Exhibit B to the Distribution Agreement
EMPLOYEE
BENEFITS
and
COMPENSATION ALLOCATION AGREEMENT
between
SFX BROADCASTING, INC.
and
SFX ENTERTAINMENT, INC.
dated as of
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS..................................................... 1
Section 1.1 General....................................... 1
ARTICLE II.
RETIREMENT AND WELFARE PLANS.................................... 4
Section 2.1 SFX 401(k) Plan............................... 4
Section 2.2 Welfare Plans................................. 4
ARTICLE III.
GENERAL PROVISIONS.............................................. 5
Section 3.1 Employment Transfers.......................... 5
Section 3.2 Costs and Expenses............................ 6
ARTICLE IV.
MISCELLANEOUS................................................... 6
Section 4.1 Guarantee of Subsidiaries' Obligations........ 6
Section 4.2 Sharing of Information........................ 6
Section 4.3 Termination................................... 6
Section 4.4 Rights to Amend or Terminate Plans;
No Third Party Beneficiaries ............... 6
Section 4.5 Complete Agreement............................ 7
Section 4.6 Governing Law................................. 7
Section 4.7 Notices....................................... 7
Section 4.8 Amendment and Modification.................... 7
Section 4.9 Successors and Assigns........................ 7
Section 4.10 Counterparts.................................. 7
Section 4.11 Interpretation................................ 7
Section 4.12 Legal Enforceability.......................... 7
Section 4.13 References; Construction...................... 7
Section 4.14 Disputes...................................... 8
- i -
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION
AGREEMENT, dated as of , 1998 by and between SFX Broadcasting, Inc., a
Delaware corporation ("SFX"), and SFX Entertainment, Inc., a Delaware
corporation and wholly-owned subsidiary of SFX ("Entertainment"). Unless the
context requires otherwise, "SFX" refers to SFX and its subsidiaries (other
than Entertainment and its subsidiaries) and "Entertainment" refers to
Entertainment and its subsidiaries.
WITNESSETH:
WHEREAS, pursuant to the terms of that certain Distribution
Agreement by and between SFX and Entertainment and dated as of (the
"Distribution Agreement), the parties have entered into this Agreement
regarding certain employment, compensation and benefit matters occasioned by
the Distribution; and
WHEREAS, Parent has joined as a signatory and a party to
this Agreement in order to preserve and protect its rights under the Merger
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement and the Distribution
Agreement, each of the parties hereto, on behalf of itself and its
subsidiaries, hereby agrees as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 GENERAL. Any capitalized terms that are used in this Agreement but
not defined herein shall have the meanings set forth in the Distribution
Agreement (or, if not defined therein, the meanings set forth in the Merger
Agreement), and, as used herein, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
Adverse Consequences: means all actions, suits, proceedings,
investigations, charges, complaints, claims, demands, judgments,
orders, decrees, rulings, damages, fines, costs, amounts paid in
settlement, liabilities, losses, and expenses, including court costs
and reasonable attorneys' fees and expenses.
Agreement: this Employee Benefits and Compensation
Allocation Agreement.
- 1 -
Alternate Payee: an alternate payee under a domestic
relations order which has been determined by the appropriate Plan
administrator to be qualified under Section 414(p) of the Code and
Section 206(d) of ERISA and which creates or recognizes an alternate
payee's right to, or assigns to an alternate payee, all or a portion
of the benefits payable to a participant under any Plan, or an
alternate recipient under a medical child support order which has
been determined by the appropriate Plan administrator to be qualified
under Section 609(a) of ERISA and which creates or recognizes the
existence of an alternate recipient's right to, or assigns to an
alternate recipient the right to, receive benefits for which a
participant or beneficiary is eligible under any Plan.
Beneficiary: a beneficiary, dependent or Alternate Payee of
a participant in a Plan or the estate of a deceased participant in a
Plan, in each case, in his, her or its capacity as such a
beneficiary, dependent, Alternate Payee or estate.
Distribution Agreement: defined in the recitals.
Distribution Date: defined in the Distribution Agreement.
Distribution Employees: defined in the Distribution
Agreement.
Effective Time: defined in the Merger Agreement.
Employee: a Distribution Employee and any employee shown on
the payroll and other records of the Pre-Distribution Group as being
assigned to the Transferred Businesses as of the Distribution Date,
if such individual is, at the relevant time, actively at work or on a
leave of absence (including, but not limited to, vacation, holiday,
sick leave, family and medical leave, disability leave, military
leave, jury duty, layoff with rights of recall, and any other leave
of absence or similar interruption of active employment that is not
considered, according to the policies and practices of such entity,
to have resulted in a permanent termination of such individual's
employment).
Entertainment: defined in the preamble.
Entertainment Participant: any individual who is an Employee
or a Beneficiary of an Employee.
Entertainment 401(k) Plan: a defined contribution plan and
any related trust established by Entertainment to receive the SFX
401(k) Plan account balances described in Section 2.1(a).
Entertainment Plans: Plans provided by, contributed to or
sponsored by one or more members of the Delsener/Xxxxxx Group which
are initially effective on or after the Distribution Date to provide
benefits to Entertainment Participants.
- 2 -
Entertainment Welfare Plan: a Welfare Plan provided by,
contributed to or sponsored by one or more members of the
Delsener/Xxxxxx Group which are initially effective on or after the
Distribution Date to provide benefits to Entertainment Participants.
ERISA: the Employee Retirement Income Security Act of 1974,
as amended, or any successor legislation, and the regulations
promulgated thereunder.
Executive Group: defined in the Merger Agreement.
Parent: defined in the Distribution Agreement.
Plan: any written or unwritten plan, policy, program,
payroll practice, ongoing arrangement, trust, fund, contract,
insurance policy or other agreement or funding vehicle provided by,
contributed to or sponsored by one or more members of the SFX Group
or the Delsener/Xxxxxx Group, providing benefits to SFX Participants
or Entertainment Participants, regardless of whether it is mandated
under local law or negotiated or agreed to as a term or condition of
employment or otherwise, and regardless of whether it is
governmental, private, funded, unfunded, financed by the purchase of
insurance, contributory or noncontributory.
Pre-Distribution Group: SFX and its subsidiaries prior to
the Distribution.
SFX: defined in the preamble.
SFX Employee: any individual who is not an Employee who is
actively employed or on a leave of absence from (including, but not
limited to, vacation, holiday, sick leave, family and medical leave,
disability leave, military leave, jury duty, layoff with rights of
recall, and any other leave of absence or similar interruption of
active employment that is not considered, according to the policies
and practices of such entity, to have resulted in a permanent
termination of such individual's employment) or was formerly employed
by one or more members of the Pre-Distribution Group.
SFX 401(k) Plan: the SFX Broadcasting 401(k) Plan, or any
successor thereto (by merger of plans or otherwise) and any related
trust.
SFX Group: the Pre-Distribution Group, excluding the
Delsener/Xxxxxx Group.
SFX Welfare Plan: any Welfare Plan provided by, contributed
to or sponsored by one or more members of the SFX Group on, prior to
or after the Distribution Date.
Welfare Plan: any Plan that is an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA (whether or not such plan
is subject to ERISA) and any Plan that
- 3 -
is or is intended to be a cafeteria plan under Code Section 125;
provided such term shall not include any severance obligations to the
Executive Group.
ARTICLE II.
RETIREMENT AND WELFARE PLANS
SECTION 2.1 SFX 401(K) PLAN
(a) SFX and Entertainment shall take all actions necessary
or appropriate so that, as of the Distribution Date, all members of the
Delsener/Xxxxxx Group shall cease to be participating employers and sponsors
of the SFX 401(k) Plan. To the extent the parties determine that distribution
of the account balances of Entertainment Participants under the SFX 401(k)
Plan cannot be made in accordance with applicable law and the provisions of
the SFX 401(k) Plan within thirty (30) days after the Effective Time or such
other date or dates mutually agreeable to the parties ("401(k) Distribution
Deadlines"), SFX and Entertainment shall take all actions as may be necessary
or appropriate in order to effect the transfer of the account balances of the
Entertainment Participants under the SFX 401(k) Plan to the Entertainment
401(k) Plan on or as soon as practicable after the 401(k) Distribution
Deadlines or such other date or dates mutually agreeable to the parties. The
assets transferred shall be equal to the liabilities transferred and shall
consist of a pro-rata portion of the assets held in the SFX 401(k) Plan,
unless the parties mutually agree otherwise. To the extent such transfer is
made or any distributions from the SFX 401(k) Plan are submitted for
acceptance to the Entertainment 401(k) Plan as rollover contributions, such
transfers and rollover contributions shall be subject to receipt by
Entertainment of notification from SFX that the SFX 401(k) Plan is intended to
be a tax qualified plan under section 401(a) of the Code. Furthermore,
acceptance or non-acceptance of any rollover contribution from the SFX 401(k)
Plan by the Entertainment 401(k) Plan shall be solely at Entertainment's
discretion and, if accepted, shall be subject to any other conditions and
restrictions that Entertainment in its sole discretion decides to impose.
(b) SFX and Entertainment shall cooperate in making all
appropriate filings required under the Code or ERISA, and the regulations
thereunder and any applicable securities or other laws, implementing all
appropriate communications with participants, maintaining and transferring
appropriate records, and taking all such other actions as may be necessary or
appropriate to implement the provisions of this Section 2.1 and to cause the
transfers pursuant to Section 2.1(a) to take place as soon as practicable
after the date or dates described in Section 2.1(a).
- 4 -
SECTION 2.2 WELFARE PLANS.
(a) SFX and Entertainment shall take all actions necessary
or appropriate so that, as of the Distribution Date, all members of the
Delsener/Xxxxxx Group shall cease to be participating employers and sponsors
of the SFX Welfare Plans. The SFX Group shall have sole responsibility for
retaining and discharging: (1) all Liabilities and Adverse Consequences
relating to or arising out of the SFX Welfare Plans by or in respect of
Entertainment Participants who are not Distribution Employees or Beneficiaries
of Distribution Employees with respect to claims incurred on or prior to the
Distribution Date, provided such claims are filed or submitted within the time
periods required under the SFX Welfare Plans; (2) all Liabilities and Adverse
Consequences relating to or arising out of the SFX Welfare Plans by or in
respect of Entertainment Participants who are Distribution Employees or
Beneficiaries of Distribution Employees with respect to claims incurred on or
prior to the Effective Time, provided such claims are filed or submitted
within the time periods required under the SFX Welfare Plans; and (3) all
Liabilities and Adverse Consequences relating to or arising out of the SFX
Welfare Plans by or in respect of individuals who are not Entertainment
Participants. Effective as of the Distribution Date, the Delsener/Xxxxxx Group
shall have no Liabilities and shall not be responsible for any Adverse
Consequences relating to or arising out of the SFX Welfare Plans. For purposes
of this Section 2.2(a), a claim shall be deemed incurred when the service is
rendered or the materials are provided and not when an individual is formally
billed or charged for the service or materials.
(b) Except as specifically set forth in this Section 2.2,
Entertainment shall take all actions necessary or appropriate to establish
Entertainment Welfare Plans to provide such Welfare Plan benefits as
Entertainment determines necessary or appropriate, if any, to Entertainment
Participants. SFX agrees to provide Entertainment or its designated
representatives with such information in the possession of a member of the SFX
Group and not already in the possession of a member of the Delsener/Xxxxxx
Group as may be reasonably requested by Entertainment in order to carry out
the requirements of this Section 2.2. Entertainment shall have sole
responsibility for retaining and discharging all Liabilities and Adverse
Consequences relating to or arising out of the Entertainment Welfare Plans.
(c) On or prior to the Distribution Date, Entertainment
shall pay premiums and contributions with respect to the Entertainment
Participants' coverage under the SFX Welfare Plans in accordance with past
practices and procedures except, with respect to the month in which the
Distribution Date occurs, any such premiums and contributions shall be paid as
soon as practicable after such month and be pro-rated to the day in the month
when the Distribution Date occurs and be based on the number of participants
employed by the Delsener/Xxxxxx Group as compared to the total number of
participants in the SFX Welfare Plan in question.
ARTICLE III.
GENERAL PROVISIONS
- 5 -
SECTION 3.1 EMPLOYMENT TRANSFERS. Subject to Section 4.3 of
the Distribution Agreement and Section 5.07 of the Merger Agreement,
Entertainment and SFX shall take all steps necessary and appropriate so that,
on or immediately after the Distribution Date, all Employees who are not
Distribution Employees are employed, or (where employment does not continue by
operation of law) are offered employment, by a member of the Delsener/Xxxxxx
Group, and all SFX Employees who are not former employees of the
Pre-Distribution Group are employed, or (where employment does not continue by
operation of law) are offered employment, by a member of the SFX Group. Such
steps shall include, where necessary or appropriate under local law, making
employment offers and/or transferring contracts of employment.
SECTION 3.2 COSTS AND EXPENSES. The Delsener/Xxxxxx Group
and SFX Group shall bear their own costs and expenses with respect to actions
taken to comply with this Agreement, except as otherwise provided in this
Agreement.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.1 GUARANTEE OF SUBSIDIARIES' OBLIGATIONS. Each of
SFX and Entertainment shall cause to be performed, and hereby guarantees the
performance and payment of, all actions, agreements, obligations and
Liabilities set forth herein to be performed or paid by any subsidiary of such
party which is contemplated by the Distribution Agreement to be a subsidiary of
such party on or after the Distribution Date.
SECTION 4.2 SHARING OF INFORMATION. Each of SFX and
Entertainment shall provide to the other all such information in its
possession as the other may reasonably request to enable it to administer its
employee benefit plans and programs, and to determine the scope of, and
fulfill, its obligations under this Agreement. Such information shall, to the
extent reasonably practicable, be provided in the format and at the times and
places requested, but in no event shall the party providing such information
be obligated to incur any direct expense not reimbursed by the party making
such request, nor to make such information available outside its normal
business hours and premises.
SECTION 4.3 TERMINATION. This Agreement shall be terminated
in the event that the Distribution Agreement is terminated and the
Distribution abandoned prior to the Distribution Date. In the event of such
termination, neither party shall have any liability of any kind to the other
party under this Agreement.
SECTION 4.4 RIGHTS TO AMEND OR TERMINATE PLANS; NO THIRD
PARTY BENEFICIARIES. No provisions of this Agreement shall be construed (i) to
limit the right of SFX, any other member of the SFX Group, Entertainment or
any other member of the Delsener/Xxxxxx
- 6 -
Group to amend any Plan or terminate any Plan, or (ii) to create any right or
entitlement whatsoever in any employee of the Pre-Distribution Group, former
employee of the Pre-Distribution Group or Beneficiary, including a right to
continued employment or to any benefit under a Plan or any other compensation.
This Agreement is solely for the benefit of the parties hereto and their
respective subsidiaries and should not be deemed to confer upon third parties
any remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
SECTION 4.5 COMPLETE AGREEMENT. This Agreement and the
agreements and other documents referred to herein (including, but not limited
to, the Distribution Agreement, Merger Agreement and Tax Sharing Agreement)
shall constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
SECTION 4.6 GOVERNING LAW. Subject to applicable U.S.
federal law, this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware (other than the laws that might
otherwise govern under applicable principles of conflicts law) as to all
matters, including matters of validity, construction, effect, performance and
remedies.
SECTION 4.7 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be given in accordance with the
provisions of the Distribution Agreement.
SECTION 4.8 AMENDMENT AND MODIFICATION. This Agreement may
be amended, modified or supplemented only by a written agreement of SFX and
Entertainment and with the consent of the Parent, which consent shall not be
unreasonably withheld.
SECTION 4.9 SUCCESSORS AND ASSIGNS. 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, but
neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party.
SECTION 4.10 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.
SECTION 4.11 INTERPRETATION. The Article and Section
headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties hereto and shall not in any way
affect the meaning or interpretation of this Agreement.
- 7 -
SECTION 4.12 LEGAL ENFORCEABILITY. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 4.13 REFERENCES; CONSTRUCTION. References to any
"Article" or "Section," without more, are references to Articles or Sections
of this Agreement. Unless otherwise expressly stated, clauses beginning with
the term "including" set forth examples only and in no way limit the
generality of the matters thus exemplified.
SECTION 4.14 DISPUTES. If a dispute arises between SFX and
Entertainment as to the interpretation or the implementation of this
Agreement, the provisions of Article XI of the Distribution Agreement shall be
used to resolve the dispute.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the day and year first above
written.
SFX BROADCASTING, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
SFX ENTERTAINMENT, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
SBI HOLDING CORPORATION
By:
-----------------------------
Name:
---------------------------
- 8 -
Title:
--------------------------
- 9 -
