AGREEMENT OF MERGER
BY AND AMONG
SFX BROADCASTING, INC., NOC-ACQUISITION CORP.,
CADCO ACQUISITION CORP., QN-ACQUISITION CORP.,
NEDERLANDER OF CONNECTICUT, INC.,
CONNECTICUT AMPHITHEATER DEVELOPMENT CORPORATION,
QN CORP., CONNECTICUT PERFORMING ARTS, INC., AND
CONNECTICUT PERFORMING ARTS PARTNERS
AND THE
STOCKHOLDERS OF NEDERLANDER OF CONNECTICUT, INC.,
CONNECTICUT AMPHITHEATER DEVELOPMENT CORPORATION
AND
QN CORP.
LISTED ON THE SIGNATURE PAGE HERETO
FEBRUARY 12, 1997
TABLE OF CONTENTS
Page
SECTION 1. THE MERGERS......................................................1
1.1 The Mergers..........................................................1
1.2 Effective Date of the Mergers........................................2
1.3 Substitute Letter of Credit .........................................3
1.4 Certificates of Incorporation........................................3
1.5 By-Laws..............................................................3
1.6 Directors and Officers...............................................3
1.7 Conversion of Shares.................................................4
1.8 Payment for Shares of Stock..........................................5
1.9 Taking of Necessary Action; Further Action...........................5
1.10 Closing of the Company's Transfer Books..............................6
1.11 Apportionments ......................................................6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES..................12
2.1 Corporate Organization..............................................12
2.2 Capitalization......................................................12
2.3 Subsidiaries of the Company.........................................13
2.4 Authorization.......................................................14
2.5 No Violation........................................................14
2.6 Permits; Compliance.................................................15
2.7 Reports and Financial Statements....................................15
2.8 Absence of Certain Changes or Events................................16
2.9 Undisclosed Liabilities.............................................17
2.10 Title to Properties.................................................17
2.11 Real Property.......................................................17
2.12 Personal Property...................................................23
2.13 Reserved............................................................23
2.14 Insurance...........................................................23
2.15 Employee Benefits...................................................23
2.16 Employees...........................................................24
2.17 Environment, Health and Safety......................................24
2.18 Intellectual Property...............................................26
2.19 Contracts...........................................................27
2.20 Taxes...............................................................28
2.21 Litigation..........................................................32
2.22 Consents............................................................32
2.23 Affiliate Transaction...............................................32
2.24 Broker's and Finder's Fees .........................................33
2.25 Absence of Certain Business Practices...............................33
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF SFX............................33
3.1 Corporate Organization..............................................33
3.2 Authorization.......................................................33
3.3 No Violation........................................................34
3.4 Litigation..........................................................34
3.5 Consents............................................................34
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER .............35
4.1 Authorization of Transaction........................................35
4.2 Noncontravention....................................................35
4.3 Brokers' Fees.......................................................36
4.4 Company Shares......................................................36
4.5 Accredited Investor.................................................36
4.6 Investment Intention................................................37
4.7 Receipt of Information..............................................37
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING SFX SUBS................37
5.1 Organization........................................................37
5.2 Authority Relative to This Agreement................................37
SECTION 6. COVENANTS AND AGREEMENTS.........................................38
6.1 Conduct of Business.................................................38
6.2 Access..............................................................41
6.3 Filings and Governmental Consents...................................41
6.4 Stockholders' Approval..............................................41
6.5 Confidentiality.....................................................42
6.6 Restrictions on Transfer............................................43
6.7 Registration Statement for Registering of Stock.....................43
6.8 Use of Financial Statements ........................................44
6.9 "As Is, Where Is" Acquisition.......................................44
6.10 Stock Legend........................................................45
6.11 Further Actions.....................................................46
6.12 Casualty and Condemnation...........................................46
6.13 Environmental and Structural Unwind Provision.......................47
SECTION 7. CONDITIONS.......................................................51
7.1 Conditions to Each Party's Obligation to Effect the Merger..........51
7.2 Conditions to Obligation of the Companies to Effect the Mergers.....52
7.3 Conditions to Obligations of SFX and SFX Subs to Effect the Mergers.52
SECTION 8. TERMINATION PRIOR TO EFFECTIVE DATE..............................54
8.1 Termination Prior to Effective Date.................................54
8.2 Effect of Termination...............................................54
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SECTION 9. DUE DILIGENCE REVIEW; PURCHASER'S TERMINATION OPTION.............55
SECTION 10. PUT AND CALL PROVISIONS AFTER MERGER.............................57
10.1 Put Option..........................................................57
10.2 Put Closing.........................................................57
10.3 Call Option.........................................................58
10.4 Call Closing........................................................58
10.5 Acceleration of Put.................................................58
SECTION 11. RIGHT OF FIRST REFUSAL...........................................59
SECTION 12. INDEMNIFICATION..................................................59
12.1 The Stockholders' Indemnitees.......................................59
12.2 SFX's Indemnitees...................................................60
12.3 Procedures..........................................................61
SECTION 13. MISCELLANEOUS PROVISIONS.........................................62
13.1 Specific Performance................................................62
13.2 Amendment and Modification..........................................62
13.3 Waiver..............................................................63
13.4 Survival of Representations and Warranties..........................63
13.5 Expenses............................................................64
13.6 Materiality.........................................................64
13.7 Notices.............................................................64
13.8 Assignment..........................................................65
13.9 Publicity...........................................................66
13.10 Books and Records; Tax Closing Package..............................66
13.11 Closing.............................................................66
13.12 Counterparts........................................................66
13.13 Headings............................................................66
13.14 Entire Agreement....................................................67
13.15 Obligations of SFX Subs.............................................67
13.16 Governing Law.......................................................67
13.17 Jurisdiction........................................................67
13.18 Several Obligations ................................................68
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AGREEMENT OF MERGER
AGREEMENT OF MERGER dated February 12, 1997, among SFX BROADCASTING,
INC. ("SFX"), a Delaware corporation, NOC-Acquisition Corp., a Connecticut
corporation and a wholly-owned subsidiary of SFX ("NOC-Acquisition"),
CADCO-
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Acquisition Corp., a Connecticut corporation and a wholly-owned subsidiary of
SFX ("CADCO-Acquisition"), QN-Acquisition Corp., a Connecticut corporation and
a wholly-owned subsidiary of SFX ("QN-Acquisition", and together with
NOC-Acquisition and CADCO-Acquisition, the "SFX Subs"), Nederlander of
Connecticut, Inc., a Connecticut corporation ("NOC"), Connecticut Amphitheater
Development Corporation, a Connecticut corporation ("CADCO"), QN Corp., a
Connecticut corporation, ("QN Corp.") Connecticut Performing Arts, Inc.
("CPA"), a Connecticut corporation, Connecticut Performing Arts Partners
("CPAP"), a joint venture by and between NOC and CADCO ("QN", and together with
NOC and CADCO, the "Companies") ( collectively, the SFX Subs and the Companies
are hereinafter referred to collectively as the "Constituent Corporations") and
all of the Stockholders of the Companies listed on the signature page hereto
(individually, a "Stockholder" and collectively, the "Stockholders").
WHEREAS, the Boards of Directors of (i) SFX, (ii) each of the SFX
Subs, and (iii) each of the Companies, deeming it advisable for their
respective benefits and the benefits of their respective shareholders, have
approved the merger of each of NOC-Acquisition, CADCO-Acquisition and
QN-Acquisition with and into NOC, CADCO, and QN respectively (collectively the
"Mergers"), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 THE MERGERS
1.1 The Mergers. On the Effective Date (as defined in Section 1.2),
NOC-Acquisition shall be merged with and into NOC, CADCO-Acquisition shall be
merged with and into CADCO and QN-Acquisition shall be merged with and into QN,
all in accordance with the applicable provisions of the law of the State of
Connecticut. Upon the Mergers, the separate existences of each of
NOC-Acquisition, CADCO-Acquisition and QN-Acquisition shall thereupon cease,
and NOC, CADCO and QN, as the surviving corporations in each of the Mergers
(each a "Surviving Corporation" and collectively, the "Surviving
Corporations"), shall continue their corporate existences under the law of the
State of Connecticut except that the name
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of NOC shall be changed so as to exclude the name "Nederlander" and any changes
to the names of the entities shall otherwise comply with applicable law. In
addition, upon the effectiveness of all of the Mergers, NOC, CADCO and QN each
shall possess all the rights, privileges, powers and franchises, of a public as
well as of a private nature, of (i) NOC-Acquisition and NOC, (ii)
CADCO-Acquisition and CADCO, and (iii) QN-Acquisition and QN, respectively; and
shall be subject to all the restrictions, disabilities and duties of (i)
NOC-Acquisition and NOC, (ii) CADCO-Acquisition and CADCO, and (iii)
QN-Acquisition and QN, respectively; and all the rights, privileges, powers and
franchises of (i) NOC-Acquisition and NOC, (ii) CADCO-Acquisition and CADCO,
and (iii) QN-Acquisition and QN, respectively; and all property, real, personal
and mixed, and all debts due to them on whatever account, for stock
subscriptions as well as all other things in action or belonging to each of
them shall be vested in NOC, CADCO and QN respectively; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporations
as they were of the applicable Constituent Corporations, and the title to any
real estate vested by deed or otherwise in the Constituent Corporations shall
not revert or be in any way impaired by reason of the Mergers; but all rights
of creditors and all liens upon any property of the Constituent Corporations
shall be preserved unimpaired, and all debts, liabilities and duties of each of
the Constituent Corporations shall thenceforth attach to the applicable
Surviving Corporations, and may be enforced against them to the same extent as
if said debts, liabilities and duties had been incurred or contracted by said
Surviving Corporations.
1.2 Effective Date of the Mergers. Subject to the terms and conditions
hereof, including, without limitation, the satisfaction or waiver of the
conditions set forth in Section 7 hereof, the parties hereto will cause each of
the Mergers to be consummated on or about February 21, 1997 by the filing with
the Secretary of State of Connecticut, in accordance with the Stock Corporation
Act of the State of Connecticut ("CN Stock Act"), of a Certificate of Merger
(the "Certificate of Merger") in such form as required by and executed in
accordance with the relevant provisions of applicable law. Each of the Mergers
shall become effective on the date and time when the applicable Certificate of
Merger is so filed (the "Effective Date").
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1.3 Substitute Letter of Credit and Bond. Upon the consummation of the
Mergers, SFX shall cause the Surviving Corporations to replace: (i) that
certain letter of credit (as amended) No.42148, in the face amount of $785,000
drawn under Nations Bank which is currently being held by Fleet National Bank
of Connecticut ("Fleet") as security for that certain General Obligation
Indenture of Trust dated as of November 1, 1993, by and between Connecticut
Development Authority and Fleet (as amended); and (ii) the bond (the "Bond") to
the extent required to be posted pursuant to that certain preliminary report
issued by the State of Connecticut State Traffic Commission (No. 063-9702-1) in
an amount not to exceed $90,000, to the extent that the Bond is posted prior to
the Effective Date. SFX acknowledges that the Stockholders shall not be
required to post the Bond after the Effective Date.
1.4 Certificates of Incorporation. The Certificates of Incorporation
of each of NOC-Acquisition, CADCO-Acquisition, and QN-Acquisition, as in effect
immediately prior to the Effective Date shall be the Certificates of
Incorporation of the relevant Surviving Corporation, until thereafter amended
as provided by law provided that Article First of the Certificate of
Incorporation of NOC shall be amended in its entirety to provide that the name
of NOC is "NOC Corp".
1.5 By-Laws. The By-Laws of each of NOC-Acquisition, CADCO-
Acquisition and QN-Acquisition as in effect immediately prior to the Effective
Date shall be the By-Laws of the respective surviving corporations, until
amended as therein provided.
1.6 Directors and Officers. The directors of each of NOC, CADCO and QN
in office immediately prior to the Effective Date will resign effective as of
the Effective Date. The directors of the Surviving Corporations on the
Effective Date shall be the directors of NOC-Acquisition, CADCO-Acquisition and
QN-Acquisition in office immediately prior to the Effective Date, to serve in
accordance with the By-Laws of the Surviving Corporations. The officers of each
of the Surviving Corporations on the Effective Date shall be the officers of
NOC-Acquisition, CADCO-Acquisition, and QN-Acquisition immediately prior to the
Effective Date, to serve in accordance with the By-Laws of the relevant
Surviving Corporation.
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1.7 Conversion of Shares. As of the Effective Date, by virtue of the
Mergers and without any action on the part of the holders thereof:
(a) Each share of stock of each of NOC, CADCO, and QN outstanding
immediately prior to the Effective Date (the "Stock") shall be canceled and
extinguished and converted into the right to receive, in the aggregate, (i)
$1,000,000 in cash, without any interest, and (ii) shares of the Class A Common
Stock of SFX (the "SFX Shares"), with a market value as of the close of
business on the date prior to the Effective Date of $9 million, such market
value to be determined by the average official closing price per share of said
stock for the twenty (20) consecutive trading days ending on the fifth day
prior to the Effective Date in the market on which it is publicly traded (the
"Closing Value") which Closing Value shall be reduced by 10% (the "Adjusted
Closing Value") for the purposes of computing the number of shares to be
delivered on the Effective Date (the "Merger Consideration"); provided,
however, if the market value of the SFX shares is less than $9 million based
upon the closing price of such shares on the day immediately preceding the
Effective Date, SFX shall deliver an additional amount of shares so that the
aggregate value of the SFX shares so delivered is not less than $9 million,
based on the closing price of such shares on the day immediately preceding the
Effective Date. For example, assuming that the Closing Value as of the
Effective Date is equal to $30 per share, then the number of SFX Shares to be
delivered to the shareholders of NOC and CADCO would be 333,333 shares ($30 per
share reduced by 10% = $27 per share and $9,000,000/$27 per share = 333,333
shares). The Merger Consideration shall be allocated and distributed among the
shareholders of NOC, CADCO and QN in accordance with Section 1.8 below;
(b) Each share of Stock of NOC-Acquisition, CADCO-Acquisition and
QN-Acquisition outstanding immediately prior to the Effective Date shall be
converted without any action on the part of the holders thereof into one
validly issued, fully paid and nonassessable share of Stock of NOC, CADCO, and
QN, respectively;
(c) Each share of Stock of NOC, CADCO, and QN held in the treasury
of said Companies or the treasury of any subsidiary of said Companies, and each
such share owned by SFX, NOC-Acquisition, CADCO Acquisition or QN Acquisition
or any other
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subsidiary of SFX shall be canceled and cease to exist, and no payment or other
consideration shall be made in respect thereof: and
(d) All notes and other debt instruments of each of the Companies
outstanding on the Effective Date shall continue to be outstanding subsequent
to the Effective Date as notes and other debt instruments of the applicable
Surviving Corporation subject to the terms and covenants thereof, and shall not
be affected by the Mergers; provided, however, that any liabilities of any
nature whatsoever to any Stockholder shall, except to the extent disclosed
herein or in the Schedules attached hereto, be extinguished.
1.8 Payment for Shares of Stock. By no later than 9 a.m. on the
Effective Date, SFX and the SFX Subs shall cause the Merger Consideration to be
deposited with Xxxxxx X. Xxxxxxxxxxx (the "Paying Agent") to be held pending
the consummation of Mergers. Upon the consummation of Mergers, the Paying Agent
shall distribute such Merger Consideration in accordance with a joint written
direction from the Stockholders to be provided to the Paying Agent on the
Effective Date.
1.9 Taking of Necessary Action; Further Action. SFX, each of the SFX
Subs, the Companies and the Stockholders, respectively, shall take all such
action as may be necessary or appropriate in order to effectuate the Mergers as
promptly as possible. If, at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this Agreement
and to vest the Surviving Corporations with full right, title and possession to
all assets, property, rights, privileges, powers and franchises of the
applicable Constituent Corporations, the officers and directors of such
corporations are fully authorized in the name of their corporation or otherwise
to take, and shall use reasonable efforts to take, all such action.
1.10 Closing of the Company's Transfer Books. On the date hereof, the
stock transfer books of the Companies and the Companies Subsidiaries (as
defined below) shall be closed and no transfer of shares (other than shares
into which the capital stock of NOC
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Acquisition, CADCO Acquisition and QN Acquisition may be converted pursuant to
the Mergers), shall thereafter be made.
1.11 Apportionments. SFX and the Stockholders shall apportion the
following items of revenue and expense (which items of revenue and expense are
more particularly set forth by example in the Combined Balance Sheet of
Connecticut Performing Arts, Inc. and Connecticut Performing Arts Partners,
dated as of November 30, 1996), as of midnight of the date immediately
preceding the Effective Date in accordance with the following terms and
conditions:
A. (i) SFX shall, except as otherwise expressly set forth herein,
receive a credit in an amount equal to the sum of (a) all accounts payable and
accrued expenses of the Companies to the extent the same are attributable to
periods preceding the Effective Date; (b) to the extent not satisfied prior to
the Effective Date, any amounts of principal and accrued and unpaid interest
outstanding under the Nations Bank Loan (as defined on the Balance Sheet (as
defined below); and (c) $250,000.
(ii) Stockholders shall receive a credit in an amount equal to the
sum of (w) $110,000 on deposit with the City of Hartford together with any
interest accrued thereon, (x) an amount equal to any other deposits made on
behalf of the Companies and as set forth on Schedule 1.11(A)(ii), together with
any accrued interest thereon, (y) all cash on deposit in accounts of the
Companies as of the date immediately preceding the Effective Date less an
amount equal to any outstanding checks as of such date, and (z) all prepaid
expenses and subscriptions, if any, to the extent the same are attributable to
periods preceding the Effective Date;
(iii) the accounts receivable set forth below shall be apportioned
in the following manner:
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(a) Anheuser Xxxxx: To the extent not paid prior to the Effective
Date, the Stockholders shall be entitled to an amount equal to any sponsorship
fees due on account of shows or events occurring prior to the Effective Date;
the Companies shall remit such amount to the Stockholders within five (5) days
following receipt thereof.
(b) To the extent not paid prior to the Effective Date, ATI The
Car Phone Store ("ATI"): the Stockholders shall be entitled to receive the sum
of $2,000 representing sponsorship fees due from ATI and attributable to
periods preceding the Effective Date; the Companies shall remit such amount to
the Stockholders within five (5) days following receipt thereof.
(c) WMRQ, WHCN and WKSS: Stockholders shall receive a credit on
the Effective Date in the following amounts to the extent not previously
received by the Companies: (i) such portion of the $5,833.31 with respect to
sponsorship fees due from WMRQ which are attributable to periods prior the
Effective Date, (ii) such portion of the $8,333.31 with respect to sponsorship
fees due from WHCN which are attributable to periods prior to the Effective
Date, and (iii) $18,750 with respect to sponsorship fees due from WKSS which
are attributable to periods prior to the Effective Date.
(d) WTIC: In the event that the $5,000 receivable on account of
sponsorship fees due from WTIC for the period January 1, 1997 through March 31,
1997 is received prior to the Effective Date, then SFX shall, on the Effective
Date, receive a credit of the allocable amount thereof (prorated on a per diem
basis) for the period from the Effective Date through March 31, 1997 and the
balance shall be retained by the Stockholders. In the event that such amount is
received subsequent to the Effective Date, the Companies shall remit the
allocable amount due to the Stockholders within five (5) days following receipt
thereof.
(e) Tweeter: In the event that the $6,250 receivable on account
of sponsorship fees due from Tweeter for the period from February 15, 1997
through May 15, 1997 is received prior to the Effective Date, SFX shall, on the
Effective Date, receive a credit for the
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allocable amount (prorated on a per diem basis) for the period from the
Effective Date through May 15, 1997 and the balance shall be retained by the
Stockholders. In the event that such amount is received subsequent to the
Effective Date, the Companies shall remit the allocable amount due to the
Stockholders within five (5) days following receipt thereof.
(f) St. Xxxxxxx: In the event that the $40,000 receivable on
account of sponsorship fees due from St. Xxxxxxx for the period from October 1,
1996 through September 30, 1997 is received prior to the Effective Date, SFX
shall, on the Effective Date, receive a credit for the allocable amount
(prorated on a per diem basis) for the period from the Effective Date through
September 30, 1997 and the balance shall be retained by the Stockholders. In
the event that such amount is received subsequent to the Effective Date, the
Companies shall remit the allocable amount due to the Stockholders within five
(5) days following receipt thereof.
(g) EMI, Inc.: Stockholders shall be entitled to receive (i) the
sum of $4,276.48 representing amounts due with respect to periods prior to the
Effective Date to the extent not received prior to the Effective Date, and (ii)
any additional amounts due with respect to events held subsequent to November
30, 1996 and prior to the Effective Date to the extent not received prior to
the Effective Date. In the event that such amounts are received subsequent to
the Effective Date, SFX shall remit the amount due to the Stockholders within
five (5) days following receipt thereof.
(h) Protix: There shall be no adjustment with regard to Protix.
(i) Xxxxx: There shall be no adjustment with regard to Xxxxx.
(iv) deferred income (excluding the amounts to be apportioned
in respect of items set forth in Section 1.11(A)(iii) above) shall be
apportioned between SFX and the Stockholders based upon the Companies prior
amortization schedule, which is attached hereto as Schedule 1.11(A)(iv),
therefor based upon the period to which such deferred income relates such that
SFX shall receive a credit for all such deferred income allocable to periods
from
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and after the Effective Date and the Stockholders shall receive a credit for
all such deferred income through the date immediately preceding the Effective
Date;
(v) if the Effective Date is other than the first day of a
calendar month, all fixed rent payable under leases (other than the Lease and
Sublease Agreement between CPA and CPAP) shall be apportioned for the month in
the which the Effective Date occurs provided that SFX shall receive a credit
for any unpaid amounts for any other periods prior to the Effective Date;
(vi) if the Effective Date is other than the first day of a
calendar month, interest payable under all loan agreements, mortgages and
financing agreements with the Connecticut Development Authority (expressly
excluding, however, interest payments payable to Protix and Xxxxx), shall be
apportioned for the month in which the Effective Date occurs provided that SFX
shall receive a credit for any unpaid amounts for any other periods prior to
the Effective Date; and
Anything contained herein to the contrary notwithstanding, no
apportionment shall be made with respect to: (i) all related party loans or
payables which shall be canceled or satisfied by the Stockholders as of the
Effective Date, and (ii) any long term debt or other obligations of the
Companies to Xxxxx, Protix, Shawmut Bank or the Connecticut Development
Authority.
B. To the extent that the following items are not subject to
adjustment pursuant to the provisions of 1.11(A) hereof, SFX and the
Stockholders shall also apportion the following items of revenue and expense as
of midnight on the date immediately preceding the Effective Date:
(i) all wages and salaries of employees for current periods,
including accruals up to the Effective Date, for bonuses, commissions,
vacations and sick pay and related payroll taxes;
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(ii) utility expenses, including without limitation,
telephone, electricity and gas, on the basis of the most recently issued bills
therefor, with a subsequent reapportionment of such utilities promptly after
issuance of bills for the same for the period which includes in the Effective
Date; and
(iii) payments in lieu of taxes and additional rents payable
under leases (other than the Lease and Sublease Agreement between CPA and CPAP)
and any prepaid charges or advance payments under service contracts.
C. The apportionments contemplated by this Section, to the extent
practicable, shall be made on the Effective Date. At least five (5) business
days prior to the estimated Effective Date, the Stockholders shall furnish to
SFX a proposed apportionment schedule with respect to the items set forth in
Sections 1.11(A) and (B). Thereafter, the Stockholders and SFX shall negotiate
in good faith in order to resolve any disputed amounts contained therein. In
the event that the Stockholders and SFX are unable to resolve any such disputed
items (the "Disputed Apportionments"), such dispute shall be resolved as
provided in Section 1.11(D) below. On the Effective Date, to the extent that
the aggregate apportionments which are not the subject of dispute shall result
(x) in an amount due to the Stockholders, SFX shall increase the amount of the
cash Merger Consideration in an amount equal to the amount due, or (y) in an
amount due to SFX, SFX shall be entitled to reduce the amount of the cash
Merger Consideration to the extent of such amount due SFX (but in no event to
exceed $100,000 exclusive of amounts required to repay the Nations Bank Loan
which shall be credited entirely in cash) and the balance of such amount due to
SFX shall be satisfied by reducing the amount of SFX Shares to be delivered to
the Stockholders by the dividing the balance of the amount due by the Closing
Value.
D. Within thirty (30) days following the Effective Date, the
Stockholders shall deliver to SFX a schedule of all final apportionments which
were not made on the Effective Date together with a schedule of all Disputed
Apportionments including the Stockholder's position with respect thereto (the
"Final Schedule"). Within ten (10) days following receipt of such Final
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Schedule, SFX shall either give the Stockholders written notice of acceptance
of such Final Schedule or the give the Stockholders written notice of any
remaining disputed amounts (a "Notice of Dispute"). If SFX fails to either
accept such Final Schedule or deliver a Notice of Dispute within said ten day
period, SFX shall be deemed to have accepted the Final Schedule. The Notice of
Dispute shall state the amount that SFX believes it is entitled to receive or
obligated to pay in respect of the final apportionments and any Disputed
Apportionments (the "SFX Amount") and the Stockholders shall have a period of
ten (10) days following receipt of the Notice of Dispute to either accept the
SFX Amount or to reject the SFX Amount. If the Stockholders reject the SFX
Amount and the amount in dispute is $10,000 or less in the aggregate, then the
disputed amount shall be shared equally between SFX and the Stockholders. If
the Stockholders reject the SFX Amount and the SFX Amount exceeds $10,000, and
the Stockholders and SFX unable to resolve any remaining differences within ten
(10) days following the rejection of the SFX Amount by the Stockholders, then
the such dispute shall be submitted to an independent arbitrator (the
"Apportionment Arbitrator") designated by the American Arbitration Association
under the expedited procedures then in effect for the resolution of commercial
disputes for resolution. The Arbitrator shall be a certified public accountant
designated by the American Arbitration Association. SFX and the Stockholders
shall share equally the costs and expenses of the Apportionment Arbitrator, but
each party shall bear its own legal and other expenses, if any. Upon final
resolution of the amount due in respect of the Final Schedule including any
Disputed Apportionments, the amounts due to either SFX or the Stockholders, as
the case may be, shall be paid in accordance with Section 1.11(C) hereof.
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
Each of the Companies (in each case, the "Company") hereby represents
and warrants (with respect to itself and its own subsidiaries only) to SFX as
follows:
2.1 Corporate Organization.
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(a) Schedule 2.1 of the Disclosure Schedule sets forth the name
and jurisdiction of the Company and its direct and indirect Subsidiaries, (the
"Subsidiaries"). Each of the Company and its Subsidiaries other than CPAP, is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has all
requisite corporate or other power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by it or the ownership or leasing of
its properties makes such qualification necessary except where the failure to
so qualify would not have a material affect on the Company or its Subsidiaries
(a "Material Adverse Affect").
(b) The copies of the Certificate of Incorporation and By-Laws of
the Company and of each of its subsidiaries heretofore delivered to SFX are
complete and correct copies of such instruments as presently in effect.
2.2 Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company and the capital accounts of CPAP are as set forth
on Schedule 2.2. All issued and outstanding shares of Stock are duly
authorized, validly issued and outstanding, fully paid and nonassessable and
not subject to any unwaived, preemptive or appraisal rights. 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 capital stock of the Company or its Subsidiaries or any
securities convertible into, or other rights to acquire, any of the capital
stock of the Company or its Subsidiaries; or (ii) obligates the Company or its
Subsidiaries to grant, offer or enter into any of the foregoing; or (iii)
relates to the voting or control of such capital stock, securities or rights.
No person has any right to require the Company or its Subsidiaries to register
any of its securities under the Securities Act of 1933, as amended (the
"Securities Act"). Schedule 2.2 sets forth the name and address of each holder
of Company Stock and the number of such securities held by such holder. Each
holder of Company Stock is an "accredited investor" as that term is defined in
Regulation D promulgated under the Securities Act.
- 12 -
2.3 Subsidiaries of the Company.
(a) Schedule 2.3 of the Disclosure Schedule sets forth the name,
jurisdiction of incorporation and capitalization of each Subsidiary. Except as
set forth in Schedule 2.3 of the Disclosure Schedule, the Company does not own,
directly or indirectly, any capital stock of any corporation or have any direct
or indirect equity or ownership interest in any corporation, business trust,
firm, association, partnership, joint venture, entity or organization.
(b) Except as set forth in Schedule 2.3 of the Disclosure
Schedule, all of the issued and outstanding capital stock of each Subsidiary of
the Company is owned, directly or indirectly, by the Company free and clear of
any liens, claims, charges, options, rights of first refusal, pledges, security
interests, mortgages, indentures, or other encumbrances or third party rights
of any kind, written or oral (collectively, "Liens") and is validly issued,
fully paid and nonassessable.
(c) Except as set forth in Schedule 2.3 of the Disclosure
Schedule, each Subsidiary of the Company: (i) is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation; and (ii) has full power and authority to own, operate and lease
its properties and assets and to carry on its business as it is now being
conducted in the manner of and in the places in which such business is now
being conducted.
2.4 Authorization. The Company has full power and authority to enter
into this Agreement and (subject to obtaining the consents set forth in
Schedule 2.22 hereof and the approval of transactions contemplated hereby by
the stockholders of the Company in accordance with applicable law) to carry out
the transactions contemplated hereby. The Board of Directors of the Company has
approved this Agreement and the transactions contemplated hereby, has
authorized the execution and delivery of this Agreement and has directed that
the transactions
- 13 -
contemplated hereby be submitted to its stockholders for approval within seven
(7) days of the date hereof, and (except for the approval of the transactions
contemplated hereby by the stockholders of the Company) no other corporate
proceedings on the part of the Company are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and (assuming this Agreement is a legal,
valid and binding obligation of SFX and its applicable subsidiary) constitutes
a legal, valid and binding obligation of the Company enforceable in accordance
with its terms.
2.5 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (with or
without notice or the passage of time, or both): (a) violate any provision of
the Certificate of Incorporation or ByLaws of the Company or of any Subsidiary
or the partnership agreement of CPAP; (b) except as set forth in Schedule 2.5
of the Disclosure Schedule, violate, conflict with, constitute a default under,
permit the termination of, cause the acceleration of the maturity of, or result
in the creation or imposition of any lien upon the properties or assets of the
Company or any of its Subsidiaries pursuant to the provisions of, any
agreement, lease, document, instrument, debt or obligation to which the Company
or any of its Subsidiaries is bound; or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental agency
or body by which the Company or any of its Subsidiaries is bound or to which
the Company or any of its Subsidiaries is subject. Neither the Company nor any
of its Subsidiaries has received notice that it is in material violation of any
statute, law, judgment, decree, order, regulation or rule relating to or
affecting the operation, conduct or ownership of the properties or business of
the Company or any of its Subsidiaries.
2.6 Permits; Compliance. Except as set forth on Schedule 2.6 hereto,
to the actual knowledge of each Company, (i) each Company and its Subsidiaries
is in possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals
and orders necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the "Company
Permits"), and (ii) there is no material action, proceeding or investigation
pending or threatened regarding
- 14 -
suspension or cancellation of any of the Company Permits. Schedule 2.6 sets
forth a list of all of the Company Permits. Neither the Company nor any of its
Subsidiaries is in material violation, which violation would have a Material
Adverse Effect, of (a) any law applicable to the Company or any of its
Subsidiaries or which any of their respective properties is bound by or subject
to or (b) any of the Company Permits and neither the Companies nor any of their
Subsidiaries has received notice with respect to any such violation. The
Company has provided SFX with copies of any written notifications which any of
its Subsidiaries has received from any governmental entity with respect to
material violations of applicable laws.
2.7 Reports and Financial Statements. Schedule 2.7 of the Disclosure
Schedule contains true and complete copies of the Company's (i) Unaudited
Balance Sheet and Income Statement for the years ended December 31, 1994 and
December 31, 1995, (ii) interim balance sheets and income statements for 1996
(other than for CPA and CPAP), (iii) certified audited combined financial
statements for CPAP and CPA for each of the years ended December 31, 1994 and
December 31, 1995 and (iv) internally prepared unaudited quarterly combined
financial statements for CPA and CPAP for 1996 (collectively, the "Financial
Statements"). The Financial Statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of the Company and/or its Subsidiaries, as the case may be,
as at the dates thereof and the results of their operations and changes in
financial position for the periods then ended subject, in the case of the
unaudited interim financial statements, to normal year-end audit adjustments
and any other adjustments described therein which would not have a Material
Adverse Effect.
2.8 Absence of Certain Changes or Events. Except as disclosed in
Schedule 2.8 of the Disclosure Schedule, since November 1996, the Company and
its Subsidiaries have conducted their respective businesses only in a manner
consistent with usual and customary industry practice and there has not been:
(i) any material change in the business, operations or financial conditions of
the Company or any of its Subsidiaries; (ii) any entry into any commitment or
transaction material to the business and financial condition of the Company or
its
- 15 -
Subsidiaries (including, without limitation, any borrowing or capital
expenditures other than the transactions contemplated by that certain loan
commitment, dated December 20, 1996 from the Connecticut Development Authority
to CPA (the "CDA Loan"); (iii) any material damage, destruction or loss (not
covered by insurance) with respect to any assets of the Company or any of its
Subsidiaries involving cost or loss (not covered by insurance) in excess of
$50,000 the aggregate; (iv) any change by the Company or its Subsidiaries in
their accounting methods, principles or practices; (v) any declaration, setting
aside or payment of any dividends or distributions in respect of shares of
Stock or the shares of Stock of, or other equity interests in, any subsidiary
of the Company or any redemption, purchase or other acquisition of any of the
Company's securities or any of the securities of any Subsidiary; (vi) any
increase in the benefits under, or the establishment or amendment of, any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any increase in the
compensation payable or to become payable to directors, officers or employees
of the Company or its Subsidiaries; (vii) any disposition of any material
property of the Company or its Subsidiary; (viii) any waiver or compromise by
the Company or any of its Subsidiaries of a valuable right or a material debt
owed to it; or (ix) any agreement or commitment by the Company or any of its
Subsidiaries to do all of the foregoing.
2.9 Undisclosed Liabilities. Except as set forth in Schedule 2.9 of
the Disclosure Schedule, the Company and its Subsidiaries have no indebtedness,
liabilities or obligations which would be required to be reflected on a balance
sheet or the footnotes thereto in accordance with generally accepted accounting
principles including those to any Stockholder or any affiliate of any
Stockholder (as such term is defined in Rule 144 under the Securities Act)
except indebtedness, liabilities and obligations: (a) reflected or reserved
against on the balance sheet of the Company and its Subsidiaries for the period
ended November 30, 1996 (the "Balance Sheet"), including the notes thereto; or
(b) incurred since the date of the Balance Sheet consistent with usual and
customary industry practice.
- 16 -
2.10 Title to Properties. Except as set forth in Schedule 2.10 of the
Disclosure Schedule, the Company or one or more of its Subsidiaries has good
and marketable title to, or a valid leasehold interest in, all of their
properties and assets (real, personal or mixed), including without limitation,
all of their properties and assets, reflected on the Balance Sheet or acquired
since the date of the Balance Sheet, except for properties and assets sold or
disposed of since the date of the Balance Sheet consistent with usual and
customary industry past practice. There are no outstanding rights or options
relating to the Real Property leased by the Company and its Subsidiaries. To
the actual knowledge of the Company, there are no unrecorded or undisclosed
documents or other matters which affect title to the Real Property leased by
the Company and its Subsidiaries. The properties and assets to be held by the
Companies and their respective Subsidiaries are all such properties and assets
used and necessary to conduct in all material respects the business and
operations of the Companies as now conducted.
2.11 Real Property.
(i) Schedule 2.11 (i) of the Disclosure Schedule contains a list
and brief description of all real property owned or leased by the Company and
its Subsidiaries and the improvements (including buildings and other
structures) located on such real property (including a brief description of the
use to which such property is being employed and, in the case of any such
property which is leased, the termination date or notice requirement with
respect to termination, annual rental and renewal or purchase options) (the
"Real Property"). Schedule 2.11(i) of the Disclosure Schedule also lists all
title insurance policies with respect to the Real Property owned by the Company
and its Subsidiaries and all guarantees of such leases, given by the Company
and its Subsidiaries or any other person or entity. Complete and correct copies
of all such leases, title insurance policies and guarantees have been delivered
by the Company to SFX as of the date hereof;
(ii) Except as provided in Schedule 2.11(ii) of the Disclosure
Schedule, neither the Company nor any Subsidiary has received any notice of a
pending or contemplated annexation or condemnation or similar proceedings
affecting, or which may affect, all or any portion of the Real Property;
- 17 -
(iii) The tenancies described on Schedule 2.11(iii) of the
Disclosure Schedule constitute all of the written and oral agreements which
grant rights of use or possession with respect to the Real Property; except as
otherwise noted on Schedule 2.11(iii), (a) the leases described on Schedule
2.11(iii) are valid and subsisting and in full force and effect, have not been
amended, modified or supplemented and the tenants, licensees or occupants
thereunder are in actual possession, (b) no landlord has asserted any claim
which would in any way affect the relevant tenant's right of use, possession or
occupancy, (c) there are no pending summary proceedings or other legal actions
for eviction of any such tenant, (d) no notice of default or breach on the part
of the tenant under any of the leases has been received by the Company or its
Subsidiaries or their respective agents from the landlord thereunder, (e) all
decorating, repairs, alterations and other work required to be performed by the
tenant under each of the leases has been performed in all material respects,
and (f) except as set forth in Schedule 2.22 of the Disclosure Schedule, no
consent is necessary from any of the landlords with regard to the Mergers. No
landlord under any of the leases has any right or option to terminate the lease
for any reason other than a default thereunder by the applicable tenant of the
Real Property and no landlord has a "put" option with regard to any such Real
Property. The copies of the leases delivered to SFX together with all other
agreements disclosed herein or in the Disclosure Schedule attached hereto
constitute the sole agreements binding upon the Company with respect to the
Real Property. The rents set forth in Schedule 2.11(iii) of the Disclosure
Schedule are the actual rents, income and charges presently being paid by the
Company and its Subsidiaries under the leases. No security deposits have been
paid by any tenants of the Real Property, except as set forth on Schedule
2.11(iii) hereto;
(iv) Those management agreements and operating agreements listed
on Schedule 2.11(iv) of the Disclosure Schedule, constitute all of the written
and oral agreements for the provision of management and/or operating services
to the Real Property and all such agreements unless otherwise disclosed on such
schedule are terminable upon thirty (30) days notice by the party to whom
services are being provided thereunder;
- 18 -
(v) The Real Property constitutes separate tax lots which are not
owned in common with any other party, and payments in lieu of taxes ("PILOT'S")
have been assessed against each such lot as a separate tax lot without regard
to property owned by any other party;
(vi) The Real Property is serviced by a public sanitary sewer,
not a septic system;
(vii) To the actual knowledge of the Companies, the existing
parking areas and the existing number of parking spaces located at the Real
Property together with the parking agreements described on Schedule 2.11 are
all of the parking spaces required by law and the site fully complies with all
applicable laws, rules, regulations, codes and ordinances and approved site
plans;
(viii) Except as set forth on Schedule 2.11(viii) of the
Disclosure Schedule, there are no commissions or other compensation now or
hereafter payable to any broker or other agent under any written or oral
agreement or understanding with such broker or agent in relation to any of the
leases to which either the Company or its Subsidiaries are a party or any
extension thereof. With respect to any and all such brokerage commissions, the
Company covenants and agrees to pay any such brokerage commissions or
compensation at or prior to the Effective Date and shall hold SFX and the SFX
Subs harmless and defend each of SFX and the SFX Subs in regard to any and all
claims for brokerage commissions or other compensation relating to any leasing
activity prior to the Effective Date, including without limitation, reasonable
attorney's fees and expenses (notwithstanding anything to the contrary
contained in this Agreement, such indemnity obligation shall survive the
Effective Date);
(ix) There is no condemnation proceeding pending with regard to
all or part of the Real Property and, the Company has received no notice that
any such proceeding is contemplated by any governmental authority;
- 19 -
(x) Except as otherwise disclosed on Schedule 2.11(x) hereto, to
the actual knowledge of the Companies, all certificates, permits and licenses
from any governmental authority having jurisdiction over the Real Property
which are necessary to permit the lawful use and operation of the buildings and
improvements on or constituting the Real Property as they presently exist, have
been obtained, and are now, and will continue to be at all times before the
Effective Date, in full force and effect, and, the Companies have received no
notice of any pending threat of modification, cancellation, termination or
expiration of any such certificate, permit, approval or license; no buildings
or improvements located on or constituting the Real Property depend on any
dedication, variance, subdivision, special exception or other special
governmental approval for their continuing legality under all current
applicable governmental laws, regulations and ordinances;
(xi) To the actual knowledge of the Companies, all utilities
required for the operation of the Real Property either enter the Real Property
through adjoining public streets or if they pass through adjoining private
land, do so in accordance with valid public easements or private easements; all
of said public utilities are installed and operating and all installation and
connection charges have been or will be paid in full prior to the Effective
Date;
(xii) The Companies have received no notice of any violation of
any covenant, restriction, condition or agreement contained in any instrument
affecting the Real Property and the Companies have received no notices of
default from any third party who shall be benefited by any such restriction,
condition or agreements;
(xiii) Except as set forth on Schedule 2.11 (xiii) of the
Disclosure Schedule, there are no charges, complaints, actions, proceedings or
investigations pending or (to the actual knowledge of the Companies) threatened
against or involving the Company or any of its Subsidiaries or the Real
Property;
(xiv) The Companies and their respective Subsidiaries have not
received any notice from any insurance company which has issued a policy with
respect to the Real
- 20 -
Property or from any landlord of the Real Property requesting performance of
any structural or other repairs or alterations to the Real Property;
(xv) There are no, and on the Effective Date there will be no,
mechanics', materialmen's or similar liens against the Real Property or any
portion thereof, except for work performed with the prior written consent of
SFX;
(xvi) To the actual knowledge of the Companies, no current
zoning, building or similar law, ordinance, order or regulation is or will be
violated by the continued maintenance, operation or use of any buildings or
other improvements on or constituting the Real Property or by the continued
maintenance, operation or use of the parking areas as long as said maintenance,
operation or use does not materially change from the current maintenance,
operation or use and the Company and its Subsidiaries. The Companies have no
actual knowledge of any pending, threatened or contemplated changes to any
zoning, building or similar law, ordinance, order or regulation which may
affect the maintenance, operation or use of the Real Property;
(xvii) The Companies have received no notice of any violations of
any federal, state or municipal laws, ordinances with regard to any portion of
the Real Property;
(xviii) No assessments or impact fees for public improvements
have been made or charged or to the actual knowledge of the Companies and its
Subsidiaries are proposed against the Real Property, including without
limitation, those for street widenings, intersection restructurings,
construction of traffic signals, sewer, water, gas and electric lines and
mains, streets, roads, sidewalks and curbs;
(xix) Each of the Companies and their respective Subsidiaries is
not a foreign person within the meaning of Section 1445 of the Internal Revenue
Code of 1986, as amended. At the Closing, each of the Company and its
Subsidiaries shall deliver an executed certificate in the applicable form set
forth in Treasury Regulation Section 1.1445-2(b)(2);
- 21 -
(xx) Each of the Company and its Subsidiaries has no actual
knowledge of any assessment (for real estate taxes, sewer, water, or other
municipal improvements, or not-for-profit associations) payable in annual
installments, or any part thereof, which has, or may become a lien on the Real
Property or any part thereof, nor of any pending special assessments affecting
the Real Property, or any part thereof; and
(xxi) All buildings and improvements located on the Real Property
are structurally sound and all material systems used therein are in good
working order.
(xxii) To the actual knowledge of the Companies, there are no old
highways, abandoned roads, lanes, cemetery or family burial grounds, springs,
streams, rivers, ponds, or lakes bordering or running through the Real
Property; the Companies have permitted no easements, rights of way, continuous
driveway usage, drain, sewer, water, gas or oil pipeline or other rights of
passage to others over the Real Property except as disclosed on the Schedules
attached hereto and the Companies have no knowledge of such adverse rights; no
encroachments upon the Real Property by others have been permitted by the
Companies nor have the Companies encroached upon any property of adjoining land
owners; and the Companies have conveyed no portion of the Real Property nor
committed any act or permitted any act to be committed which has changed or
could change the boundaries of the Real Property.
2.12 Personal Property. All of the personal property located at the
Real Property and available for inspection by SFX on January 16, 1997 and
available for inspection by SFX or its representatives on January 16, 1997,
constitutes all of the material tangible personal property and assets owned or
held by the Company and its Subsidiaries (the "Personal Property"). Except as
disclosed in Schedule 2.12 the Disclosure Schedule, and except as may be
subject to lease agreements or purchase money liens of the Company and the
Subsidiaries, the Companies own and have, and will have on the Effective Date,
good and marketable title to all such property (and to all other tangible and
intangible personal property and assets to be acquired by SFX hereunder), and
none of such property is, or at the Effective Date will be, subject to any
encumbrance other than as set forth in the Disclosure Schedule or the Financial
Statements. The Personal Property include all such properties used and
necessary to conduct in all material
- 22 -
respects the business and operations of the Company and its Subsidiaries as it
is presently conducted.
2.13 [RESERVED]
2.14 Insurance. Schedule 2.14 of the Disclosure Schedule sets forth
the following information with respect to each current insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Company or
its Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(c) the policy number and the period of coverage;
With respect to each such insurance policy, the Companies have not received
notice of any default (including with respect to the payment of premiums or the
giving of notices), under the policy, and no party to the policy has repudiated
any provision thereof. To the actual knowledge of the Company and its
Subsidiaries have been covered during the past three (3) years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period.
2.15 Employee Benefits. The Company and its Subsidiaries 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
- 23 -
of taxes. More specifically, the Company and its Subsidiaries have
substantially complied with and are not knowingly in default in any material
respect under any laws, 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 Company or its
Subsidiaries, threatened against the Company or its Subsidiaries before any
court or governmental agency and involving any alleged unlawful employment
practices, whether or not relating to the laws described above except as set
forth on Schedule 2.11 (viii). The Company and its Subsidiaries 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 Company or its Subsidiaries and any of its employees.
2.16 Employees. Schedule 2.16 of the Disclosure Schedule sets forth a
true and complete list of all employees of the Company and its Subsidiaries,
their positions, locations, salaries or hourly wages and severance
arrangements. Except as set forth on the Balance Sheet or on Schedule 2.16 of
the Disclosure Schedule, there is no liability for unpaid salary or wages,
bonuses, vacation time or other employee benefits, including, without
limitation, Retirement Benefits, due or accrued, nor liability for withheld or
deducted amounts from Employees earnings for the period ending on the Effective
Date. Neither the Company or its Subsidiaries is a party to or not bound by any
collective bargaining agreement, nor, except as otherwise set forth on Schedule
2.11 (xiii) has it experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Neither the Company or its
Subsidiaries has committed any unfair labor practice. There is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company or its Subsidiaries.
- 24 -
2.17 Environment, Health and Safety. Except as otherwise disclosed in
the reports and other documentation described in Schedule 2.17 hereof: (i) no
Hazardous Substances (as hereinafter defined) have been released, treated,
stored or disposed of, or otherwise deposited in, on, or under, or migrated to,
the Real Property, including without limitation of the generality of the
foregoing, the surface waters and subsurface waters of the Real Property which
have not been remediated in accordance with all applicable Environmental Laws
(as hereinafter defined); (ii) there are no substances or conditions
(including, without limitation, asbestos or asbestos-containing materials or
lead based paints) in or on the Real Property which may support a claim or
cause of action under any existing federal, state or local environmental
statute, regulation, ordinance or other environmental regulatory requirement,
whether relating to air, water, land or otherwise (hereinafter collectively
referred to as "Applicable Environmental Laws"), including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), as amended 42 U.S.C. ss. 6901 et seq. and the Resource Conservation
and Recovery Act ("RCRA"), as amended, 42 U.S.C. ss. 6901 et seq., which terms
shall also include, whether or not included in the definitions contained in
Applicable Environmental Laws, petroleum, petroleum by-products, solvents, or
polychlorinated biphenyls ("PCBs"); (iii) there are no underground tanks at the
Real Property and no part of the Real Property constitutes "wetlands" under any
federal, state or local statute, rule or regulation; (iv) there are no liens
under Applicable Environmental Laws affecting the Real Property and no
government actions have been taken or, are in process, which could subject any
portion of the Real Property to such liens; (v) there have been delivered to
SFX true copies of the results of any tests, investigations or reports made by
on behalf of or in the possession or control of the Company or any of its
Subsidiaries with respect to the environmental or other condition of the Real
Property and the Company is not aware of any material inaccuracies in such
tests, investigations or reports; (vi) the Company and its Subsidiaries and the
Real Property are in full compliance with all Applicable Environmental Laws and
with all permits and the Company shall and shall cause its Subsidiaries to
comply with all Applicable Environmental Laws up to the Effective Date; (vii)
the Companies have received no notice of the occurrence of any event which,
with the passage of time or the giving of notice or both, would constitute
non-compliance
- 25 -
with such Applicable Environmental Laws and the Company and its Subsidiaries
has not received any notices of non-compliance with, or otherwise relating to,
such Applicable Environmental Laws; and (viii) there are no actions, suits,
claims, or proceedings relating to a violation or non-compliance with any
Applicable Environmental Laws pending which may affect the Real Property, or
with respect to the disposal, discharge or release of Hazardous Substances,
hazardous wastes or contaminants at or from or onto the Real Property. As used
herein, "Hazardous Substances" shall mean any hazardous materials, hazardous
waste, hazardous and toxic substances, pollutants and contaminants, as those
terms are defined by any Applicable Environmental Laws.
2.18 Intellectual Property.
(a) To the actual knowledge of the Companies, the Company or its
Subsidiaries own or have the right to use pursuant to license, sublicense,
agreement, or permission all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, ("Intellectual Property"), necessary for the operation of the
businesses of the Company and its Subsidiaries as presently conducted. Each
item of Intellectual Property owned or used by the Company and its Subsidiaries
is owned or available for use by the Company and its Subsidiaries on identical
terms and conditions immediately subsequent to the Effective Date. The Company
and its Subsidiaries have taken all reasonably necessary and desirable action
to maintain and protect each item of Intellectual Property that it owns or
uses.
(b) To the actual knowledge of the Companies, the Company and its
Subsidiaries have not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and none of the Stockholders and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the Company
has ever received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation (including any
claim that the
- 26 -
Company or the Subsidiaries must license or refrain from using any Intellectual
Property rights of any third party). To the best of the Company's knowledge, no
third party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of the Company or the
Subsidiaries or its Subsidiaries.
2.19 Contracts. Schedule 2.19 of the Disclosure Schedule, together
with all other Schedules annexed hereto, lists the following contracts and
other agreements to which either the Company or its Subsidiaries are a party as
of the date hereof:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any person providing for lease payments in
excess of $50,000 per annum or a term of more than one (1) year;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which has a term more than 12 months left on its term, or
involves unpaid consideration in excess of $50,000;
(c) any partnership or joint venture agreement;
(d) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $25,000, or under
which it has imposed a security interest on any of its assets, tangible or
intangible;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with any of the Stockholders or their
affiliates (as such terms defined in Rule 144 under the Securities Act);
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(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(h) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis (other than agreements which
are terminable without causing a Material Adverse Effect);
(i) any agreement under which the consequences of a default or
termination would have a Material Adverse Effect; or
(j) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000.
The Company has delivered to SFX a correct and complete copy of each written
agreement listed in Schedule 2.19 of the Disclosure Schedule and a written
summary setting forth the terms and conditions of each oral agreement referred
to in Schedule 2.19. With respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (subject to obtaining the consents required by
Section 2.22); (C) to the actual knowledge of the Company, no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination modification, or
acceleration, under the agreement; and (D) no party has repudiated any
provision of the agreement.
2.20 Taxes.
(a) To the actual knowledge of the Companies and except as
otherwise disclosed in Schedule 2.20(a) and it the attached Disclosure
Schedules: (i) The Company has filed and has furnished to SFX (or received an
appropriate extension of time to file) all federal,
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state, local, and foreign Tax Returns required to be filed by them prior to the
Effective Date; (ii) From October 12, 1993 through the Effective Date, the
Company and the Subsidiaries filed consolidated U.S. federal income tax returns
as members of an affiliated group, the common parent of which is the Company,
other than CADCO, QN Corp. which has not filed any returns and which is not a
member of a consolidated group and CPAP which has filed partnership returns;
(iii) All such Tax Returns were true and correct in all material respects. The
Company and each of the Subsidiaries has paid all Taxes shown to be due on such
Tax Returns, and has made appropriate provisions in the Balance Sheet for any
Taxes not yet due, or which are being contested in good faith; (iv) The Company
and each of the Subsidiaries has withheld and paid over to the appropriate
Governmental Authority all Taxes required by law to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party; (v) All tax
deficiencies asserted or assessed against the Company and each of the
Subsidiaries have been paid or finally settled; (vi) Neither the Company nor
any of the Subsidiaries expects any federal, state, local or foreign taxing
authority to assess any additional Taxes for any period for which Tax Returns
have been filed; (vii) No claims have ever been made by any tax authority in a
jurisdiction where the Company and each of the Subsidiaries do not file Tax
Returns that it is or may be subject to taxation by that jurisdiction; (viii)
Neither the Company nor any of the Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a tax assessment or deficiency; (ix) There is no pending or, to the
knowledge of the Company, threatened action, audit, proceeding or investigation
for the assessment or collection of any Taxes; (x) There are no requests for
rulings, subpoenas or requests for information pending with respect to any
taxing authority; (xi) Any adjustments of Taxes made by any federal taxing
authority in any examination which is required to be reported to a state,
local, or foreign taxing authority has been reported, and any additional Taxes
due with respect thereto have been paid; (xii) No power of attorney has been
granted by the Company or any of the Subsidiaries, and is currently in force,
with respect to any matter relating to Taxes; (xiii) There are no liens (other
than liens for Taxes that are not yet due or which are being contested in good
faith) on any assets of the Company or any of the Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax, except for
liens which would not, individually or in the aggregate, have a material
adverse
- 29 -
effect; and (xiv) CADCO is and has been a valid Subchapter S Corporation (as
defined in the Code) since its incorporation.
(b) To the actual knowledge of the Companies and except as
otherwise disclosed in any of the attached Disclosure Schedules: (i) Neither
the Company nor any of the Subsidiaries has made an election under Section
341(f) of the Code; (ii) Neither the Company nor any of the Subsidiaries has
made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code; (iii)
Neither the Company nor any of the Subsidiaries has been a United States real
property holding company within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii); (iv) No
excess loss account (within the meaning of Treas. Reg. [section] 1.1502-19)
exists with respect to any of the Subsidiaries; (v) Neither the Company nor any
of the Subsidiaries has, or will have, as of the Effective Date, any deferred
gain or loss arising from deferred intercompany transactions within the meaning
of Treas. Reg. [section] 1.1502-13; (vi) Neither the Company nor any of the
Subsidiaries was acquired in a "qualified stock purchase" under Section
338(d)(3) of the Code and no election under Section 338(g) of the Code,
protective carryover basis election, or offset prohibition election is
applicable to the Company or any of the Subsidiaries; (vii) Neither the Company
nor any of the Subsidiaries has participated in or cooperated with any
international boycott within the meaning of Section 999 of the Code; (viii)
Neither the Company nor any of the Subsidiaries is required to include in
income any adjustment pursuant to Section 481(a) of the Code (or any similar
provision of law or regulations) by reason of a change in accounting method,
nor is any taxing authority considering such change in accounting method; (ix)
Neither the Company nor any of the Subsidiaries has disposed of any property
which has been accounted for tax purposes under the installment method. Neither
the Company nor any of the Subsidiaries is a party to any interest rate swap,
currency swap or similar transaction; (x) [INTENTIONALLY OMITTED]; (xi) As of
the Effective Date but prior to the Merger, the ability of the Company and each
of the Subsidiaries to use their net operating losses and carryovers will not
have been affected by Sections 382, 383 or 384 of the Code or by the SRLY or
CRCO limitations of Treas. Reg. [section][section] 1.1502-21 or 1.1502-22;
(xii) Neither the Company nor
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any of the Subsidiaries owns any interest in an entity which is characterized
as a partnership for U.S. federal income tax purposes; (xiii) Neither the
Company nor any of the Subsidiaries would be liable for any increase in Tax
under Section 47 of the Code, were such entity to dispose of all of its assets
on the Effective Date; (xiv) As of the Effective Date, neither the Company nor
any of the Subsidiaries will have sustained an "overall foreign loss" within
the meaning of Section 904(f) of the Code; (xv) As of the Effective Time,
neither the Company nor any of the Subsidiaries will have any "non-recapture
net section 1231 losses" within the meaning of Section 1231(c) of the Code; and
(xvi) No election under Section 1504(d) of the Code has been made with respect
to the Company or any of the Subsidiaries.
(c) Regarding the Merger: Neither the Company nor any of the
Subsidiaries is an investment company as defined in Section 368(a)(2)(F)(iii)
and (iv) of the Code. Except as set forth on Schedule 2.20(c) of the Disclosure
Schedule, neither Company nor any of the Subsidiaries is under the jurisdiction
of a court in Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code. Neither the Company or any of the Subsidiaries holds
stock of SFX and will not hold stock of SFX prior to the Merger.
(d) For purposes of this Section 2.20, the following terms will
have the following meanings:
(i) "Tax" or "Taxes" shall mean any and all federal, state,
local, foreign, and other taxes, levies, fees, imposts, duties and charges of
whatever kind (including any income, franchise, profits, or gross receipts, and
also ad valorem, value added, sales, use, service, real or personal property,
capital stock, license, payroll, withholding, employment, social security,
workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer, and
gains taxes and interest, penalties or additions thereto imposed by any tax
authority payable by the Company or any of the Subsidiaries, or chargeable or
relating to the assets, income or revenue of the Company or any of its
Subsidiaries.
- 31 -
(ii) "Tax Return" shall mean returns, reports, information
statements, or other documentation (including any additional or supporting
material) filed or maintained, or required to be filed or maintained in
connection with the calculation, determination, assessment or collection of any
Tax.
2.21 Litigation. Except as set forth in Schedule 2.21 of the
Disclosure Schedule, there are no lawsuits, claims, actions, administrative,
arbitration or other proceedings or governmental investigations or inquiries
(a) pending or, to the actual knowledge of the Company threatened, against or
involving the Company or any or its Subsidiaries or any property or rights of
the Company or any of its Subsidiaries, nor is there any order, judgment,
injunction or decree of any court, governmental agency or arbitrator
outstanding against the Company or any of its Subsidiaries, or (b) pending or,
to the actual knowledge of the Company threatened, against the Company or any
of its Subsidiaries which challenge the validity or propriety of this Agreement
or the transactions contemplated hereby, and the Companies have received no
notice of any complaints with respect to the Company or its Subsidiaries which
have been filed with any consumer protection agency.
2.22 Consents. Except as set for in Schedule 2.22 of the Disclosure
Schedule, and except for the approval of the transactions contemplated hereby
by the stockholders of the Company, no consent or approval under any agreement
entered into by the Company is required in connection with the execution,
delivery or performance by the Company of this Agreement or in connection with
the transactions contemplated hereby, which the failure to obtain or make,
either individually or in the aggregate with all other such failures, could
reasonably be expected to (a) have a Material Adverse Effect, or (b) prevent
the Company from consummating the transactions contemplated hereby.
2.23 Affiliate Transactions. Except as set forth on Schedule 2.23
hereof, none of the Stockholders, officers or directors, or any of their
immediate family members, or to the actual knowledge of the Company or its
Subsidiaries, none of its other employees, is currently a party (either
directly or through any ownership, beneficial, contingent or other interest in
an
- 32 -
entity, business or enterprise of any kind) to any transaction with or
involving the Company or its Subsidiaries or any assets used in the operation
of the Company or its Subsidiaries including, without limitation, any
arrangement (other than for services in the ordinary course of business as
officers, directors or employees of the Companies) providing for (a) the
furnishing of services by or to, (b) the rental of the sites on which the Real
Property is located, (c) any loan or other indebtedness from or to, (d) the
grant of any mortgage, security interest, pledge or other encumbrance from or
to, or (e) otherwise requiring payments or other consideration (including a
promise of forbearance) from or to, any such person.
2.24 Broker's and Finder's Fees. The Company has not retained any
broker or finder or other person in connection with transactions contemplated
hereby.
2.25 Absence of Certain Business Practices. To the best of the
Company's knowledge, tickets sold in connection with the Companies and its
Subsidiaries operations are sold in compliance with all local laws and solely
through nationally recognized ticket outlets (including Protix) and not through
ticket brokers.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SFX
SFX hereby represent and warrants to each of NOC, CADCO, QN and the
Stockholders as follows:
3.1 Corporate Organization.
(a) SFX is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has the
full power and authority to own, operate and lease its properties and assets
and to carry on its business as now being conducted in the manner of and in the
places in which such business is now being conducted.
- 33 -
(b) The copies of the Certificate of Incorporation and By-Laws of
SFX heretofore delivered to the Company are complete and correct copies of such
instruments as presently in effect.
3.2 Authorization. SFX has the full power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby. The Board
of Directors of SFX has approved this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by SFX and (assuming this Agreement is a legal, valid and binding
obligation of the Company) constitutes a legal, valid and binding obligation of
SFX enforceable in accordance with its terms.
3.3 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will: (a) violate
any provisions of the Certificate of Incorporation or By-Laws of SFX; (b)
violate, or constitute a default under, any agreement to which SFX is a party,
or by which SFX is bound, which violation or default could reasonably be
expected to (i) have a material adverse effect on the business, financial
condition or results of operations of the SFX and its subsidiaries taken as a
whole or (ii) prevent SFX from consummating the transactions contemplated
hereby; or (c) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental agency or body which SFX is
bound, which could reasonably be expected to (i) have a material adverse effect
on the business, financial condition or results of operations of SFX and its
subsidiaries taken as a whole or (ii) prevent SFX from consummating the
transactions contemplated hereby.
3.4 Litigation. There are no lawsuits, actions, administrative,
arbitration or other proceedings, or governmental investigations pending
against SFX or any of its subsidiaries challenging the validity or propriety of
this Agreement or the transactions contemplated hereby.
3.5 Consents. Except for (a) applicable requirements of (i) the
Securities Act, and the rules and regulations of the SEC thereunder, (ii) the
Securities Exchange Act of 1934 as amended and the rules and regulations of the
SEC thereunder (the "Exchange Act"), (iii) state
- 34 -
securities laws ("Blue Sky Laws") and (iv) NASDAQ; and (b) the filing and
recordation of appropriate merger or other documents as required by CN Stock
Act; no consent, approval, authorization or order of (or registration or filing
with) any court or governmental agency or body or other third party is required
to be made or obtained by SFX in connection with the execution, delivery or
performance by SFX of this Agreement or in connection with the transactions
contemplated hereby, which the failure to obtain or make could reasonably be
expected to prevent SFX from consummating the transactions contemplated hereby.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each Stockholder represents and warrants for itself and not with
respect to any other Stockholder severally, but not jointly, to SFX as follows:
4.1 Authorization of Transaction. Such Stockholder has full power and
authority to execute and deliver this Agreement and to perform his, her or its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of each Stockholder, enforceable in accordance with its terms and
conditions. Such Stockholder, if a natural person, is over 21 years of age and
has not had a legal representative appointed by a court of law or otherwise act
in his or her behalf or with respect to any of his or her property. If such
Stockholder is not a natural person: such Stockholder is a corporation or other
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization; the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
other action; no other corporate or other proceeding on the part of such
Stockholder is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby; and this Agreement has been duly delivered by
such Stockholder. Such Stockholder need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any governmental
entity in order to consummate the transactions contemplated by this Agreement.
- 35 -
4.2 Noncontravention. Neither the execution and the delivery of this
Agreement and the Consent, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which such Stockholder is
subject or the certificate of incorporation and bylaws or other organizational
documents of such Stockholder or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which such Stockholder is a party, by which it is bound or to which any of
its assets is subject.
4.3 Brokers' Fees. Except as set forth on Schedule 4.3 of the
Disclosure Schedule, no Stockholder has any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. The fees set forth in Schedule 4.3
of the Disclosure Schedule shall be borne by the Stockholders.
4.4 Company Shares. Such Stockholder holds of record and owns
beneficially the number of shares of Company Stock set forth next to its name
on the signature page hereto, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), security interests, options, warrants, purchase rights, contracts,
commitments and equities. Such Stockholder is not a party to any option,
warrant, purchase right, or other contract or commitment that could require
such Stockholder to sell, transfer, or otherwise dispose of any capital stock
of the Company or any of its Subsidiaries (other than this Agreement). Such
Stockholder is not a party to any voting trust, proxy or other agreement or
understanding with respect to the voting of any capital stock of the Company
(other than this Agreement).
4.5 Accredited Investor. Such Stockholder is (i) a natural person
whose individual net worth, or whose joint net worth with that person's spouse,
exceeds $1,000,000; (ii)
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a corporation or partnership not formed for the specific purpose of acquiring
SFX Shares, with total assets in excess of $5,000,000; or (iii) an entity in
which all of the equity owners are "accredited investors" as that term is
defined in Regulation D of the Securities Act. Such Stockholder is a
sophisticated investor by virtue of his education, training and/or numerous
prior investments made on his or her behalf or through entities which he or
she, alone or with others, controls. Such Stockholder is knowledgeable and
experienced in financial and business matters, and is capable of evaluating the
merits and risks of an investment and of making an informed business decision.
4.6 Investment Intention. Such Stockholder is acquiring its SFX shares
for investment and not with a view to dispose of its SFX Shares to be issued in
the Merger in violation of the Security Act.
4.7 Receipt of Information. Such Stockholder has received a copy of
each of the following documents relating to SFX: (i) Annual Report on Form 10-K
for the year ended December 31, 1995; (ii) Quarterly Reports on Form 10-Q for
the quarters ended, March 31, 1996, June 30, 1996 and September 30, 1996; (iii)
Current Report on Form 8-K dated January 21, 1997 and January 28, 1997; (iv)
Proxy Statement relating to the 1996 Annual Meeting of Shareholders; and (v)
the 1995 Annual Report to Shareholders.
SECTION 5 REPRESENTATIONS AND WARRANTIES REGARDING SFX SUBS
SFX and each of the SFX Subs jointly and severally represent and
warrant to the Stockholders as follows (each SFX Sub represents and warrants
only with respect to itself):
5.1 Organization. Each of the SFX Subs is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Connecticut and is an indirect subsidiary of SFX.
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5.2 Authority Relative to This Agreement. Each of the SFX Subs has the
requisite corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by each of the SFX Subs' Board of Directors and approved by its sole
stockholder, and no other corporate proceedings on the part of the SFX Subs are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement constitutes a legal, valid and binding obligation of each Sub.
SECTION 6 COVENANTS AND AGREEMENTS.
6.1 Conduct of Business. Each of the Companies agrees that from the
date hereof until the Effective Date without the prior written consent of SFX
and the SFX Subs:
(a) the Companies shall operate their businesses and cause the
businesses of their Subsidiaries to be operated only in the ordinary course
consistent with past practice;
(b) the Companies shall use their commercially reasonable efforts
to preserve, in all material respects and consistent with past custom and
practice, its business and properties, including its present operations,
physical facilities, permits, approvals, licenses, working conditions and
relationships with persons having significant business relations with it,
including without limitation, suppliers and customers;
(c) the Companies shall not (i) amend their Certificates of
Incorporation or By-Laws or the charter documents or by-laws of any of its
Subsidiaries or CPAP's joint venture agreement, (ii) change the number of
authorized shares of its capital stock, as set forth on Schedule 2.2 hereof,
and (iii) split or reclassify any shares of its capital stock or declare, set
aside or pay any dividend or other distribution or payment in cash, stock or
property in respect of shares of its capital stock;
- 38 -
(d) except otherwise expressly as set forth in this Agreement or
the Disclosure Schedules attached hereto, neither the Companies nor any of
their Subsidiaries shall (i) issue, grant, sell or pledge or agree or propose
to issue, grant, sell or pledge any shares of, or rights of any kind to acquire
any shares of, the capital stock of the Company or any of its Subsidiaries,
(ii) redeem, purchase or otherwise acquire or offer to redeem, purchase or
otherwise acquire, any shares of capital stock or other securities, (iii)
acquire any assets or properties, or enter into any other transaction, other
than consistent with usual and customary industry practices, (iv) sell,
transfer or otherwise dispose of or encumber or mortgage any assets or
properties which are material to the Company and its Subsidiaries, other than
consistent with usual and customary industry practices, (v) waive, release,
grant or transfer any rights of value or modify or change in any material
respect any existing license, lease, contract or other document, other than
consistent with usual and customary industry practices, (vi) enter into any
Contract other than those which would be consistent with usual and customary
industry practice, (vii) enter into any performance production agreements,
management agreements, ticketing agreements or other agreements relating to the
operation of the Real Property as a performance venue (viii) enter into any
"booking agreements" without the prior approval of SFX, which consent shall not
be unreasonably withheld or delayed and which consent shall be deemed granted
if not denied within 36 hours of delivery to SFX of notice of such booking,
(ix) enter into any employment contract or collective bargaining agreement, or
modify the terms of any existing such contract or agreement, (x) establish any
new Employee Benefit Plan, or modify or terminate any existing Employee Benefit
Plan, (xi) except to the extent contemplated by the CDA Loan, make any capital
expenditures other than those which would be consistent with usual and
customary industry practice, or make any capital expenditures in the aggregate
in excess of $50,000, (xii) take or agree to take any action that would or is
reasonably likely to result in any of Company's representations and warranties
set forth in this Agreement being untrue or in any of the conditions to the
Merger not being satisfied, or (xiii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(e) except as set forth in the Disclosure Schedules, neither the
Companies nor any of their Subsidiaries will (i) incur or assume any
indebtedness for money
- 39 -
borrowed (including any indebtness under the CDA Loan with respect to capital
improvements but excluding any other amounts under the CDA Loan up to $1
million) or (ii) guarantee any indebtedness;
(f) the Companies and their Subsidiaries shall (i) exercise
commercially reasonable efforts to keep in full force and effect insurance now
carried, (ii) exercise commercially reasonable efforts to perform in all
material respects all obligations under their Contracts relating to or
affecting their properties, assets and business, (iii) maintain their books of
account and records consistent with good business practices and (iv) exercise
commercially reasonable efforts to comply in all respects with all laws
applicable to them and to the conduct of their business;
(g) the Companies shall not (i) increase the compensation payable
to, or to become payable to, any employee, director or executive officer; (ii)
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or employee; (iii) establish,
adopt, enter into or amend any employee benefit plan or arrangement except as
may be required by applicable law; or (iv) hire any salaried employees or pay
any bonuses;
(h) the Companies shall not acquire or agree to acquire, by
merging or consolidating with, by purchasing an equity interest in, all or a
portion of the assets of, or by any other manner, any corporation, partnership,
association or other business, organization or division (other than a wholly
owned subsidiary) thereof, or otherwise acquire or agree to acquire any assets
of any other person (other than the purchase of assets from suppliers or
vendors in consistent with past practice) which are material, individually or
in the aggregate, to either of the Companies and their Subsidiaries; and
(i) from and after the date hereof until the Effective Date, the
Companies shall not initiate or solicit any Competing Transaction or enter into
discussions or negotiate with any person or entity in furtherance of such
inquiries to obtain a Competing
- 40 -
Transaction, or enter into an agreement with respect to any Competing
Transaction and (other than with respect to any proposals or negotiations with
respect to any Competing Transactions which commenced prior to the date hereof)
the Companies shall promptly notify SFX of all relevant terms of any such
inquiries and proposals received by any of the Companies and if such inquiry or
proposal is in writing, the Companies shall deliver or cause to be delivered to
SFX a copy of such inquiry or proposal. For purposes of this Agreement,
"Competing Transaction" shall mean any of the following involving the
Companies, any of their Subsidiaries or any affiliate of the Companies: (i) any
merger, consolidation, share exchange, business combination, or other similar
transaction (other than the transactions contemplated by this Agreement); (ii)
any sale, lease, exchange, transfer or other disposition of 25% or more of the
assets of any of the Companies and their Subsidiaries, taken as a whole, in a
single transaction or series of transactions; (iii) any offer (whether cash or
securities) for 25% or more of the outstanding shares of capital stock of any
of the Companies; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing.
6.2 Access. From the date hereof until the Effective Date, the
Companies shall (a) afford to SFX and to their respective representatives,
during regular business hours and upon reasonable notice, such access to the
plants, offices, warehouses, properties, books and records of the Companies and
their Subsidiaries as any of them may reasonably request in connection with the
transactions contemplated hereby; and (b) cause its officers and accountants
promptly to furnish to SFX and to its representative, such financial and
operating data and other information as any of them may from time to time
reasonably request in connection with the transactions contemplated hereby.
Notwithstanding the foregoing, any investigation made by SFX or its officers,
attorneys, accountants, or other representatives shall not in any manner affect
the representations and warranties of the Companies and the Stockholders
contained herein. In addition, the Companies and the Stockholders shall have
the right to update and amend any of the Schedules attached hereto at any time
prior to the Closing; provided, however, if the Schedules are updated by the
Companies in a manner which would have a Material Adverse Effect, SFX and the
SFX Subs shall have twenty (20) days from delivery of the last of the
- 41 -
updated Schedules to complete its due diligence review of the Companies and the
Stockholders as set forth in section 9.4.
6.3 Filings and Governmental Consents. After the execution and
delivery hereof, the Companies, the Subsidiaries, SFX and the SFX Subs: each
shall use its best efforts to cooperate in obtaining any consent, approval,
authorization or order of, or in making any registration or filing with, any
governmental agency or body required in connection with the execution, delivery
or performance of this Agreement or in connection with the transactions
contemplated hereby.
6.4 RESERVED
6.5 Confidentiality.
(a) Except for disclosure to accountants, attorneys, financial
advisors and other consultants or advisors, each of SFX and the SFX Subs agrees
that they shall, and shall use their best efforts to cause their officers,
employees and authorized representatives to, hold in strict confidence all data
and information obtained by them from the Companies (unless such information is
a matter of public knowledge or has heretofore been or is hereafter published
or filed as public information or becomes readily ascertainable from public or
published information or trade sources) and shall use their best efforts to
ensure that such officers, employees and authorized representatives do not,
disclose such information to others without the prior written consent of each
of the Companies, except that SFX and such other persons may provide such
confidential information in response to legal process or applicable laws or
governmental regulations.
(b) The Companies each agree that it shall, and shall use its best
efforts to cause its officers, employees and authorized representatives to,
hold in strict confidence all data and information obtained by them from SFX
and the SFX Subs (unless such information is or becomes readily ascertainable
from public or published information) and shall not, and shall
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use its best efforts to ensure that such officers, employees and authorized
representatives do not, disclose such information to others without the prior
written consent of SFX and each of the SFX Subs.
(c) In the event this Agreement is terminated, the Companies, on
the one hand, and SFX and the SFX Subs, on the other, each agree if so
requested by the other party, to return promptly or to destroy every document
furnished to either of them by the other party or any division, associate or
affiliate of such other party and any copies thereof which may have been made,
and which is in its possession or under its control, in connection with the
transactions contemplated hereby, and to cause its representatives, and any
representative of financial institutions, partnerships and others to whom such
documents were furnished, promptly to return such documents and any copies
thereof any of them may have made, other than documents filed with the SEC or
otherwise public available.
6.6 Restrictions on Transfer. Each of the Stockholders agrees that
such Stockholder on a Several Basis (as defined below) will not, during the
period commencing on the Effective Date and ending on the second anniversary of
the Effective Date: (1) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer, except for
transfers to immediate family members of such Stockholder or transfers to
trusts for the benefit of immediate family members of the Stockholders as well
as Stockholder's estates, or dispose of, directly or indirectly, any SFX
Shares; or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the SFX Shares owned by the Stockholder, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of SFX Shares, in cash
or otherwise.
6.7 Registration Statement for Registering of Stock. At the request of
any of the holders of any of the SFX Shares, SFX hereby undertakes to file a
Registration Statement under the Securities Act with the U.S. Securities and
Exchange Commission (the "SEC") at any time following the second anniversary of
the Effective Date, to register the resale of the SFX Shares pursuant to
brokerage transactions as defined in Rule 144 of the Securities Act and shall
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use its best efforts to effect registration under the Securities Act of such
Shares, provided that, SFX shall be required to effect no more than one such
registration pursuant to this Section 6.7. Any such registration statement
shall provide each of the holders with the opportunity to have its shares
included therein and shall remain in effect for not less than 12 months. SFX
shall notify the Stockholders of the disposition of said SFX Registration
Statement and, to the extent that the Registration Statement shall become
effective, shall, at such time, issue replacement certificates for the Shares
eliminating the portion of the legend which provides: "THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT. FURTHERMORE,"
6.8 Use of Financial Statements. Prior to the Effective Date, the
Companies and the Subsidiaries agree that they will (i) consent to the use of
their audited financial statements in any registration statement or other
document filed by SFX (or any of its Subsidiaries) under the Securities Act or
the Securities Exchange Act of 1934, as amended, and (ii) execute and deliver,
and cause its partners and officers to execute and deliver, such
"representation" letters as are customarily delivered in connection with audits
and as SFX's independent accountants may reasonably request.
6.9 "As Is, Where Is" Acquisition. Notwithstanding anything in this
Agreement to the contrary, it is expressly understood by and among the parties,
that there are no representations, warranties or covenants, express or implied,
made with respect to the condition of any of the assets which become property
of the Surviving Corporations by virtue of the Mergers, except as expressly set
forth herein. Furthermore, there are no representations, warranties or
covenants, express or implied, being made with respect to any obligations,
liabilities or potential liabilities associated with any of the assets except
as expressly set forth
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herein. Finally, there are no representations, warranties or covenants made,
express or implied, with respect to any information, projections, budgets or
other financial information provided to SFX and the SFX Subs except as
expressly set forth herein.
6.10 Stock Legend.
In addition to any legend imposed by applicable state securities laws,
the certificate of incorporation of SFX or the rules, regulations and polices
of the Federal Communications Commission, all stock issued by SFX pursuant to
this Agreement, shall bear a restrictive legend stating substantially as
follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
FURTHERMORE, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN "CALL," "PUT", RIGHTS OF FIRST REFUSAL AND OFFSET
PROVISIONS SET FORTH IN THAT CERTAIN AGREEMENT OF MERGER BY AND AMONG
SFX BROADCASTING, INC., ("SFX") NOC-ACQUISITION CORP., CADCO
ACQUISITION CORP., QN-ACQUISITION CORP., NEDERLANDER OF CONNECTICUT,
INC. AND CONNECTICUT AMPHITHEATER DEVELOPMENT CORPORATION AND QN CORP.
AND CERTAIN OF THE STOCKHOLDERS THEREOF DATED FEBRUARY __, 1997 (THE
"AGREEMENT"). AS A RESULT OF THE
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OFFSET PROVISIONS IN THE AGREEMENT, SHARES NOT VOLUNTARILY SURRENDERED
TO SFX MAY BE CANCELED ON THE TRANSFER BOOKS OF SFX WITHOUT NOTICE TO
THE HOLDER HEREOF. TRANSFEREE'S OF THESE SHARES TAKE THESE SHARES
SUBJECT TO SUCH CANCELLATION RIGHT.
6.11 Further Actions. Each of the parties hereto agrees to use its
best efforts to take, or cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement, including using its
best efforts: (i) to obtain all necessary waivers, consents and approvals, to
give all notices and to effect all necessary registrations and filings, and
(ii) to defend any lawsuits or other legal proceedings, whether judicial or
administrative and whether brought derivatively or on behalf of third parties
(including governmental agencies or officials), challenging this Agreement or
the consummation of the transactions contemplated hereby.
6.12 Casualty and Condemnation
(a) If, prior to the Effective Date all or a substantial portion
of the Real Property shall be (i) condemned or taken by eminent domain, or (ii)
destroyed or damaged, at the option of SFX (subject, however, to the rights of
the Stockholders set forth in the next succeeding sentence), this Agreement
shall be null and void and of no further effect, and all monies paid hereunder
shall be returned promptly to SFX, with interest thereon. As used in this
Section 6.12, "a substantial portion of the Real Property" shall mean (A) in
the event of a condemnation or taking, a condemnation or taking of five (5%)
percent or more of the improvements at the Real Property, or such portion of
the parking or the means of ingress and egress which would cause a default by
the landlord under any of the leases or provide any tenant thereunder with the
right to terminate any such lease or any other condemnation or taking of the
Real Property that would inhibit the use, enjoyment or operation of the Real
Property as it currently exists, or (B) in the event of a casualty, the cost of
repair and/or replacement resulting from such casualty exceeds $250,000 (unless
the Stockholders shall elect to bear any costs or repair of such casualty in
excess of $250,000). In the event of such a cancellation by SFX, the
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Companies shall be entitled to collect all proceeds from the condemnation or
eminent domain and all insurance proceeds payable by reason of such destruction
or damage. If SFX does not elect to exercise its right to terminate this
Agreement, there shall be no diminution of the Merger Consideration, but SFX
shall be entitled to receive all condemnation proceeds and all insurance
proceeds covering such loss or damage (plus payment from the Stockholders to
SFX in the amount of the deductible under the applicable insurance policy) and
the Company and its Subsidiaries shall assign irrevocably all such rights to
SFX at the Effective Date. The election of SFX hereunder must be exercised
within thirty (30) days after notice to SFX of the occurrence of the taking or
loss or damage, and if such taking or loss or damage occurs less than thirty
(30) days prior to the Effective Date, the Effective Date, shall be extended
for such additional period of time as may be necessary to afford SFX a full
thirty (30) days to make its election. The Companies covenant and agree to
notify SFX in writing immediately upon the Companies' or any of their
Subsidiaries having knowledge of any taking or the occurrence of any damage or
casualty.
(b) If, prior to the Effective Date, less than a substantial
portion of the Real Property shall be (i) condemned or taken by eminent domain
or (ii) destroyed or damaged, the Companies shall, cure, promptly restore, or
cause to be restored, the Real Property to substantially and materially the
same condition as existed immediately prior to such taking or casualty, and the
Effective Date shall be extended to the extent reasonably necessary to allow
the Companies to substantially complete, or cause the completion of, such
restoration. To the extent that such condemnation, taking, destruction or
damage could reasonably be expected to be cured for an amount less than
$250,000, then the Companies and their respective Subsidiaries shall assign to
SFX and the SFX Subsidiaries all insurance and/or condemnation proceeds and the
Effective Date should not change.
6.13 Environmental, Structural, Title and Zoning Unwind Provisions
6.13.1 (i) SFX and the SFX Subs shall have the right, for a
period of ninety (90) days from the date hereof, to assert a claim against the
Stockholders on a Several Basis (as
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hereinafter defined), for a breach of the representations and warranties set
forth in Sections 2.11(xxi)(the "Structural Warranty") and 2.17 (the
"Environmental Warranty"; the Structural Warranty and the Environmental
Warranty are collectively referred to as the "Unwind Warranties"). Anything
contained in this Agreement to the contrary notwithstanding, SFX and the SFX
Subs agree that the provisions of this Section 6.13.1 shall be the sole and
exclusive remedy of SFX and the SFX Subs with respect to any breach or
misrepresentation relating to the Unwind Warranties and/or the Additional
Unwind Warranties (as defined below) or otherwise relating to the structural or
physical condition of the Real Property, compliance with any Applicable
Environmental Laws or otherwise relating to presence of hazardous substances,
the environmental condition of the Real Property or any other environmental
matters (whether based upon a breach of the Unwind Warranties or any other
representations or warranties contained in this Agreement which relate to such
matters). In addition, SFX and the SFX Subs shall have the right, for a period
of forty-five (45) days from the date of delivery to SFX or the SFX Subs, or
the completion by SFX of an "As Built Survey" of the Real Property, to assert a
claim against the Stockholders, on a Several Basis, for a breach of the
representations and warranties set forth in Sections 2.11 (x); (xi); (xvi) or
(xxii) (the "Additional Unwind Warranties") regardless of the actual knowledge
of the Companies. During the period from the Effective Date through and
including the last date on which the Unwind Procedure (as hereinafter defined)
may be consummated (the "Outside Date"), SFX and the SFX Subs shall, for
benefit of the Stockholders, comply with each of the covenants and conditions
of Sections 6.1, 6.2 and 6.3 hereof, other than those contained in Section
6.1(c)(viii), which were binding on the Companies and Stockholders for the
benefit of SFX and the SFX Subs between the date of this Agreement and the
Effective Date. In addition, SFX shall not cause the preferred stock of CPA to
be canceled unless the Outside Date shall have occurred without the Unwind
Procedure having been exercised.
(ii) In the event that SFX or the SFX Subs shall elect to assert
a claim with respect to a breach of the Unwind Warranties or Additional Unwind
Warranties, SFX and/or the SFX Subs shall, within ninety (90) days from the
date hereof in the case of the Unwind Warranties or within thirty (30) days
following receipt of the "As Built Survey" in the case of the Additional Unwind
Warranties, to submit a written notice to the Stockholders (a "Demand
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Notice") which shall contain a detailed description of the basis for such claim
and the estimated cost of curing such breach or the projected loss to the
Companies or the Subsidiaries from the inability to rebuild or use the Real
Property as currently used or constructed (the "Claim Amount").
(iii) The Stockholders shall have a period of thirty (30) days
following receipt of a Demand Notice to elect by written notice to SFX and/or
the SFX Subs to either (a) accept the Demand Notice and the Claim Amount set
forth therein, (b) contest the Demand Notice, or (c) in the event that the
Claim Amount sought in such Demand Notice shall exceed $1,250,000 (inclusive of
any Claim Amount previously submitted in connection with the Additional Unwind
Warranties), elect to unwind the transactions contemplated by this Agreement in
accordance with Section 6.13(vii) hereof (the "Unwind Procedure").
(iv) In the event that the Stockholders shall elect to accept the
Demand Notice, the Stockholders shall, within ten (10) days following such
acceptance, deliver to SFX or the SFX Subs, as the case may be, on a Several
Basis, the number of SFX Shares equal the Claim Amount which number of shares
shall be determined on the basis of the Adjusted Closing Value.
(v) In the event that the Stockholders shall elect to contest the
Demand Notice, then the Stockholders shall and SFX or the SFX Subs, as the case
may be, shall attempt to mutually agree upon the Claim Amount. If the parties
are unable, within (10) days following the giving of notice of such contest, to
mutually agree upon the Claim Amount, then each of the parties shall submit
their determination of the appropriate Claim Amount (the Claim Amount submitted
by SFX or the SFX Subs is referred to as the "SFX Determination" and the Claim
Amount Submitted by the Stockholders is referred to as the "Stockholder
Determination") and the parties shall jointly appoint an independent structural
engineer and/or environmental engineer (the "Arbitrator") whose fee shall be
borne equally by SFX and the Stockholders. In the event that SFX and the
Stockholders are unable to jointly agree upon the Arbitrator within five (5)
days after they are requested to do so, then the parties agree to allow the
American Arbitration Association to designate the Arbitrator in accordance with
the rules, regulations and/or
- 49 -
procedures then outstanding of the American Arbitration Association. The
Arbitrator shall conduct such hearings and investigations as the Arbitrator
shall deem appropriate and shall, within thirty (30) days after the designation
of the Arbitrator, choose either the SFX Determination or the Stockholder
Determination (the "Final Claim Amount"), and such choice by the Arbitrator
shall be conclusive and binding upon the parties. The Arbitrator shall not have
the power to add to, modify or change any of the provisions of this Agreement.
(vi) Within ten (10) days following the determination of the
Final Claim Amount, the Stockholders shall elect either to (x) accept the Final
Claim Amount, or (y) if the Final Claim Amount shall exceed $1,250,000, to
effectuate the Unwind Procedure. If the Stockholders elect to accept the Final
Claim Amount, then the Stockholders shall, within ten (10) days following such
acceptance, deliver to SFX or the SFX Subs, as the case may be, on a Several
Basis, the number of SFX Shares equal to the Final Claim Amount which number of
shares shall be based upon the Adjusted Closing Value. If the Stockholders
shall elect the Unwind Procedure, then the transactions contemplated hereunder
shall be subject to the unwind provisions set forth in Section 6.13(vii)
hereof.
(vii) In the event that the Stockholders shall elect the Unwind
Procedure, then SFX or the SFX Subs, as the case may be, shall have the right,
within thirty (30) days following notice of such election, to elect either to
(x) accept the Unwind Procedure, or (y) reject the Unwind Procedure. In the
event that SFX or the SFX Subs, as the case may be, shall elect to reject the
Unwind Procedure, then the transactions contemplated by this Agreement shall
remain in full force and effect, the Final Claim Amount shall be deemed to be
the $1,250,000 and the Stockholders shall, after payment to SFX of $1,250,000,
have no further liability or obligations to SFX or the SFX Subs with respect to
the Unwind Warranties or the Additional Unwind Warranties.
In the event that SFX or the SFX Subs, as the case may be, shall
accept the Unwind Procedure, then, within thirty (30) days following such
acceptance (the "Unwind Date"), the Stockholders, SFX and the SFX Subs shall
cause the following transactions to occur: (i) the
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Stockholders shall form and designate newly formed corporations for the purpose
of effectuating a merger with CPA, NOC and CADCO and the Subsidiaries by filing
Certificates of Merger in the manner contemplated by Section 1.2 hereof, (ii)
the Stockholders shall cause substitute letters of credit to be delivered and
replace the $110,000 on deposit with the City of Hartford and the $785,000 on
deposit with Fleet all as contemplated by Section 1.3 hereof, (iii) the
directors and officers of the Companies and the Subsidiaries shall resign
effective as of the Unwind Date, (iv) the Stockholders shall return the Merger
Consideration to SFX on the Unwind Date, (v) all books, records and accounts of
the Companies and the Subsidiaries shall be delivered by SFX to the
Stockholders on the Unwind Date, (vi) SFX and the Stockholders shall make an
adjustment of the assets and liabilities of the Companies effective as of the
Unwind Date in accordance with the procedures set forth in Section 1.12 hereof,
(vii) the parties shall take such other actions and make such other deliveries
in order to effectuate an unwind of the transactions contemplated hereby; and
(viii) the Stockholders shall replace the Bond contemplated by Section 1.3
hereof, to the extent that it has been posted.
SECTION 7 CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Mergers. The
respective obligations of each party to effect the Mergers shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) No preliminary or permanent injunction or other order by any
Federal or state court or by any governmental or regulatory body in the United
States which prevents the consummation of the Mergers or the transactions
contemplated hereby shall have been issued and remain in effect (each party
agreeing to use its best efforts to have any such injunction lifted and to seek
to avoid any such injunction).
(b) No statute, rule or regulation shall have been enacted by the
government (or any governmental body or agency) of the United States or any
state thereof that prevents the consummation of the Mergers or the transactions
contemplated hereby.
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(c) No action or proceeding before any court or any governmental
or regulatory authority and no investigation by any governmental or regulatory
authority shall have been commenced (and be pending), against the Companies,
SFX, the SFX Subs or any of their respective affiliates, associates, officers
or directors seeking to prevent or materially delay the transactions
contemplated hereby or challenging any of the terms or provisions of this
Agreement or seeking material damages in connection therewith; provided,
however, that in the case of an action or proceeding brought by a person other
than a governmental or regulatory authority, the condition set forth in this
paragraph (d) shall be deemed to have been satisfied with respect to such
action or proceeding of SFX, the SFX Subs and the Companies shall have been
provided with an opinion of counsel satisfactory to them to the effect that it
is reasonably probable that the relief sought in such action or proceeding will
not be granted.
7.2 Conditions to Obligation of the Companies to Effect the Mergers.
The obligation of each Company to effect the relevant Merger shall be subject
to the fulfillment at or prior to the Effective Date of the following
additional conditions (unless waived):
(a) The representations and warranties of SFX and the SFX Subs
contained in this Agreement shall be true in all material respects when made
and on and as of the Effective Date with the same force and effect as though
made on and as of such times, except as affected by the transactions
contemplated hereby and except that any such representation and warranty made
as or a specified date shall have been true on and as of such date.
(b) SFX and the SFX Subs shall in all material respects have
performed each obligation and agreement and complied with each covenant to be
performed or complied with by it hereunder on or before the Effective Date.
(c) SFX shall have delivered to the Companies a written opinion of
its counsel, dated as of the Effective Date, substantially in the form attached
hereto as Exhibit A.
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(d) Except with respect to any obligations or liabilities arising
under this Agreement, the Stockholders, the Companies and their Subsidiaries
shall each execute and deliver mutual general releases of all liabilities and
obligations.
(e) The CDA Loan shall have closed.
7.3 Conditions to Obligations of SFX and SFX Subs to Effect the
Mergers. The obligations of SFX and SFX Subs to effect the Mergers shall be
subject to the fulfillment at or prior to the Effective Date of the following
additional conditions (unless waived):
(a) The representations and warranties of the Companies and the
Stockholders contained in this Agreement shall be true and correct in all
material respects when made and on and as of the Effective Date with the same
force and effect as though made on and as of such time, except as affected by
the transactions contemplated hereby and except that any such representation or
warranty made as of a specified date shall have been true in all material
respects on and as of such date.
(b) The Companies shall in all material respects have performed
each obligation and agreement and complied with each covenant to be performed
or complied with by it hereunder on or before the Effective Date.
(c) The consents referred to in Section 2.22 shall have been
obtained without any adverse effect on SFX or the SFX Subs or the continued
operations of the Companies and their Subsidiaries consistent with prior past
practice.
(d) The Companies shall have furnished such certificates of its
officers to evidence its compliance with Sections 2 and 6 as may be reasonably
requested by SFX or the SFX Subs.
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(e) On the Effective Date, Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxxx
shall execute a non-competition agreement in the form attached hereto as
Exhibit B.
(f) The Companies shall have delivered to SFX and the SFX Subs
written opinions of their counsel, dated as of the Effective Date,
substantially in the form attached hereto as Exhibit C.
SECTION 8 TERMINATION PRIOR TO EFFECTIVE DATE
8.1 Termination Prior to Effective Date. Agreement may be terminated
and abandoned at any time prior to the Effective Date:
(a) by SFX prior to February 14, 1997;
(b) by the mutual consent of the respective Boards of Directors of
the Companies and SFX;
(c) by the Companies or SFX, by action of its Board of Directors,
in the event the transactions contemplated by this Agreement are not
consummated on or before June 1, 1997;
(d) as provided in any section of this Agreement which
specifically provides for termination; or
(e) by either SFX or the Companies, if any court or competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and nonappealable.
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8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 hereof:
(a) neither the Companies nor SFX shall make or issue, or cause to
be made or issued, any announcement or written statement concerning termination
of this Agreement or the transactions contemplated hereby for dissemination to
the general public without the prior consent of the other party which consent
shall not be unreasonably withheld; provided, however, that such consent shall
not be required where such announcement or written statement is required by
applicable law; and
(b) this Agreement shall become wholly void and of no force or
effect, without any liability or further obligation on the part of the
Companies or SFX or the SFX Subs.
SECTION 9 DUE DILIGENCE REVIEW; PURCHASER'S TERMINATION OPTION
9.1 Notwithstanding anything to the contrary herein contained, the
Company hereby acknowledges that SFX has had the opportunity prior to the
execution of this Agreement to examine all of the relevant legal and business
information and documents relating to the structural and environmental aspects
Real Property and to conduct an inspection of the Real Property. SFX hereby
acknowledges that the Companies have heretofore provided such information
relating to the foregoing as has been requested by SFX. Notwithstanding the
foregoing, the Companies shall, at the Companies' sole expense, within five (5)
days from the date hereof, if requested by SFX, provide to SFX copies of such
other records, agreements, plans and specifications, title reports and all
other material information and documents in the possession or control of the
Companies or their Subsidiaries.
9.2 At all times prior to the Effective Date, SFX, its agents and
contractors shall have the right upon reasonable prior notice to enter upon the
Real Property for the purpose of conducting inspections and investigations of
any kind and nature. Notwithstanding the
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foregoing, SFX shall not conduct intrusive physical inspections of the Real
Property without the prior written consent of the Companies which consent shall
not be unreasonably withheld or delayed, with the understanding that time is at
the essence with respect to this Section. Any such entry shall not, however, in
any manner whatsoever restrict or materially interfere with the operations of
the Real Property or impose any liability upon the Companies. The Companies
reserve the right to impose reasonable conditions upon SFX's access to the Real
Property if such access will restrict or materially interfere with the
operations of the Real Property or impose liability upon Real Property. SFX
hereby agrees to indemnify, defend and hold the Companies harmless from and
against any and all loss, cost, damage and expense (including, without
limitation, reasonable attorneys' fees and disbursements) incurred by the
Companies in connection with SFX's access to the Real Property or the
activities of Purchaser, its agents, representatives, employees or contractors
thereon and to restore any damage resulting from its inspections thereof.
9.3 If, at any time on or before February 14, 1997 or any extensions
thereof pursuant to section 6.2 above, (the "Due Diligence Period"), SFX shall
determine in its sole discretion to rescind this Agreement as a result of SFX's
determination that any aspect of the financing, use, operation, maintenance or
occupancy of all or any portion of the Real Property (including, without
limitation, matters relating to title to the Real Property, engineering
conditions at the Real Property, the presence or potential presence or release
of Hazardous Substances, applicable zoning and/or building codes, rules,
regulations, laws and/or ordinances, real estate taxes, assessments or impact
fees, the existence of violations of applicable laws, rules, regulations, codes
and/or ordinances or conditions which constitute such a violation, and the
contract of any leases affecting this Real Property or any portion thereof) is
not satisfactory to SFX. SFX shall have the right to terminate this Agreement
by providing written notice (the "Due Diligence Termination Notice") of such
termination to the Companies. Upon receipt of such notice by the Companies,
SFX's termination shall become effective. In the event that SFX exercises its
right to terminate this Agreement pursuant to the terms of this Section 9.4,
except as otherwise provided herein to the contrary, the terms and conditions
of this Agreement shall immediately be deemed null and void and shall have no
further force or effect. Time shall be of
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the essence in regard to SFX timely providing the Companies with the Due
Diligence Termination Notice, and if SFX shall fail to timely give the Due
Diligence Termination Notice, the contingency otherwise provided for in this
Section 9.4 shall be conclusively deemed waived; provided, if and to the extent
SFX shall not be provided access to any portion of the Real Property or
documentation to be delivered by the Companies in accordance with this
Agreement, the Due Diligence Period shall toll.
SECTION 10 PUT AND CALL PROVISIONS AFTER MERGER
10.1 Put Option. Each of the holders of SFX shares as of a given date
(individually, a "Seller") may, at its option, by written notice given to SFX
any time after the second anniversary of the Effective Date and before the
seventh anniversary of the Effective Date (the "Put Period"), elect to transfer
to SFX any or all of the SFX Shares held by it, free and clear of any and all
encumbrances for an amount equal to the product of the Closing Value reduced by
10% multiplied by the number of SFX Shares being transferred pursuant to this
provision.
10.2 Put Closing. The closing of any purchase under section 10.1 shall
be held at a place and date specified by the Seller(s) by written notice given
to SFX not more than 10 days after the Seller(s) shall have exercised the
option pursuant hereto; the date of the closing shall not be more than 30 days
after the Seller(s) shall have exercised the option pursuant to Section 10.1.
At the closing, (i) the Seller(s) of the SFX Shares which are the subject of
the "put" shall deliver to SFX a certificate or certificates for all the Shares
being transferred, duly endorsed in blank and with all required stock transfer
stamps attached, if any, and (ii) SFX shall pay such Seller(s) the purchase
price for the SFX Shares. The purchase price shall be payable by wire transfer
of immediately available funds to an account specified by the holder(s) by
written notice given to SFX at least two business days before the closing. Each
holder of SFX Shares shall have the option hereunder without regard to whether
any other holder of SFX Shares has exercised the put option hereunder.
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10.3 Call Option. SFX (or its assignee) may, at its option, by written
notice given to all of the holders of the SFX Shares as of a given date, and at
any time after the Effective Date and before the seventh anniversary of the
Effective Date (the "Call Period"), elect to purchase from all said holders all
of the SFX Shares held by them, free and clear of any and all encumbrances for
an amount equal to the product of the Closing Value increased by 10% multiplied
by the number of SFX Shares being transferred pursuant to this provision. The
holders of the SFX Shares shall be prohibited from conveying their SFX Shares
after delivery of a notice by SFX pursuant to this Section.
10.4 Call Closing. The closing or any purchase under section 10.3
shall be held at a place and date specified by SFX in a written notice given to
each of the holders not more than 10 days after SFX shall have exercised the
option pursuant hereto; the date of the closing shall not be more than 30 days
after SFX shall have exercised the option pursuant to Section 10.3. At the
closing, (i) the holders of the SFX Shares which are the subject of the "call"
shall deliver to SFX a certificate or certificates for all the Shares being
transferred, duly endorsed in blank and with all required stock transfer stamps
attached, and (ii) SFX shall pay such holders the purchase price for the SFX
Shares in accordance with the amount set forth herein. The purchase price shall
be payable by wire transfer of immediately available funds to accounts
specified by each of the holders by written notice given to SFX at least two
business days before the closing.
10.5 Acceleration of Put. In the event of a material breach of this
agreement by SFX or an SFX Sub at any time after the Effective Date, each of
the holders shall immediately have the rights set forth in Sections 10.1 and
10.2 hereof, notwithstanding the fact that such rights would otherwise not
accrue until after the second anniversary of the Effective Date. For purposes
of this agreement, SFX shall be deemed to have materially breached this
agreement, if, among other things there shall be a "Change of Control" of SFX,
or SFX shall have failed to comply with the provisions of Section 6.7 hereof. A
"Change of Control" shall have be deemed to have occurred with respect to a
change in ownership of the outstanding voting stock of SFX held by Xxxxxx F.X.
Sillerman or his affiliates which such change in ownership shall be deemed a
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change of control pursuant to the rules and regulations of the Federal
Communications Commission.
SECTION 11 RIGHT OF FIRST REFUSAL.
11.1 If any Stockholder (a "Selling Stockholder") elects to sell (the
"Third Party Sale") all or a portion of such Stockholder's SFX Shares (the
"Sale Shares") at any time up to the seventh anniversary of the Effective Date
and such Third Party Sale is not then prohibited by Section 6.6 hereof or any
applicable laws, including without limitation any securities laws, then prior
to the date of the proposed Third Party Sale, the Selling Stockholder shall (i)
deliver written notice (an "Offering Notice") of his intent to consummate the
sale, which notice shall set forth the number of SFX Shares to be sold and the
price per Share at which such Shares are to be sold (the "Sale Price") and
shall irrevocably offer to sell to SFX such shares at the Sale Price. The date
of delivery of such Offering Notice shall hereby be defined as (the
"Determination Date"). SFX may, within forty-eight (48) hours after the
Determination Date, elect, by written notice to the Selling Stockholder (a
"Purchase Notice"), to purchase all of the Sale Shares for the Sale Price.
Within three (3) days after the receipt of the Purchase Notice, the Selling
Stockholder shall sell to SFX and SFX shall purchase from the Selling
Stockholder all of the Sale Shares for the Sale Price. If SFX shall fail to
deliver a Purchase Notice within said forty-eight hour period, then the selling
Stockholder may sell the Sale Shares; provided, however, if neither the Third
Party Sale nor the sale to SFX is consummated within thirty (30) days of the
Determination Date for "market" Third Party Sale transactions or sixty (60)
days of the Determination Date for "private" Third Party Sale transactions,
then neither sale shall be consummated. Any subsequent sales of SFX shares
(other than the Sale Shares) by the Selling Stockholder, shall continue to be
subject to the provisions of this Section 11.1.
SECTION 12 INDEMNIFICATION.
12.1 The Stockholders' Indemnitees. The Stockholders shall, on a
Several Basis, but not jointly, indemnify, defend by counsel reasonably
acceptable to SFX, and hold
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harmless SFX, its officers, directors, affiliates, employees, agents,
successors and permitted assigns (the "SFX Indemnitees") from and against all
demands, claims, actions, and causes of action ("Claims") and assessments,
losses, costs, damages, liabilities, interest, penalties, court costs, and
reasonable accounting, consulting, engineering and attorneys' fees ("Losses")
asserted against, imposed upon or incurred by any of the SFX Indemnitees,
directly or indirectly caused by a material breach by the Companies, the
Subsidiaries or the Stockholders of any of their representations, warranties
and/or covenants contained herein; provided that the Stockholders shall only be
required to indemnify SFX where the aggregate Losses is in an amount in excess
of $100,000 (the "Threshold Amount"), in which event the Stockholders shall be
liable for all such claims including the Threshold Amount. Notwithstanding
anything contained in this Agreement to the contrary, no Stockholder shall be
liable for any claim made under this Agreement for any default, breach or
misrepresentation, including provisions of this Section 12.1 and Section 6.13,
for any amounts in excess of thirty-three and one-third (33 1/3%) (the "Maximum
Amount") of the Adjusted Closing Value; provided, however, in no event shall
the Maximum Amount be reduced by greater than 10% for any amounts required to
be paid by the Stockholders pursuant to Section 6.13 hereof. No claim for
indemnification pursuant to this Section 12.1 may be made subsequent to the
date one (1) year after the Effective Date unless such claim is based upon a
fraudulent misrepresentation made herein. Solely for the purposes of this
Section 12.1, in calculating the amount of losses arising from any
mis-representation, breach of warranty, or covenant made by the Companies,
their Subsidiaries or the Stockholders in this Agreement, the applicable
provisions of this Agreement shall be read and interpreted as if the
qualification stated therein with respect to Materiality or Material Adverse
Effect was not contained therein.
12.2 SFX's Indemnitees. SFX shall indemnify, defend by counsel
reasonable acceptable to the Companies, and hold harmless the Companies, their
shareholders employees, agents, successors and permitted assigns and the
Stockholders (the "Companies Indemnitees") from and against all Claims and
Losses asserted against, imposed upon or incurred by any of the Companies
Indemnitees, directly or indirectly, resulting from or arising out of (i) the
ownership or operation of the Companies or their Subsidiaries by SFX from and
after the Effective Date, (ii) the failure of SFX to pay, perform or discharge
any of SFX's obligations, including any
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obligations expressly assumed by SFX pursuant to this Agreement, or (iii) the
breach by SFX of any of its representations and warranties contained herein.
12.3 Procedures.
12.3.1 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.
12.3.2 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. 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.
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12.3.3 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.
12.3.4 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).
SECTION 13 MISCELLANEOUS PROVISIONS
13.1 Specific Performance. The Companies recognize that, in the event
they refuse to perform the provisions of this Agreement, monetary damages alone
will not be adequate. SFX shall, therefore, be entitled in such event, in
addition to bringing suit at law or equity for money or other damages, to
obtain specific performance of the terms of this Agreement. In any action to
enforce the provisions of this Agreement, the Companies and the Stockholders
shall waive the defense that there is an adequate remedy at law or equity and
agree that SFX shall have the right to obtain specific performance of the terms
of this Agreement without being required to prove actual damages, post bond or
furnish other security.
13.2 Amendment and Modification. This Agreement may be amended by the
parties hereto, by action taken by their respective Boards of Directors or duly
authorized committees thereof, at any time before or after approval hereof by
the stockholders of the
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Company, but, after any such approval, no amendment shall be made which reduces
the amount to be received by holders of shares of Stock of the Companies or
changes the medium of payment therefor or which in any way materially adversely
affects the rights of such stockholders without the further approval of the
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
13.3 Waiver. Any of the terms or conditions of this Agreement which
may be lawfully waived may be waived in writing at any time by the party which
is entitled to the benefits thereof. Any waiver of any of the provisions of
this Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
13.4 Survival of Representations and Warranties. The respective
representations and warranties of the Companies and SFX and the SFX Subs
contained herein or in any certificates or other documents delivered prior to
or at the Effective Date shall expire at, and be terminated and extinguished on
the first anniversary of the Effective Date except for (i) the representations
and warranties contained in Section 2.11(vi) and 2.12 (other than the
representation and warranty that the Personal Property includes all such
properties used and necessary to conduct in all material respects the business
and operations of the Companies and their Subsidiaries as presently conducted)
which shall not survive the Effective Date and the representations and
warranties contained in Sections 2.11 (x), (xi), (xvi), (xxi) and 2.17 and or
(xxii which shall survive the Effective Date only to the extent provided in
Section 6.13, and thereafter neither the Companies nor SFX or the SFX Subs, nor
any officer, director or principal thereof, shall be under any liability
whatsoever with respect to any such representation or warranty. This Section
13.4 shall have no effect upon any other obligation of the parties hereto,
whether to be performed before or after the Effective Date. To the extent that
a claim is made alleging a breach of a representation and/or warranty by the
Companies and/or its Subsidiaries
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after the Effective Date but prior to the first anniversary of the Effective
Date which relates to an alleged failure of the Companies and/or its
Subsidiaries to disclose a material obligation, then, the liability of the
Companies and/or Subsidiaries on account of such failure shall be limited
(subject to the limitations as to the Maximum Amount) to a recoupment of the
shares of SFX distributed hereunder on a Several Basis to the extent of the
Adjusted Closing Value, provided, however, that there shall only be such a
recovery where the aggregate of all claims for all such omissions is in an
amount in excess of the Threshold Amount in which event the Companies and the
Subsidiaries shall then be liable for all such claims including the Threshold
Amount.
13.5 Expenses. Each party agrees that all fees and expenses (including
all fees of counsel) incurred by it in connection with this Agreement shall be
borne by it, except that any and all applicable real estate transfer tax or
entity transfer tax relating to the Mergers shall be paid by the Companies at
or prior to the Effective Date.
13.6 Materiality/Disclosure Schedule. Inclusion of information on the
Disclosure Schedule or any other writing delivered pursuant to this agreement
does not constitute an admission or acknowledgment of the materiality of such
information. Information disclosed in any particular Disclosure Schedule
annexed hereto shall, for the purposes of all representations and warranties
made herein, be deemed included in all other Disclosure Schedules attached
hereto.
13.7 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or five days after mailed by prepaid
registered or certified first class mail (return receipt requested), addressed
as follows:
(a) If to the Companies, to:
Xxxxxx Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
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with copies to:
Proskauer Xxxx Xxxxx & Mendelssohn LLP
0000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
and
Xxxxx X. Xxxxxxx
Sandler & Daniells, PC
0 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
or to such other person or address as the Company shall furnish to SFX in
writing.
(b) If to SFX or an SFX Sub, to:
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & XxXxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
or to such other person or address as SFX shall furnish to the Company in
writing.
13.8 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and is not intended to confer upon
any other person any rights or remedies hereunder. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto without the prior written consent of the other
party
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except that SFX and the SFX Subs may assign all or any part of their rights
hereunder to any subsidiary of SFX.
13.9 Publicity. So long as this Agreement is in effect, neither the
Company nor SFX shall, or shall permit any of its subsidiaries to, issue or
cause the publication of any press release or other announcement with respect
to the Merger or this Agreement other than a press release in the form of
Exhibit D attached hereto, without consulting with, and the consent of, the
other party; provided, however, that such consent shall not be required where
such release or announcement is required by applicable law.
13.10 Books and Records; Tax Closing Package. Unless otherwise
consented to in writing by the Company, SFX shall not permit the Companies or
the Subsidiaries to destroy or otherwise dispose of any of the existing books
and records of the Companies, all of which shall have been turned over to SFX
as of the closing, which books and records are less than six (6) years old at
the time of such proposed destruction, and SFX shall grant the Companies and
its Subsidiaries, and their representatives, reasonable access thereto during
normal business hours, provided that they will pay the costs incurred by SFX to
furnish any materials requested by them.
13.11 Closing. The closing of the transactions contemplated by this
agreement shall take place at the offices of Proskauer Xxxx Xxxxx & Xxxxxxxxxx
LLP, 1585 Broadway, New York, New York, or such other place as the parties may
agree, as promptly as practicable after the satisfaction or waiver or the
conditions set forth in Section 7.
13.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.13 Headings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof or affect
in any way the meaning or interpretation of this Agreement.
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13.14 Entire Agreement. This Agreement, including the Disclosure
Schedule and the other documents, exhibits and certificates delivered pursuant
to the terms hereof, sets forth the entire agreement and understanding of the
parties hereto with respect to the subject matter contained herein, and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
party hereto or by any director, officer, employee, agent or representative of
any party hereto.
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13.15 Obligations of SFX Subs. Whenever this Agreement requires an SFX
Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of SFX to cause the SFX Sub to take such action.
13.16 Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the state of New York, without regard to its conflicts of law
doctrines.
13.17 Jurisdiction. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING ARISING IN CONNECTION
WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL
BE BROUGHT ONLY IN SUCH COURT (AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS OR ANY OTHER OBJECTION TO VENUE THEREIN); PROVIDED, HOWEVER, THAT
SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS
SECTION 13.18 AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
JURISDICTION OF SAID COURTS OTHER THAN FOR SUCH PURPOSE.
13.18. Several Obligations. Anything contained in this Agreement to
the contrary notwithstanding, the obligations and liability of the Stockholders
hereunder with respect to any misrepresentation, indemnification or breach of
any of the obligations of the Companies or the
[end of page]
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Subsidiaries hereunder shall be on a several and not on a joint basis. In
furtherance of the foregoing, SFX and the SFX Subs hereby agree that all such
liability shall be allocated (such allocation being sometimes referred to
herein as on a "Several Basis") as follows: (x) 60% to the Stockholders of NOC,
and (y) 40% to the Stockholders of CADCO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
SFX BROADCASTING, INC.
By: /s/ Xxxxxx F.X. Sillerman
-------------------------------
Name: Xxxxxx F.X. Sillerman
Title: Executive Chairman
NOC-ACQUISITION CORP.
By: /s/ Xxxxxx F.X. Sillerman
-------------------------------
Name: Xxxxxx F.X. Sillerman
Title: Executive Chairman
CADCO ACQUISITION CORP.
By: /s/ Xxxxxx F.X. Sillerman
-------------------------------
Name: Xxxxxx F.X. Sillerman
Title: Executive Chairman
QN-ACQUISITION CORP.
By: /s/ Xxxxxx F.X. Sillerman
-------------------------------
Name: Xxxxxx F.X. Sillerman
Title: Executive Chairman
NEDERLANDER OF CONNECTICUT, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
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Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
CONNECTICUT AMPHITHEATER
DEVELOPMENT CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
QN CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
CONNECTICUT PERFORMING ARTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
CONNECTICUT PERFORMING
ARTS PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
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