii)
Xxxxxx to such account as Xxxxxx shall direct. The amounts to be transferred
by wire at the Closing to the Seller and Xxxxxx and the appropriate wire
instructions are set forth on Appendix I hereto. Any such payment to be made
or caused to be made on a day that is not a business day shall be made on the
first business day immediately following such day.
ARTICLE 3
CLOSING
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3.1 Closing. Except as otherwise mutually agreed upon by the Seller
and the Buyer, the consummation of the transactions contemplated herein (the
"Closing") shall occur on the later of (i) five (5) business days following
the date of expiration or termination of all waiting periods, including any
extensions thereof, which are applicable to the transactions contemplated by
this Agreement pursuant to Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules and
regulations thereunder and (ii) January 2, 1997. The Closing shall be held at
the Buyer's offices in New York, New York or such other location in New York,
New York as the Seller shall request. The date of the Closing is referred to
herein as the "Closing Date."
ARTICLE 4
GOVERNMENTAL CONSENTS
---------------------
4.1 HSR Act. It is specifically understood and agreed by the Buyer
and the Seller that the Closing and the purchase of the Shares is expressly
conditioned on and is subject to the prior expiration or termination of all
waiting periods, including any extensions thereof, which are applicable to the
transactions contemplated by this Agreement pursuant to the HSR Act.
4.2 Governmental Filings. The Companies, the Seller and the Buyer
will, within five
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(5) business days following the date of this Agreement, file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "Department of Justice") pursuant to
the HSR Act all requisite documents and notifications in connection with the
transactions contemplated by this Agreement. The Seller and the Buyer will use
their commercially reasonable efforts to make or cause to be made all such
other filings and submissions as may be required under applicable laws and
regulations, if any, for the consummation of the transactions contemplated by
this Agreement. The Buyer and the Seller will coordinate with one another in
exchanging such information and reasonable assistance as another may request in
connection with all of the foregoing. The parties hereby acknowledge that in
making such filings, the parties will be relying on information provided by the
other party without independent investigation. The Buyer shall pay the filing
fee payable in respect of the pre-notification filing pursuant to the HSR Act.
The Seller and the Buyer agree to request early termination of the waiting
periods under the HSR Act.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer hereby makes the following representations and warranties
to the Seller, each of which is true and correct on the date hereof, shall
remain true and correct to and including the Closing Date, shall be unaffected
by any notice to the Seller and shall survive the Closing.
5.1 Organization and Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and will at Closing be duly qualified as a foreign corporation to
do business in the State of New York and have the corporate power and
authority to own the Shares and to carry on the business of the Companies as
they are now being conducted and as proposed to be conducted by the Companies
between the date hereof and the Closing Date.
5.2 Authorization and Binding Obligation. The Buyer has all necessary
power and
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authority to enter into and perform this Agreement and the transactions
contemplated hereby, and to own the Shares and to carry on the business of the
Companies as they are now being conducted, and the Buyer's execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by the Buyer, and this Agreement
constitutes, and the other agreements to be executed by the Buyer in connection
herewith will constitute, the valid and binding obligation of the Buyer,
enforceable in accordance with their terms, except as limited by laws affecting
the enforcement of creditors' rights.
5.3 Litigation and Compliance with Law. There is no litigation,
administrative, arbitration or other proceeding, or petition, complaint or, to
the best of the Buyer's knowledge, investigation pending, or to the best of
Buyer's knowledge, threatened before any court or governmental body, against
the Buyer or any of its affiliates that would adversely affect the Buyer's
ability to perform its obligations pursuant to this Agreement or the agreements
to be executed in connection herewith. To the best of the Buyer's knowledge,
there is no violation of any law, regulation or ordinance or any other
requirement of any governmental body or court which would have a material
adverse effect on the Buyer's ability to perform its obligations pursuant to
this Agreement or the agreements to be executed in connection herewith.
5.4 Investment Intent. The Buyer is acquiring the Shares solely for
its own account and not with a view to sale or distribution thereof in
violation of any securities laws. The Buyer acknowledges that the Shares are
restricted securities under the Securities Act of 1933, as amended, and cannot
be sold, transferred or conveyed without proper registration or an exemption
from registration under the Securities Act of 1933, as amended.
5.5 Accuracy of Information. To the best of Buyer's knowledge, no
written statement made by the Buyer herein and no information provided by the
Buyer herein or in the documents, instruments or other written communications
made or delivered directly by the Buyer to the Seller in connection with the
negotiations covering the purchase and sale of the Shares contains any
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material untrue statement of a material fact or omits a material fact necessary
to make the statements contained therein or herein not materially misleading.
To the extent that a representation or other information is made to the Buyer's
knowledge or is otherwise qualified by its terms, this representation shall not
be interpreted to expand such limitations or qualifications.
5.6 Stock Ownership. Buyer's Sub is a wholly-owned subsidiary of the
Buyer, and the Buyer owns one hundred percent (100%) of the authorized and
issued capital stock of Buyer's Sub.
5.7 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 4 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by the Buyer: (a) does
not require the consent of any third party; (b) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which the Buyer is a party; and (c) will not, either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
agreement, instrument, license or permit to which the Buyer is now subject.
5.8 Audit. SCHEDULE 5.8 of the Disclosure Schedules sets forth the
results of the audit (the "Audit") of the Companies' financial statements
performed by Ernst & Young from August 1996 through September 1996. The Audit
is consistent in all respects with the Financial Statements.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
The Seller hereby makes the following representations and warranties
to the Buyer, each of which is true and correct on the date hereof, shall
remain true and correct to and including the Closing Date, shall be unaffected
by any notice to the Buyer other than in the Disclosure Schedule attached
hereto and hereby made a part hereof and shall survive the Closing as provided
in ARTICLE 16 hereof.
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6.1 No Other Interests. Other than through the Companies, the Seller,
directly or indirectly, individually or with others, does not own, manage,
operate, control, participate in, perform consultation services for, and is
not connected in any manner with the ownership, management, operation or
control of any business similar to, or competitive with, the business of the
Companies or any of their affiliates or subsidiaries. All activities of the
Seller in the Business are conducted by the Companies. All income of the
Seller generated from the conduct of the Business is generated by the
Companies.
6.2 Ownership of Shares; Title. The Seller is the owner of record and
beneficially of all of the Shares. The Seller has not received any notice of
any adverse claim to the ownership of the Shares, does not have any reason to
know of any such adverse claim and is not aware of existing facts that would
give rise to any adverse claim to the ownership of the Shares. The sale and
delivery of the Shares to the Buyer pursuant to this Agreement shall vest in
the Buyer legal and valid title to the Shares, free and clear of all liens,
security interests, adverse claims or other encumbrances of any character
whatsoever ("Encumbrances"), other than Encumbrances created by the Buyer and
restrictions on resales of the Shares under applicable securities laws.
6.3 Authorization and Binding Obligation. The Seller has all power
and authority to enter into and perform this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Seller, and this Agreement constitutes, and the other agreements to be
executed by the Seller in connection herewith will constitute, the valid and
binding obligation of the Seller, enforceable in accordance with their terms,
except as limited by laws affecting the enforcement of creditor's rights.
6.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 4 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by the Seller: (a) does
not require the consent of any third party; (b) will not violate any
applicable law, judgment, order, injunction, decree, rule, regulation or
ruling of any governmental authority to which the Seller is a party or by
which he or the Shares are bound; (c) will
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not, either alone or with the giving of notice or the passage of
time, or both, conflict with, constitute grounds for termination of or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, agreement, instrument, license or permit to which the
Seller or the Shares are now subject; and (d) will not result in the creation
of any lien, charge or Encumbrance on any of the Shares.
6.5 Continuation of Companies' Business. Except as set forth on
SCHEDULE 6.5 to the Disclosure Schedule, the Seller does not know of any
reason whatsoever why the consummation of the transactions contemplated hereby
would adversely affect the Companies' enjoyment of all their material
benefits, rights, title and interest under all of the Contracts (as defined
below).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE COMPANIES
-------------------------------
The Seller and the Companies, jointly and severally, hereby make the
following representations and warranties to the Buyer, each of which is true
and correct on the date hereof, shall remain true and correct to and including
the Closing Date, shall be unaffected by any notice to the Buyer other than in
the Disclosure Schedule and shall survive the Closing as provided in ARTICLE
16 hereof.
7.1 Organization and Standing. Each of the Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted and as proposed to be conducted by the Companies between the
date hereof and the Closing Date. Each of the Companies is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by them or the nature of the business
conducted by them makes such qualification necessary. SCHEDULE 7.1 of the
Disclosure Schedule sets forth a complete and correct list of all
jurisdictions in which each of the
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Companies is incorporated and qualified or licensed to do business. The Seller
has heretofore delivered to the Buyer complete and correct copies of the
Certificate of Incorporation and By-laws (or other similar charter documents)
of each of the Companies.
7.2 Authorization and Binding Obligation. Each of the Companies has
the corporate power and authority to enter into and perform this Agreement and
the transactions contemplated hereby, and the Companies' execution, delivery
and performance of this Agreement, and the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on
their part. This Agreement has been duly executed and delivered by the
Companies, and this Agreement constitutes, and the other agreements to be
executed by the Companies in connection herewith will constitute, the valid
and binding obligation of the Companies, enforceable in accordance with their
terms, except as limited by laws affecting the enforcement of creditor's
rights.
7.3 Capitalization. SCHEDULE 7.3 of the Disclosure Schedule sets
forth a complete and correct list of the authorized and issued capital stock
of each of the Companies including the registered holder of each of the
Shares. All outstanding Shares have been duly authorized and validly issued,
are fully paid and non-assessable and were not issued in violation of any
pre-emptive rights. Other than Xxxxxx'x employment agreement dated as of
January 1, 1993 with the Companies (which shall be terminated on or prior to
the Closing), there is outstanding no security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature whatsoever,
fixed or contingent, that directly or indirectly (i) calls for the issuance,
sale, pledge or other disposition of any Shares or of any capital stock of the
Companies or any securities convertible into, or other rights to acquire, any
such Shares or other capital stock of the Companies; or (ii) obligates the
Companies or the Seller to grant, offer or enter into any of the foregoing; or
(iii) relates to the voting or control of such Shares, capital stock,
securities or rights. No person has any right to require the Companies to
register any of its securities under the Securities Act of 1933, as amended.
7.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in ARTICLE 4 or SCHEDULE 7.10 of the Disclosure Schedules hereof
with respect to governmental
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consents, the execution, delivery and performance of this Agreement by the
Companies: (a) does not require the consent of any third party; (b) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which any of the
Companies is a party; (c) will not, either alone or with the giving of notice
or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, agreement, instrument, license or
permit to which any of the Companies is now subject; and (d) will not result in
the creation of any lien, charge or Encumbrance on any of the Shares.
7.5 Government Authorizations. SCHEDULE 7.5 of the Disclosure
Schedule contains a true and complete list of all material licenses, permits
or other authorizations from governmental and regulatory authorities which are
required for the lawful conduct of the business and operations of the
Companies in the manner and to the full extent they are presently conducted.
The Companies are the authorized legal holders of the licenses, permits and
authorizations listed in SCHEDULE 7.5 of the Disclosure Schedule, none of
which is subject to any restrictions or condition which would limit in any
material respect the full operation of the Companies as now operated.
7.6 Subsidiaries. Except as set forth in SCHEDULE 7.6 of the
Disclosure Schedule, the Companies do not own any equity ownership interest,
directly or indirectly, in any person, corporation or other entity.
7.7 Taxes. The Companies have filed all material federal, state,
local and foreign income, franchise, sales, use, property, excise, payroll and
other tax returns required by law and have paid all material taxes, estimated
taxes, interest, assessments, and penalties due and payable. All material
returns and forms which have been filed have been true and correct in all
material respects, and no material tax or other payment in a material amount
other than as shown on such returns and forms is required to be paid and has
been paid by the Companies. Except as set forth in SCHEDULE 7.7 of the
Disclosure Schedule, there are no present disputes as to taxes of any nature
payable by the Companies.
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7.8 Personal Property. SCHEDULE 7.8 of the Disclosure Schedule
contains a list of all material tangible personal property and assets owned or
held by the Companies (the "Personal Property"). Except as disclosed in
SCHEDULE 7.8 the Disclosure Schedule, and except as may be subject to lease
agreements of the Companies specifically identified in SCHEDULE 7.10 of the
Disclosure Schedule, the Companies own and have, and will have on the Closing
Date, good and marketable title to all such property (and to all other
tangible and intangible personal property and assets to be transferred to the
Buyer hereunder), and none of such property is, or at the Closing will be,
subject to any Encumbrance other than (i) as set forth in the Disclosure
Schedule or the Financial Statements or (ii) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business. All of the items of the tangible personal property and assets
included in the Disclosure Schedule are generally in good operating condition
(ordinary wear and tear excepted) and are available for immediate use. The
properties listed in the Disclosure Schedule include all such properties used
and necessary to conduct in all material respects the business and operations
of the Companies as now conducted.
7.9 Real Property. SCHEDULE 7.9 of the Disclosure Schedule contains a
complete and accurate list of all real property owned and leased by the
Companies (collectively the "Real Estate Contracts") and a list of the
applicable leases. The Real Estate Contracts listed in the Disclosure Schedule
constitute valid and binding obligations of the Companies and, to the best of
the Seller's knowledge, of all other persons purported to be parties thereto
and are in full force and effect as of the date hereof and will on the Closing
Date constitute valid and binding obligations of the Companies and, to the
best of the Seller's knowledge, of all other persons purported to be parties
thereto and shall be in full force and effect. Except as set forth in the
Disclosure Schedule, none of the Companies is in default under any of such
Real Estate Contracts and none has received or given written notice of any
default thereunder from or to any of the other parties thereto and will not be
in default thereunder at or prior to the Closing.
7.10 Contracts. SCHEDULE 7.10 of the Disclosure Schedule lists all
written and oral contracts having a remaining aggregate value in excess of
$25,000 as of the date of this Agreement
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for which the Companies shall continue to be liable as of the Closing Date
(the "Contracts").
7.11 Status of Contracts. Except as noted in SCHEDULE 7.10 of the
Disclosure Schedule, the Seller has delivered to the Buyer true and complete
copies of all written Contracts, including any and all amendments and other
modifications to such Contracts. All Contracts are valid, binding and
enforceable by the Companies in accordance with their respective terms, except
as limited by laws affecting creditors' rights. The Companies have all
complied in all material respects with all Contracts and are not in material
default beyond any applicable grace periods under any of the Contracts, and,
to the Seller's knowledge, no other contracting party is, as of the date
hereof, in default under any of the Contracts.
7.12 Environmental Matters. To the best of the Seller's and the
Companies' knowledge, the Companies have not unlawfully disposed of any
hazardous waste or hazardous substance in a manner which has caused, or is
reasonably likely to cause, the Buyer to incur a material liability under
applicable law in connection therewith. To the best of the Seller's knowledge,
the Companies have complied in all material respects with all federal, state
and local environmental laws, rules and regulations applicable to their
operations. To the best of the Seller's knowledge, no hazardous waste has been
disposed of by any other person on the real estate owned or leased by the
Companies. As used herein, the term "hazardous waste" shall mean as defined in
the Resource Conservation and Recovery Act (RCRA) as amended and in the
equivalent state statute under applicable law.
7.13 Copyrights, Trademarks and Similar Rights. SCHEDULE 7.13 of the
Disclosure Schedule lists, in all material respects, all copyrights,
trademarks, trade names, licenses, patents, permits and other similar
intangible property rights and interests applied for, issued to or owned by
the Companies or under which any of the Companies is a licensee or franchisee
and used exclusively or primarily in the conduct of the Business. Except as
set forth in the Disclosure Schedule, all of such rights and interests are
issued to or owned by the Companies, or if licensed or franchised to the
Companies, to the best of the Seller's knowledge, are valid and in good
standing and uncontested. The Seller has delivered or made available to the
Buyer copies of all material documents, if any,
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establishing such rights, licenses or other authority. The Companies have
received no written notice and have no knowledge of any material infringements
or materially unlawful use of such property. The properties listed in SCHEDULE
7.13 of the Disclosure Schedule include all such properties necessary to
conduct in all material respects the Business.
7.14 Personnel Information. SCHEDULE 7.14 of the Disclosure Schedule
contains a true and complete list of all persons currently employed by the
Companies, including a list of material compensation arrangements and employee
benefit plans and a list of other terms of any and all material agreements
affecting the employment of such persons. Except as set forth in the
Disclosure Schedule, as of the date hereof, the Companies have not received
notification that any of the employees of the Companies who are listed in the
Disclosure Schedule presently plan to terminate their employment, whether by
reason of the transactions contemplated hereby or otherwise.
7.14.1 SCHEDULE 7.14 of the Disclosure Schedule contains a true
and complete list of all contracts with any labor organization. None of the
Companies has agreed to recognize any union or other collective bargaining
unit other than as listed on SCHEDULE 7.14, nor has any union or other
collective bargaining unit been certified as representing any of the
Companies' employees other than as listed on SCHEDULE 7.14. The Seller has no
knowledge of any organizational effort currently being made or threatened by
or on behalf of any labor union with respect to any of the employees of the
Companies other than as listed on SCHEDULE 7.14. During the past five (5)
years, none of the Companies has experienced any strikes, work stoppages,
grievance proceedings, claims of unfair labor practices filed or other
significant labor difficulties of any nature.
7.14.2 The Companies have all complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and those laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity,
sexual harassment and payment and withholding of taxes. More specifically, the
Companies have substantially complied with and are not knowingly in default in
any material respect under any laws,
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rules and regulations relating to employment of labor, including those relating
to wages, hours, equal employment opportunities, sexual harassment, employment
of protected minorities (including women and persons over 40 years of age),
collective bargaining and the withholding and payment of taxes and
contributions and have withheld all amounts required or agreed to be withheld
from wages and salaries of its employees, and are not liable (other than for
the current payroll period) for any arrearage of wages or for any tax or
penalty or failure to comply with the foregoing. There are no claims or
complaints pending or, to the knowledge of the Seller, threatened against the
Companies before any court or governmental agency and involving any alleged
unlawful employment practices, whether or not relating to the laws described
above. The Companies have not consented to any decree involving any claim of
unfair labor practice and have not been held in any judicial proceeding to have
committed any unfair labor practice and there are no material controversies
pending or threatened between the Companies and any of its employees.
7.15 Financial Statements. A copy of the unaudited consolidated and
consolidating balance sheet of the Companies as of the fiscal years ended
1993, 1994 and 1995 (and, in the case of Ardee Festivals NJ, Inc. and In-House
Tickets, Inc., the fiscal year ended 1996) and the unaudited consolidated and
consolidating statements of income and retained earnings and changes in
financial position of the Companies for the fiscal years ended 1993, 1994 and
1995 (and, in the case of Ardee Festivals NJ, Inc. and In-House Tickets, Inc.,
the fiscal year ended 1996), including the notes thereto (collectively the
"Financial Statements") are attached hereto as SCHEDULE 7.15. Except as noted
therein, and except as set forth on SCHEDULE 5.8 of the Disclosure Schedules,
the Financial Statements fairly present the consolidated financial position of
the Companies and their results of operations as of those dates in conformity
with generally accepted accounting principles consistently applied for such
period.
7.16 Liabilities. Except (i) as set forth in the Disclosure Schedules
or the Financial Statements and (ii) for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since
December 31, 1995, including, without limitation, for income, franchise,
sales, use, property, excise, payroll and other taxes, the Companies have, as
of the date
16
hereof and to the Seller's knowledge, no material debts, obligations or
liabilities of any kind or nature, either direct or indirect, absolute or
contingent, matured or unmatured.
7.17 Absence of Certain Changes or Events. Except as set forth in the
Disclosure Schedule or except as otherwise contemplated by this Agreement,
from the period from December 31, 1995, through the date hereof, there has not
been (a) any material damage, destruction or casualty loss to the physical
properties of the Companies (whether covered by insurance or not); (b) any
material change in the business, operations or financial condition of the
Companies; (c) any entry by the Companies into any transaction, commitment or
agreement (including without limitation any borrowing or capital expenditure)
material to any of the Companies' course of business other than in the
ordinary course of business; (d) any redemption or other acquisition by the
Companies of the Companies' capital stock or any declaration, setting aside or
payment of any dividend or other distribution in stock or property (other than
cash) with respect to the Companies' capital stock; (e) other than in
accordance with pre-existing plans, agreements and arrangements listed in the
Disclosure Schedule, any increase in the rate or terms of compensation payable
or to become payable by the Companies to its directors, officers or key
employees or any increase in the rate or terms of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement made to, for
or with any such directors, officers or key employees; (f) any acceleration of
sales or reduction of aggregate administrative, marketing, advertising and
promotional expenses or research expenditures other than in the ordinary
course of business; (g) any sale, transfer or other disposition of any
material asset of the Companies to any party, including the Seller, except for
payment of third-party obligations incurred in the ordinary course of business
in accordance with the Companies' regular payment practices; (h) any
termination or waiver of any rights of value to the business of the Companies;
or (i) any failure by the Companies to pay their accounts payable or other
obligations in the ordinary course of business consistent with past practices.
7.20 Title to Properties. Except as set forth on the Disclosure
Schedule, the Companies have good and marketable title to all of the assets
and properties which they purport to own and which are reflected on the
Financial Statements, free and clear of all Encumbrances, except (a) for liens
for
17
current taxes not yet due and payable or for taxes the validity of which is
being contested in good faith by appropriate proceedings, (b) for Encumbrances
which individually or in the aggregate do not materially and adversely affect
the business, operations or financial condition of the Companies, (c) as
otherwise set forth in the Financial Statements and (d) for lease agreements
specifically identified in SCHEDULE 7.10 to the Disclosure Schedule.
7.21 Litigation. Except as set forth in SCHEDULE 7.21 of the
Disclosure Schedule, as of the date hereof, none of the Companies is subject
to any judgment, award, order, writ, injunction, arbitration decision or
decree materially adversely affecting the conduct of any of their businesses,
and, as of the date hereof, there is no litigation, arbitration,
administration or other proceeding or, to the best of the Seller' s knowledge,
investigation pending or, to the best of the Seller's knowledge, threatened
against the Companies or the Seller in any federal, state or local court, or
before any administrative agency or arbitrator, or before any other tribunal
duly authorized to resolve disputes, which would reasonably be expected to
have a material adverse effect upon the business, property, assets or
condition (financial or otherwise) of any of the Companies or which seeks to
enjoin or prohibit, or otherwise questions the validity of, any action taken
or to be taken pursuant to or in connection with this Agreement.
7.22 Compliance With Laws. The Companies have not received any notice
prior to the date hereof asserting any material non-compliance by them in
connection with their business or operation with any applicable statute, rule
or regulation, whether federal, state or local. The Companies are not in
default with respect to any judgment, order, injunction or decree of any
court, administrative agency or other governmental authority or any other
tribunal duly authorized to resolve disputes in any respect material to the
transactions contemplated hereby. The Companies are in compliance with all
material laws, regulations and governmental orders applicable to the conduct
of their business and operations and the present use of the assets does not
violate any of such laws, regulations or orders.
7.23 Insurance. All insurance policies with respect to the
properties, assets, operations and
18
business of the Companies (the "Insurance Policies") are in full force and
effect. Except as set forth on SCHEDULE 7.23 of the Disclosure Schedule, as of
the date hereof there are no pending claims against the Insurance Policies by
the Companies as to which the insurers have denied liability and with respect
to which there is a reasonable likelihood of a settlement or determination
adverse to the Companies. To the best of the Companies' and the Seller's
knowledge, the operations of each of the Companies have been conducted in a
manner so as to conform in all material respects to all applicable Insurance
Policies, nor are there any other parties having an interest under the
Insurance Policies. Except as set forth in SCHEDULE 7.23 of the Disclosure
Schedule, (i) there exist no material claims under the Insurance Policies that
have not been properly filed by the Companies; (ii) no insurance company has
refused to renew any material insurance policy of the Companies during the past
eighteen (18) months; and (iii) 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 eighteen (18) months. The Disclosure Schedule contains a list
that includes all Insurance Policies.
7.24 Payola/Plugola. Neither the Seller nor any of the Companies has
paid or agreed to pay any money, service or any valuable consideration, as
defined in, and other than any such payments or agreements to pay made in
accordance with, Sections 317 and 507 of the Communications Act of 1934, as
amended, for the radio broadcast of any matter whatsoever.
7.25 Accuracy of Information. To the best of the Seller's and the
Companies' knowledge, no written statement made by the Seller or the Companies
herein and no information provided by the Seller or the Companies herein or in
the documents, instruments or other written communications made or delivered
directly by the Seller or the Companies to the Buyer in connection with the
negotiations covering the purchase and sale of the Shares contains any
material untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein or herein not materially
misleading. To the extent that a representation or other information is made
to the Seller's knowledge or is otherwise qualified by its terms, this
representation shall not be interpreted to expand such limitations or
qualifications.
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ARTICLE 8
COVENANTS OF THE BUYER
----------------------
8.1 Closing. On the Closing Date, the Buyer shall purchase the Shares
from the Seller as provided in ARTICLES 1 and 2 hereof and shall deliver or
cause to be delivered the Purchase Price as provided in ARTICLE 2 hereof. The
Buyer shall not permit the Companies to take any action between the Closing
and the beginning of the day after the day on which the Closing occurs other
than in the ordinary course of business.
8.2 Notification. The Buyer shall notify the Seller of any
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against the Buyer or its affiliates which challenges the
transactions contemplated hereby.
8.3 No Inconsistent Action. The Buyer shall not take any other action
which is materially inconsistent with its obligations under this Agreement.
8.4 Audit Costs. The Buyer agrees to pay the full cost of the audit
of the Companies' financial statements performed by Ernst & Young between
August, 1996 and September, 1996.
8.5 Current Assets. The Buyer agrees that all cash and other current
assets as of December 31, 1996 and all prepaid taxes (that are not current
assets) in excess of the corresponding tax liabilities as of December 31, 1996
(collectively the "Current Assets"), other than cash in respect of advance
ticket sales for events that are scheduled to occur after December 31, 1996
("Advance Cash"), shall be solely for the account of the Seller, and Seller
shall be entitled to retain such Current Assets. The parties shall, not later
than January 31, 1997, take such steps as are necessary for Buyer to receive
the Advance Cash and Seller to receive the Current Assets.
8.6 Advances, Security Deposits, Etc. The Buyer shall reimburse the
Seller for all security deposits, advances to venues or to performers to the
extent made in the ordinary course of
20
business relating to events that will generate any portion of their revenues
after December 31, 1996, as well as all capital investments in venues
(including professional fees) that have been or are to be made in or after
1996. All such deposits, advances and the like made prior to the date hereof
are listed on SCHEDULE 8.6 attached hereto. The Buyer shall make the
reimbursement described above (a) on January 2, 1997 with respect to deposits,
advances and the like for which the Seller has provided to the Buyer receipts,
invoices or other evidence reasonably satisfactory to the Buyer no later than
December 20, 1996 and (b) from time to time after January 2, 1997 within five
business days after the Seller has provided to the Buyer receipts, invoices or
other evidence reasonably satisfactory to the Buyer. Notwithstanding the
foregoing, the Seller shall remain responsible for the funding of all such
items, whether or not listed on SCHEDULE 8.6, through and including the Closing
Date.
ARTICLE 9
COVENANTS OF THE SELLER AND THE COMPANIES
-----------------------------------------
9.1 Pre-Closing Covenants. The Seller and the Companies covenant and
agree with respect to the Companies that between the date hereof and the
Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of the Buyer, they shall act in accordance with the
following:
9.1.1 The Companies shall conduct their business and operations
in the ordinary and prudent course of business consistent with past practices
and with the intent of preserving the ongoing operations and assets of the
Companies.
9.1.2 The Companies shall use reasonable efforts to preserve
their customers, suppliers and others having business relations with the
Companies and continue to conduct the financial operations of the Companies,
including their credit and collection policies, in the ordinary course of
business with substantially the same effort, and to substantially the same
extent and in the same manner, as in the prior conduct of the business of the
Companies.
21
9.1.3 The Companies shall not, other than in the ordinary course
of business or in accordance with a pre-existing plan, agreement or
arrangement listed on SCHEDULE 9.1 of the Disclosure Schedule, (i) sell or
dispose of or commit to sell or dispose of any of the Companies' assets; (ii)
grant or agree to grant any general increases in the rates of salaries or
compensation payable to employees of the Companies; (iii) grant or agree to
grant any specific bonus or increase to any executive or management employee
of any of the Companies; (iv) provide for any new pension, retirement or other
employment benefits for employees of the Companies or any increases in any
existing benefits, other than as required by law; or (v) voluntarily incur any
liability not currently reflected on the Financial Statements.
9.1.4 The Seller and the Companies shall provide the Buyer
prompt written notice of any change in any of the information contained in the
representations and warranties made in ARTICLE 6 and ARTICLE 7 hereof or any
Exhibits or the Disclosure Schedule herein or attached hereto.
9.1.5 Between the date of this Agreement and the Closing Date,
the Companies will and the Seller will cause the Companies to (i) give the
Buyer and its authorized representatives reasonable access to all books,
records, offices and other facilities and properties of the Companies; (ii)
permit the Buyer to make such inspections thereof, during regular business
hours, as the Buyer may reasonably request, and (iii) cause their officers to
furnish the Buyer with such financial and operating data, including tax
returns and supporting schedules, and other information with respect to the
business and properties of the Companies as the Buyer may from time to time
reasonably request. The Seller shall cause the Companies' officers and
managerial employees, counsel and auditors to be available upon reasonable
notice and during normal business hours for such questions of the Buyer and
its authorized representatives concerning the business and affairs of the
Companies as the Buyer shall reasonably request.
9.1.6 Upon the Buyers request, the Companies shall, at the sole
cost of the Buyer, provide the Buyer with monthly unaudited consolidated and
consolidating statements of revenue and
22
expenses, such monthly statements to be provided within forty-five (45) days of
the end of each month.
9.1.7 Without the prior written consent of the Buyer, the
Companies shall not enter into or renew or modify in any material respect any
agreements, commitments or contracts, including the Contracts listed on
SCHEDULE 7.10 of the Disclosure Schedules, except in the ordinary course of
business consistent with the past practices of the Companies.
9.1.8 The Companies shall not permit any of their insurance (or
reinsurance) policies to be canceled or terminated or any of the coverage
thereunder to lapse unless simultaneously with such termination, cancellation
or lapse, replacement policies providing coverage equal to or greater than
coverage remaining under those canceled, terminated or lapsed are in full
force and effect.
9.1.9 The Companies shall not and the Seller shall not permit
the Companies to amend any of their certificates of incorporation or by-laws.
9.2 Notification. The Seller and the Companies shall notify the Buyer
of any material litigation, arbitration or administrative proceeding pending
or, to their knowledge, threatened against the Seller or the Companies which
challenges the transactions contemplated hereby.
9.4 No Inconsistent Action. The Seller and the Companies shall take
no action which is materially inconsistent with their obligations under this
Agreement.
9.5 Closing Covenant. On the Closing Date, the Seller shall sell and
deliver the Shares to the Buyer as provided in ARTICLES 1 and 2 of this
Agreement.
9.6 No Shopping. From and after the date hereof until the termination
of the Agreement
23
in accordance with its terms, neither the Seller or any representative or agent
of the Seller, nor the Companies, any officer, director, employee agent, or
representative of the Companies, shall directly or indirectly solicit or
knowingly encourage, including by way of furnishing information, the initiation
of any inquiries or proposals regarding, or engage in any discussions or enter
into any agreements regarding any merger, sale of shares of capital stock, sale
of all or substantially all of the assets or similar business combination or
transaction involving the Companies.
9.7 Escrow. In the event the Buyer, in good faith, asserts a bona
fide claim for indemnification under ARTICLE 16 against the Seller and Xxxxxx
after the Closing and prior to the last day of the eighteenth month following
the Closing, the Seller and Xxxxxx shall promptly place funds into an escrow
account in an amount equal to the lesser of (a) $2,000,000 (less any amounts
already put in escrow) and (b) the amount of such claim (each of the Seller
and Xxxxxx being severally responsible for his respective Applicable
Percentage (as defined in the Letter Agreement) of the amount in (a) or (b)).
Such amount (or an appropriate portion thereof) shall be released from escrow
(x) to the Buyer upon resolution of the claim in the Buyer's favor, or (y) to
the Seller and Xxxxxx upon resolution of the claim in the favor of the Seller
or Xxxxxx. Any claim made shall be accompanied by a certificate signed by the
Chief Executive Officer and Chief Financial Officer of the Parent to the
effect that they believe that the claim and the amount thereof to be in good
faith and bona fide.
ARTICLE 10
JOINT COVENANTS
---------------
The Buyer, the Seller and the Companies covenant and agree that
between the date hereof and the Closing Date, they shall act in accordance with
the following:
10.1 Conditions; Closing. Except as otherwise provided in this
Agreement, if any event should occur, either within or without the control of
any party hereto, which would prevent fulfillment of the conditions set forth
in Articles 11 and 12 hereof upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, the parties hereto
shall use their reasonable best efforts to cure the event as expeditiously as
possible.
24
10.2 Confidentiality. The Buyer, the Seller and the Companies shall
each keep confidential all information obtained by it or them with respect to
the other in connection with this Agreement and the negotiations preceding
this Agreement, and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return
promptly to the other, without retaining a copy thereof, any schedules,
documents or other written information obtained from the other in connection
with this Agreement and the transactions contemplated hereby. Notwithstanding
the foregoing, no party shall be required to keep confidential or return any
information which (i) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party, (ii) is or
becomes publicly known through no fault of the receiving party or its agents,
(iii) is required to be disclosed pursuant to an order or request of a
judicial or governmental authority or because of the rules and regulations of
the Securities and Exchange Commission (the "SEC") (provided the other parties
are given reasonable prior notice and a reasonable opportunity to object or
seek exemption from such order, request or regulations), or (iv) is developed
by the receiving party independently of the disclosure by the disclosing
party. The Companies and the Seller hereby acknowledge that the Buyer is a
reporting person under the rules and regulations of the SEC and will be
required, upon the execution of this Agreement, to disclose and file this
Agreement (not including the Disclosure Schedules and the Exhibits hereto)
with its regularly required SEC reports, provided, that the Buyer shall afford
the Seller reasonable time to comment on the text accompanying any such
disclosure prior to such filing.
10.3 Cooperation. The Buyer, the Seller and the Companies shall
cooperate fully with each other in taking any actions, including actions to
obtain the required consent of any governmental instrumentality or any third
party, necessary or helpful to accomplish the transactions contemplated by this
Agreement; provided, however, that no party shall be required to take any
action which would have a material adverse effect upon it or any affiliated
entity.
10.4 Publicity. The Seller, the Companies and the Buyer agree that,
from the date hereof through the Closing Date, no public release or
announcement concerning the transactions
25
contemplated hereby shall be issued by such party without the prior consent of
the other parties (which consent shall not be unreasonably withheld), (i)
except that a public announcement substantially in the form of EXHIBIT C hereto
may be released prior to the Closing Date and (ii) except as such release or
announcement may be required by law or the rules or regulations of any United
States securities exchange, in which case the party required to make the
release or announcement shall allow the other party reasonable time to comment
on such release or announcement in advance of such issuance; provided, however,
that the Seller may make internal announcements to the employees of the
Companies regarding the transactions contemplated hereby after reasonable prior
notice to and consultation with the Buyer.
ARTICLE 11
CONDITIONS OF CLOSING BY THE BUYER
----------------------------------
The obligations of the Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Governmental Consents. Each of the Seller, the Buyer and the
Companies, as required in connection with the transactions contemplated hereby
to file a Notification and Report Form for Certain Mergers and Acquisitions
with the Department of Justice and the FTC pursuant to the HSR Act, shall have
made such filing and all applicable waiting periods with respect to each such
filing (including extensions thereof) shall have expired or been terminated.
11.2 Adverse Proceedings. No order, decree or judgment of any court,
agency or other governmental authority shall have been rendered against any
party hereto which would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
11.3 No Further Conditions. Other than as explicitly set forth above,
there shall be no conditions whatsoever to the obligations of the Buyer under
this Agreement.
26
ARTICLE 12
CONDITIONS OF CLOSING BY THE SELLER
-----------------------------------
The obligations of the Seller hereunder are, at his option, subject
to satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Governmental Consents. Each of the Seller, the Buyer and the
Companies, as required in connection with the transactions contemplated hereby
to file a Notification and Report Form for Certain Mergers and Acquisitions
with the Department of Justice and the FTC pursuant to the HSR Act, shall have
made such filing and all applicable waiting periods with respect to each such
filing (including extensions thereof) shall have expired or been terminated.
12.2 Adverse Proceedings. No order, decree or judgment of any court,
agency or other governmental authority shall have been rendered against any
party hereto which would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
12.3 Payment of Purchase Price. The Buyer shall have delivered or
caused to be delivered the Purchase Price in accordance with the terms of
ARTICLE 2 hereof.
12.4 No Further Conditions. Other than as explicitily set forth
above, there shall be no conditions whatsoever to the obligations of the
Seller under this Agreement.
ARTICLE 13
FEES AND EXPENSES
-----------------
13.1 Expenses. Each party hereto shall be solely responsible for all
costs and expense incurred by it in connection with the negotiation,
preparation and performance of and compliance with the terms of this
Agreement.
27
ARTICLE 14
COMMISSIONS OR FINDER'S FEE
---------------------------
14.1 The Buyer's Representation and Agreement to Indemnify. The Buyer
represents and warrants to the Seller and the Companies that neither it nor
any person or entity acting on its behalf has agreed to pay a commission,
finder's fee or similar payment in connection with this Agreement or any
matter related hereto to any person or entity, other than to Sillerman
Communications Management Corporation. The Buyer further agrees to indemnify,
defend and hold the Seller harmless from and against any and all claims,
losses, liabilities and expenses (including reasonable attorney's fees)
arising out of a claim by any person or entity (including Sillerman
Communications Management Corporation) based on any such arrangement or
agreement made or alleged to have been made by the Buyer.
14.2 The Seller's and Companies' Representation and Agreement to
Indemnify. The Seller and the Companies, jointly and severally, represent and
warrant to the Buyer that neither they nor any person or entity acting on
their behalf has agreed to pay a commission, finder's fee or similar payment
in connection with this Agreement or any matter related hereto to any person
or entity. The Seller and the Companies further agree to jointly and severally
indemnify, defend and hold the Buyer harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorney's
fees) arising out of a claim by any person or entity based on any such
arrangement or agreement made or alleged to have been made by the Seller or
the Companies.
ARTICLE 15
DOCUMENTS TO BE RELEASED FROM ESCROW AT CLOSING
-----------------------------------------------
15.1 The Seller's Documents. At the Closing, immediately after the
wire transfers to be made at the closing have cleared, the Buyer's counsel
shall release the following documents from escrow to the Buyer:
28
15.1.1 Certified resolutions of the Boards of Directors of the
Companies approving the execution and delivery of this Agreement and each of
the other documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
15.1.2 Articles of Incorporation of the Companies certified by
the Secretary of State of the states of incorporation of the Companies;
15.1.3 Written opinion letters, dated the date hereof, a copies
of which are attached hereto as EXHIBIT D;
15.1.4 Certificates evidencing the Shares;
15.1.5 Governmental certificates showing that the Companies are
duly incorporated and in good standing under the laws of their states of
incorporation and that they are qualified as foreign corporations in the State
of New York and all other states in which they conduct business, dated not
more than ten (10) calendar days before the date hereof;
15.1.6 All stock books and records, minute books and all files
and records pertaining to the business and operations of the Companies.
15.1.17 The letter agreement dated the date hereof among the
Companies, the Seller and Xxxxxx (the "Letter Agreement"), a copy of which is
attached hereto as EXHIBIT E.
15.2 The Buyer's Documents. At the Closing, the Buyer's counsel shall
release from escrow the following, or otherwise cause to be delivered, to the
Seller:
15.2.1 The Purchase Price in accordance with SECTION 2.2 hereof.
15.2.2 The written opinion of the Buyer's corporate counsel,
dated the date hereof,
29
a copy of which is attached hereto as EXHIBIT F;
15.2.3 Governmental certificates showing that the Buyer and the
Buyer's Sub are duly incorporated and in good standing in the State of
Delaware and that the Buyer is qualified as a foreign corporation in the State
of New York, dated not more than ten (10) calendar days before the date
hereof;
15.2.4 Certified resolutions of the Board of Directors of the
Buyer approving the execution and delivery of this Agreement and each of the
other documents and agreements referred to herein and authorizing the
consummation of the transactions contemplated hereby and thereby; and
15.2.5 The Employment Agreements.
ARTICLE 16
INDEMNIFICATION
---------------
16.1 The Seller's Indemnities. 16.1.1. Subject to the limitations set
forth in this Article 16, each of the Seller and Xxxxxx hereby indemnifies,
defends and holds the Buyer harmless with respect to any and all demands,
claims, actions, suits, proceedings, assessments, judgments, costs, losses,
damages, liabilities and expenses, including, without limitation, reasonable
attorneys' fees (collectively, "Losses"), other than with respect to Taxes (as
defined below) asserted against, resulting from, imposed upon or incurred by
the Buyer directly or indirectly relating to or arising out of the inaccuracy
of any representation or warranty, or the breach of any covenant or agreement,
contained herein or in any instrument or certificate delivered pursuant
hereto.
16.1.2 The Seller hereby indemnifies, defends and holds the Buyer
harmless with respect to any and all Losses asserted against, resulting from,
imposed upon or incurred by the Buyer directly or indirectly relating to or
arising out of Taxes payable by the Companies with respect to any Pre-Closing
Tax Period ("Pre-Closing Taxes"). The term "Tax" or "Taxes" shall
30
mean all Federal, state, local, foreign and other governmental taxes,
assessments, duties, fees, levies or similar charges of any kind (including,
without limitation, all interest, penalties and additions imposed with respect
to such amounts), including, without limitation, all sales, payroll, employment
and other withholding taxes, and including, without limitation, all obligations
under any tax sharing agreement, tax indemnity obligation or similar written or
unwritten agreement, arrangement or practice and any liability for taxes
imposed by reason of transferee liability or status as the successor to another
entity or member of a consolidated, combined or unitary group including other
entities. The term "Pre-Closing Tax Period" shall mean all taxable periods
ending on or before the Closing Date and the portion ending on the Closing Date
of any taxable period that includes (but does not end on) such day.
16.2 The Buyer's Indemnities. 16.2.1. The Buyer hereby indemnifies,
defends and holds the Seller harmless with respect to any and all Losses,
other than with respect to Taxes asserted against, resulting from, imposed
upon or incurred by the Seller directly or indirectly relating to or arising
out of the inaccuracy of any representation or warranty, or the breach of any
covenant or agreement, contained herein or in any instrument or certificate
delivered pursuant hereto.
16.2.2 The Buyer hereby indemnifies, defends and holds the
Seller harmless with respect to any and all Losses asserted against, resulting
from, imposed upon or incurred by the Seller directly or indirectly relating
to or arising out of Taxes payable by the Companies with respect to any
Post-Closing Tax Period ("Post-Closing Taxes") except to the extent that such
Losses or Taxes relate to the activities of the Companies prior to the
Closing. The term "Post- Closing Tax Period" shall mean all taxable periods
beginning after the Closing Date and the portion beginning on the day after
the Closing Date of any taxable period that includes (but does not begin on)
such day.
16.3 Rights. After the Closing Date, the indemnification provided in
Sections 16.1 and 16.2 and any other indemnification expressly provided in this
Agreement and in the terms of any other agreements or documents delivered
pursuant to this Agreement will be the sole and exclusive
31
remedy of the parties hereto with respect to any and all Losses incurred
directly or indirectly because of or resulting from or arising out of or
relating to this Agreement, the transactions contemplated hereby, the Companies
or their respective assets, liabilities and businesses (other than claims of,
or causes of action arising from, fraud).
16.4 Survival of Representations and Warranties. The representations
and warranties contained herein, other than those contained in SECTIONS 6.2
and 7.3, shall survive the Closing for a period of eighteen (18) months (the
"Claims Period") following the Closing Date, and upon the expiration of such
period shall lapse and be of no further effect. The representations and
warranties contained in SECTIONS 6.2 and 7.3 shall survive the Closing.
16.5 Limitations on Indemnity. 16.5.1 Notwithstanding anything to the
contrary contained in this Agreement, neither the Buyer on the one hand nor
the Seller or Xxxxxx on the other shall have any liability or obligation to
the other for the inaccuracy or breach of any representation, warranty,
covenant or agreement of such other party made in this Agreement except to the
extent that the aggregate of such other party's Losses from such inaccuracies
or breaches exceed One Hundred Thousand Dollars ($100,000) (the "Threshold
Amount") in the aggregate, in which event the party so liable shall then be
liable only for all such Losses, including the sums constituting the Threshold
Amount. Any claim for indemnification must be made within eighteen (18) months
of the Closing.
16.5.2 Notwithstanding anything to the contrary contained in
this Agreement, (i) the liability of each of the Seller and Xxxxxx under
Section 16.1.1 with respect to any Loss shall be limited to an amount of such
Loss equal to his respective Applicable Percentage (as defined in the Letter
Agreement) of such Loss and (ii) the aggregate liability of each of the Seller
and Xxxxxx under this Article 16 shall not exceed the product of his
respective Applicable Percentage and the Fixed Payment.
16.5.3 The amount of any Loss for which indemnification is
provided under this Article 16 shall be net of any amounts recovered or
recoverable by the Indemnified Party (as
32
defined below) under insurance policies with respect to such Loss and shall be
(i) increased to take account of any net Tax cost incurred by the Indemnified
Party arising from the receipt of indemnity payments hereunder (grossed up for
such increase) and (ii) reduced to take account of any net Tax benefit realized
by the Indemnified Party arising from the incurrence or payment of any such
Loss. In computing the amount of any such Tax cost or Tax benefit, the
Indemnified Party shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
of any indemnity payment hereunder or the incurrence or payment of any
indemnified Loss.
16.6 Procedures.
16.6.1 Promptly after the receipt by any party (the "Indemnified
Party") of notice of (A) any claim or (B) the commencement of any action,
proceeding or litigation (collectively, "Litigation") which may entitle such
party to indemnification under this Section, such party shall give the other
party (the "Indemnifying Party") written notice of such claim or the
commencement of such claim or Litigation and shall permit the Indemnifying
Party to assume the defense of any such Litigation. The failure to give the
Indemnifying Party timely notice under this clause shall not preclude the
Indemnified Party from seeking indemnification from the Indemnifying Party
unless such failure has materially prejudiced the Indemnifying Party's ability
to defend such claim or Litigation.
16.6.2 If the Indemnifying Party assumes the defense of any such
claim or Litigation with counsel reasonably acceptable to the Indemnified
Party, the obligations of the Indemnifying Party as to such claim or
Litigation shall be limited to taking all steps necessary in the defense or
settlement of such claim or Litigation and to holding the Indemnified Party
harmless from and against any losses, damages and liabilities caused by or
arising out of any settlement approved by the Indemnifying Party or any
judgment in connection with such claim or Litigation; however, the Indemnified
Party may participate, at its or his expense, in the defense of such claim or
Litigation provided that the Indemnifying Party shall direct and control the
defense of such claim or Litigation.
33
The Indemnified Party shall cooperate and make available all books and records
reasonably necessary and useful in connection with the defense. The
Indemnifying Party shall not, in the defense of such claim or Litigation,
consent to entry of any judgment, except with the written consent of the
Indemnified Party, or enter into any settlement, except with the written
consent of the Indemnified Party, which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the Indemnified
Party of a release from all liability in respect of such claim or Litigation.
16.6.3 If the Indemnifying Party shall not assume the defense of
any such claim or Litigation, the Indemnified Party may, but shall have no
obligation to, defend against such claim or Litigation in such manner as it
may deem appropriate. The Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of all reasonable expenses, legal or
otherwise, incurred by the Indemnified Party in connection with the defense
against or settlement of such claim or Litigation. If no settlement of the
claim or Litigation is made, the Indemnifying Party shall promptly reimburse
the Indemnified Party for the amount of any judgment rendered with respect to
such claim or in such Litigation and of all reasonable expenses, legal or
otherwise, incurred by the Indemnified Party in the defense against such claim
or Litigation.
16.6.4 Regardless of whether the Indemnifying Party shall have
assumed the defense of any such claim or Litigation, the Indemnified Party
shall not admit any liability with respect to, or settle, compromise or
discharge, such claim or Litigation without the Indemnifying Party's prior
written consent (which consent shall not be unreasonably withheld).
ARTICLE 17
TERMINATION RIGHTS
------------------
17.1 Termination. This Agreement may be terminated by either the
Buyer or the Seller, if the party seeking to terminate is not in material
default or breach of this Agreement, upon written notice to the other upon the
occurrence of any of the following:
34
(a) by mutual written consent of the Buyer and the Seller;
(b) by the Buyer if any of the conditions set forth in Article
11 shall have become incapable of fulfillment, and shall not have been waived
by the Buyer;
(c) by the Seller if any of the conditions set forth in Article
12 shall have become incapable of fulfillment, and shall not have been waived
by the Seller; or
(d) by either the Buyer or the Seller, if the Closing does not
occur on or prior to March 1, 1997.
17.2 Liability. The termination of this Agreement under SECTION 17.1
shall not relieve any party of any liability for breach of this Agreement
prior to the date of termination.
17.3 Effect of Termination. If this Agreement is terminated as
described in SECTION 17.1, this Agreement shall become void and of no further
force or effect, except for the provisions of Sections 10.2, 10.4, 13.1, 14.1,
14.2, this Section 17.3 and Section 18.1.
ARTICLE 18
OTHER PROVISIONS
----------------
18.1 Certain Remedies of Seller and Xxxxxx. If this Agreement is
terminated pursuant to Section 17.1 (C), the Seller shall have no liability to
the Buyer. If on the Closing Date, (i) all applicable waiting periods under
the HSR Act have expired or been terminated, (ii) no order, decree or judgment
of any governmental authority has been rendered against any party hereto which
would render it unlawful to effect the transactions contemplated by this
Agreement and (iii) the Buyer has failed to comply with Section 12.3 of this
Agreement, the Seller and Xxxxxx shall have the right to immediately draw on
the full amount of the letter of credit deposited in the Escrow Account. The
foregoing right of the Seller and Xxxxxx is in addition to any and all other
rights and remedies of the
35
Seller and Xxxxxx hereunder, under applicable law, including in a court of
equity, or otherwise.
18.2 Risk of Loss. The risk of loss or damage to the Companies or
their business or any of their assets prior to December 31, 1996 shall be upon
the Seller. The Companies shall repair, replace and restore any such damaged
or lost asset to their prior condition, as soon as possible and in no event
later than the Closing Date. If the Companies fail to restore or replace any
such asset having a value exceeding Fifty Thousand Dollars ($50,000) , the
Companies shall assign or cause to be assigned to the Buyer at Closing his
rights under any insurance policy or pay over to the Buyer all proceeds of
insurance covering such asset's damage, destruction or loss.
18.3 Specific Performance. In the event of a material breach by one
of the parties hereto of their respective representations and obligations
hereunder, not cured within ten (10) calendar days after written notice to
that effect from another party, such other party shall have the right to bring
an action to enforce the terms of this Agreement by decree of specific
performance without being required to prove actual damages, post bond or
furnish other security, it being agreed that the property to be transferred
hereunder is unique and not readily available in the open market, and each
party hereto further agrees to waive any and all defenses against any such
action for specific performance based on the grounds that there is an adequate
remedy for money damages available.
18.4 Further Assurances. After the Closing, the Seller shall from
time to time, at the request of and without further cost or expense to the
Buyer, execute and deliver such other instruments of conveyance and transfer
and take such other actions as may reasonably be requested in order to more
effectively consummate the transactions contemplated hereby to vest in the
Buyer good and marketable title to the Shares being transferred hereunder, and
the Buyer shall from time to time, at the request of and without further cost
or expense to the Seller, execute and deliver such other instruments and take
such other actions as may reasonably be requested in order to more effectively
relieve the Seller of the obligations being assumed by the Buyer in connection
herewith.
18.5 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the
36
benefit of the parties hereto and their respective successors and permitted
assigns. No party may voluntarily or involuntarily assign its interest under
this Agreement without the prior written consent of the other party; provided,
that, prior to the Closing Date, the Buyer shall assign its rights and benefits
(but not its obligations) hereunder to the Buyer's Sub and, effective upon such
assignment, all references herein to the "Buyer" shall be deemed to be to each
of SFX Broadcasting, Inc. and Delsener/Xxxxxx Enterprises, Inc.
18.6 Entire Agreement. This Agreement, the Disclosure Schedule and
the Exhibits hereto embody the entire agreement and understanding of the
parties hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. In the event of a
conflict between the terms of this Agreement and any other agreement executed
in connection herewith, the terms of this Agreement shall prevail. No
amendment, waiver of compliance with any provision or condition hereof or
consent pursuant to this Agreement shall be effective unless evidenced by an
instrument in writing signed by the party against whom enforcement of any
waiver, amendment, change, extension or discharge is sought.
18.7 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.9 Payments. Neither Buyer on the one hand nor the Seller, Xxxxxx
or the Companies on the other has made any representation or warranty with
respect to the tax treatment of either the Fixed Payment or the Deferred
Purchase Price Payments.
18.10 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the State of New York without
giving effect to the choice of law provisions thereof.
18.11 Notices. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing and shall
be deemed to have been duly delivered
37
and received on the date of personal delivery or on the date of receipt, if
mailed by registered or certified mail, postage prepaid and return receipt
requested, or on the date of a stamped receipt, if sent by an overnight
delivery service, or on the date of written confirmation of delivery by
facsimile or facsimile transmission, and shall be addressed to the following
addresses, or to such other address as any party may request, in the case of
the Seller, by notifying the Buyer, and in the case of the Buyer, by notifying
the Seller:
To the Companies:
Delsener/Xxxxxx Enterprises, Ltd.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxx Xxxxxxxx
Attn: Xx. Xxxxx Xxxxxx
Facsimile #: (000) 000-0000.
With copies to:
Xxxxxx X. Xxxxxxx, Esq.
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile #: (000) 000-0000
Xxxxxxx X. Xxxxxx, Esq.
Proskauer, Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
To the Seller:
Xx. Xxx Xxxxxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000)000-0000
38
With a Copy to:
Xxxxxxx X. Xxxxxx, Esq.
Proskauer, Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
To Xxxxxx:
Xx. Xxxxx Xxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile#: (000)000-0000
With a Copy to:
Xxxxxx X. Xxxxxxx, Esq.
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile #: (000) 000-0000
To Buyer:
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxx
Facsimile#: (000) 000-0000
With a Copy to:
Xxxxxx X. Xxxxx, Esq.
Executive Vice President
and General Counsel
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
18.12 Arbitration. Any dispute between the Buyer and the Seller over
any of the terms or conditions of this Agreement shall be submitted to the
American Arbitration Association in the City of New York, State of New York
for arbitration under its then prevailing rules, the arbitrator(s) to be
selected as follows: Each of the parties hereto shall by written notice to the
other have the right
39
to appoint one arbitrator. If, within thirty (30) days following the giving of
such notice by one party, the other shall not, by written notice, appoint
another arbitrator, the first arbitrator shall be the sole arbitrator. If two
arbitrators are so appointed, they shall appoint a third arbitrator. If thirty
(30) days elapse after the appointment of the second arbitrator and the two
arbitrators are unable to agree upon the third arbitrator, then either party
may, in writing, request the American Arbitration Association to appoint the
third arbitrator. The award made in the arbitration shall be binding and
conclusive on the parties and judgment may be, but need not be, entered in any
court having jurisdiction. Such award shall include the fixing of the costs,
expenses and reasonable attorney's fees of arbitration, which shall be borne by
the unsuccessful party.
18.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
THE COMPANIES
-------------
DELSENER/XXXXXX ENTERPRISES, LTD CONNECTICUT CONCERTS,
INCORPORATED
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
-------------------- ---------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President President
BEACH CONCERTS, INC. BROADWAY CONCERTS, INC.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
-------------------- ---------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President President
40
ARDEE PRODUCTIONS, LTD. DUMB DEAL, INC.
By:/s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
-------------------- --------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President President
ARDEE FESTIVALS NJ, INC. SELLER:
By: /s/ Xxx Xxxxxxxx /s/ Xxx Xxxxxxxx
-------------------- --------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President
XXXXXX:
IN-HOUSE TICKETS, INC.
/s/ Xxxxx Xxxxxx
-----------------------
By: /s/ Xxx Xxxxxxxx Xxxxx Xxxxxx
--------------------
Xxx Xxxxxxxx
President SFX BROADCASTING, INC.
EXIT 116 REVISITED, INC.
By: /s/ Xxxxxx F.X. Sillerman
----------------------------
Xxxxxx F.X. Sillerman
By: /s/ Xxx Xxxxxxxx Chief Executive Officer
--------------------
Xxx Xxxxxxxx
President
41
