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STOCK PURCHASE AGREEMENT
BETWEEN
GREATER DETROIT THEATRES, INC.,
THE PARTIES LISTED ON SCHEDULE A
AND
SFX ENTERTAINMENT, INC.
AND CONCERT ACQUISITION SUB, INC.
Dated February 1, 1999
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STOCK PURCHASE AGREEMENT dated February 1, 1999 ("Agreement")
among Greater Detroit Theatres, Inc., a New Jersey corporation ("GDT"), the
shareholders of GDT as listed on Schedule A hereto (the "Shareholders"), and
SFX Entertainment, Inc., a Delaware corporation ("SFX"), and Concert
Acquisition Sub, Inc. a Delaware corporation and a wholly-owned subsidiary of
SFX ("Acquisition Sub").
RECITALS
WHEREAS, the Shareholders desire to sell and SFX desires to
purchase all of the shares of capital stock of GDT. The sale and purchase of
the capital stock of GDT is sometimes referred to herein as the "Transaction."
WHEREAS, immediately prior to the consummation of the
Transaction, (i) GDT shall transfer its 100% interest in Nedmas, Inc., a
Michigan corporation ("Nedmas"), to one or more newly-formed entities which may
be owned by certain of the Shareholders (such entity or entities being referred
to herein collectively as "Newco"), and (ii) Nederlander Realty Company of
Illinois, Inc., an Illinois corporation ("Nederlander Realty"), a wholly-owned
subsidiary of GDT, shall (a) transfer its 32% partnership interest in
Nederlander San Francisco Associates, a California partnership ("SF
Associates"), to Newco, (b) transfer its 13.375% limited partner interest in
Pacific Amphitheater Limited Partnership, a California limited partnership
("PALP"), to Newco, (c) cause to be transferred to Newco all obligations owed
by PALP to GDT or any of its Subsidiaries, and (d) acquire all of the
outstanding minority interests in NTC Holdings, Inc., a New Jersey corporation
("NTC"), and Xxx Prop Joint Venture, an Illinois joint venture ("Xxx Prop").
The transfers of such interests in Nedmas, SF Associates and PALP, and the
transfer of such obligations of PALP, are sometimes referred to herein
collectively as the "Newco Transfers" and the acquisition of the minority
interests in NTC and Xxx Prop are sometimes referred to herein as the "NTC/Xxx
Prop Buyout."
WHEREAS, GDT's tax liability resulting from the Newco
Transfers is expected to be not greater than $800,000 (the "Newco Transfers Tax
Liability").
WHEREAS, the principal amount outstanding of certain loans
made by certain of the Shareholders to GDT as of the date hereof is $1,750,000
(the "GDT Shareholder Debt") and the principal amount outstanding of a certain
loan made by American National Bank & Trust Co. of Chicago to GDT as of the
date hereof is $800,000 (the "ANB Bank Debt").
WHEREAS, immediately following the consummation of the Newco
Transfers, GDT shall have certain indirect interests in The World Music
Theatre, located in Tinley Park, Illinois, Alpine Valley Music Theatre, located
in East Xxxx, Wisconsin, and Xxxxxxxxxxxx Post Pavilion, located in Columbia,
Maryland (collectively, the "Venues").
WHEREAS, simultaneously with the consummation of the
Transaction under this Agreement, (i) SFX, Acquisition Sub and Nederlander
Arena Management Co., LLC ("Arena"), which owns certain interests in the Crown
Arena located in Cincinnati, Ohio, Nederlander Cincinnati LLC ("Xxx
Cincinnati"), which owns certain interests in the Xxxx Theatre located in
Cincinnati, Ohio, and Nederlander Club Management LLC ("Xxx Club"), which owns
certain interests in
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Bogart's located in Cincinnati, Ohio, shall effect a transaction under a
membership interest purchase agreement of even date herewith (the "Membership
Interest Purchase Agreement") pursuant to which Acquisition Sub shall acquire
100% of the membership interests in Arena, Xxx Cincinnati and Xxx Club; (ii)
SFX, Acquisition Sub and Nederlander of Ohio, Inc. shall effect a transaction
under an asset purchase agreement of even date herewith (the "Asset Purchase
Agreement") pursuant to which Acquisition Sub shall acquire certain interests
in Riverbend Music Center located in Cincinnati, Ohio; and (iii) SFX,
Acquisition Sub and Nederlander of New Mexico LLC ("Xxx NM"), which owns
certain interests in the Mesa del Sol Theater located in Albuquerque, New
Mexico, and Nederlander Festivals, Inc. ("Xxx Festivals"), which promotes,
operates and conducts concert performances and multi-artist festivals in
various markets in North America through a joint venture between Xxx Festivals
and The Event Group, shall effect a transaction under a purchase agreement of
even date herewith (the "Albuquerque/Festivals Agreement") pursuant to which
Acquisition Sub shall acquire 100% of the membership interests in Xxx NM and
all of the outstanding capital stock in Xxx Festivals. (This Agreement, the
Membership Interest Purchase Agreement, the Asset Purchase Agreement and the
Albuquerque/Festivals Agreement are sometimes referred to herein as the
"Agreements.")
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. DEFINITIONS
Certain terms used herein are defined in Exhibit 1 attached
hereto and, whenever used herein (including the exhibits and schedules hereto),
shall have the meanings set forth therein for all purposes of this Agreement.
All terms used herein shall be applicable to both the singular and plural forms
of such terms; and, unless otherwise indicated, all section references herein
are to sections of this Agreement.
2. PURCHASE AND SALE OF CAPITAL STOCK
Subject to the terms and conditions contained in this
Agreement and in reliance upon the representations, warranties, covenants and
agreements of the parties, on the Closing Date, the Shareholders shall sell,
assign and deliver to SFX, and SFX shall purchase from the Shareholders, all of
the shares of capital stock of GDT (the "Shares"), free and clear of all
Encumbrances, at the price and on the terms set forth in this Agreement.
3. CLOSING
(a) Time and Place of Closing. The Closing shall take place
at the offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000 at 10:00 a.m., New York time on a date selected by the parties not
later than the third business day following the satisfaction or waiver of all
conditions in Sections 5 and 6, subject to Section 16, or at such other time,
date and place as the parties may otherwise agree (the "Closing Date").
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(b) Down Payment. Upon the execution of this Agreement, SFX
shall deposit with the Shareholders the sum of Three Million Seven Hundred
Fifty Thousand Dollars ($3,750,000) as a down payment (the "Down Payment")
toward the Purchase Price (as defined below). The Shareholders shall invest the
Down Payment in interest-bearing bank deposits or money market funds. The
amount of the Down Payment may be increased pursuant to Section 12(q).
(c) Purchase Price. Subject to Section 3(d) and 3(f), the
aggregate consideration to be paid by SFX to the Shareholders in connection
with the Transaction shall be Fifty-One Million Seven Hundred Fifty-Five
Thousand Five Hundred Sixty-Four Dollars ($51,755,564) (the "Purchase Price"),
consisting of:
(i) The Down Payment, including any increase thereof
pursuant to Section 12(q), which shall be credited against the
Purchase Price;
(ii) Forty-Eight Million Five Thousand Five Hundred
Sixty-Four Dollars ($48,005,564), payable in immediately available
federal funds by wire transfer at the Closing no later than 3:00 p.m.
New York time on the Closing Date to an account or accounts designated
by the Shareholders in writing at least two business days prior to the
Closing, it being understood and agreed that this amount shall be
decreased by $2,500,000 if the Down Payment is increased by $2,500,000
pursuant to Section 12(q).
(d) Adjusted Closing Cash Payment. The Purchase Price shall
be decreased by (i) an amount equal to the Adjusted Closing Cash Payment and
(ii) the amount of interest actually earned on the Down Payment from the date
the Down Payment is deposited with the Shareholders, including pursuant to
Section 12(q) hereof, until the Closing Date. The "Adjusted Closing Cash
Payment" shall mean the sum of (x) the GDT Shareholder Debt and the ANB Bank
Debt, together with all accrued and unpaid interest thereon as of Closing Date,
and (y) the Xxxxx Debt. SFX shall make a capital contribution to GDT
immediately prior to the Closing Date in the amount of the Adjusted Closing
Cash Payment for the purpose of repayment of the GDT Shareholder Debt, the ANB
Bank Debt and the Xxxxx Debt together with all accrued and unpaid interest
thereon as of the Closing Date (the "SFX Contribution").
(e) Closing Transactions. On the Closing Date:
(i) The Shareholders shall deliver or cause to be
delivered to SFX:
(A) duly issued certificates for the
Shares, duly endorsed for transfer or accompanied by duly
endorsed stock powers, as SFX shall reasonably designate,
together with any required stock transfer stamps affixed and
canceled;
(B) the minute book and stock records of
GDT and its Subsidiaries;
(C) the certificates, agreements and other
instruments referred to in Section 5;
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(D) the written resignation of each officer
and director of GDT and each of its Subsidiaries (except with
respect to NEJA Group LLC, only those individuals appointed
by the Shareholders directly or indirectly) effective as of
the Closing Date, substantially as directed by SFX at least
five (5) days prior to the Closing Date, in their capacities
as such;
(E) a written opinion or opinions of
counsel, dated the Closing Date, substantially in the form
annexed hereto as Exhibit 3(e)(i)(E);
(F) Non-competition agreements in the forms
annexed hereto as Exhibit 3(e)(i)(F);
(G) Estoppel certificates from the
landlords and other parties, if any, listed on Schedule
3(e)(i)(G) and in the form required by the respective Leases
(as hereinafter defined) with such landlords or other
agreements entered into with such other parties, if any.
Notwithstanding the foregoing, the Shareholders shall request
each of the landlords under the Leases listed on such
schedule (other than the landlords relating to the Leases of
the World Music Theatre and the Xxxxxxxxxxxx Post Pavilion)
to deliver an estoppel certificate in recordable form
reasonably satisfactory to SFX, provided, however, the
failure of any such landlord to deliver such an estoppel
certificate in recordable form shall not give rise to any
liability on the part of the Shareholders and the failure to
obtain the same shall not constitute a condition to the
performance by SFX of its obligations under this Agreement;
(H) evidence of satisfaction of the
Shareholder Debt and the ANB Debt, in the form of either the
respective promissory notes marked "canceled" or a letter of
satisfaction, together with written releases and Form UCC-3
Termination Statements, as applicable, with respect to Liens
securing such debts, if any, from the obligee(s) with respect
to such debts; and
(I) A non-imputation affidavit in the form
annexed hereto as Exhibit 3(e)(i)(I) (the "Non-Imputation
Affidavit") with respect to any Real Property which is
covered by a Lease which has been recorded or as to which a
memorandum of lease, an estoppel certificate or a notice of
lease has been, or then can be, recorded and with respect to
which SFX or Acquisition Sub will obtain leasehold title
insurance as of the Closing Date, provided however, it is
expressly understood and agreed that (a) SFX shall indemnify
the Shareholders with respect to any Losses incurred by the
Shareholders pursuant to such Non-Imputation Affidavit to the
extent provided in Section 14 of this Agreement and (b) the
ability of SFX or Acquisition Sub to obtain leasehold title
insurance with respect to the leasehold estate created by any
of the Leases shall not constitute a condition to the
performance by SFX of its obligations under this Agreement.
(J) An amendment to the Lease with respect
to the Xxxxxxxxxxxx Post Pavilion in the form annexed hereto
as Exhibit 3(e)(i)(J).
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(ii) SFX shall deliver or cause to be delivered:
(A) the Purchase Price to the Shareholders
as decreased by the Adjusted Closing Cash Payment as required
under Section 3(d) above and as adjusted pursuant to Section
3(f);
(B) the certificates, agreements and other
instruments to be delivered to the Shareholders as referred
to in Section 6;
(C) the SFX Contribution to GDT;
(D) a written opinion of counsel, dated as
of the Closing Date, substantially in the form annexed hereto
as Exhibit 3(e)(ii)(D);
(E) the Letter of Credit in favor of the
landlord of Alpine Valley Music Center Theatre referred to in
Section 12(e); and
(F) a Guaranty in favor of the Landlord of
the Xxxxxxxxxxxx Post Pavilion substantially in the form
annexed hereto as Exhibit 3(e)(ii)(F).
(f) Apportionments. SFX and the Shareholders shall apportion
the following items of revenue and expense (which items of revenue and expense
are more particularly set forth by example in the Balance Sheet of GDT) as of
midnight of the date immediately preceding the Closing Date in accordance with
the following terms and conditions.
(i) (A) The Shareholders shall receive a credit in
an amount equal to any deposits made on behalf of GDT together with
any accrued interest thereon, all prepaid expenses and subscriptions,
if any, to the extent the same are attributable to periods preceding
the Closing Date, and all cash on deposit in accounts of GDT as of the
date immediately preceding the Closing Date less an amount equal to:
(1) any outstanding checks as of such date, and (2) any cash on
deposit as of such date relating to advance ticket sales, advance
group sales and unearned sponsorship fees.
(B) all accounts receivable, including
those set forth below, shall be apportioned in the following
manner (except that there shall be no apportionment with
respect to accounts receivable owing from the Shareholders,
their immediate family members and any Subsidiaries or
Affiliates of any thereof which shall be released at Closing
pursuant to Section 17(e)):
(1) To the extent not paid prior to
the Closing, the Shareholders shall be entitled to
an amount equal to any sponsorship fees due on
account of shows or events occurring prior to the
Closing Date; SFX shall remit such amount to the
Shareholders within five (5) days following receipt
thereof.
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(2) The Shareholders shall be
entitled to a credit equal to any general accounts
receivable and any notes receivable due on account
of shows or events occurring prior to the Closing
Date or any promissory notes receivable in existence
prior to the Closing Date.
(C) deferred income with respect to
GDT(excluding the amounts to be apportioned in respect of
items set forth in Subsection (f)(i)(B)) shall be apportioned
between SFX and the Shareholders 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 and after the Closing Date and the Shareholders
shall receive a credit for all such deferred income through
the date immediately preceding the Closing Date; and
(D) if the Closing Date is other than the
first day of a calendar month, all fixed rent payable under
Leases shall be apportioned for the month in which the
Closing Date occurs provided that SFX shall receive a credit
for any unpaid amounts for any other periods prior to the
Closing Date.
(ii) To the extent that the following items are not
subject to adjustment pursuant to the provisions of Section (f)(i)
hereof, SFX and the Shareholders shall also apportion all accounts
payable, including the following items (except that there shall be no
apportionment with respect to accounts payable due to the
Shareholders, their immediate family members and any Subsidiaries or
Affiliates of any thereof which shall be released at Closing pursuant
to Section 17(e)), as of midnight on the date immediately preceding
the Closing Date:
(A) all wages and salaries of employees for
current periods, including accruals up to the Closing Date,
for bonuses, commissions, vacations and sick pay and related
payroll taxes;
(B) 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 the Closing
Date; and
(C) payments in lieu of taxes and
additional rents payable under Leases and any prepaid charges
or advance payments under service contracts.
(iii) The apportionments contemplated by this
Section 3(f), to the extent practicable, shall be made on the Closing
Date. All such apportionments shall be made on a calendar year basis.
At least five (5) business days prior to the estimated Closing Date,
the Shareholders shall furnish to SFX a proposed apportionment
schedule with respect to the items set forth in Subsections (f)(i) and
(ii). Thereafter, the Shareholders and SFX shall negotiate in good
faith in order to resolve any disputed amounts contained therein. In
the event that the Shareholders and SFX are unable to resolve any such
disputed items (the "Disputed Apportionments"), such dispute shall be
resolved as provided in Subsection (f)
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(iv). On the Closing Date, to the extent that the aggregate
apportionments which are not the subject of dispute shall result (x)
in an amount due to the Shareholders, SFX shall increase the amount of
the Purchase Price 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
Purchase Price to the extent of such amount due SFX.
(iv) Within thirty (30) days following the Closing
Date, the Shareholders shall deliver to SFX a schedule of all final
apportionments which were not made on the Closing Date together with a
schedule of all Disputed Apportionments including the Shareholder's
position with respect thereto (the "Final Schedule"). Within ten (10)
business days following receipt of such Final Schedule, SFX shall
either give the Shareholders written notice of acceptance of such
Final Schedule or 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 business 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 Shareholders shall have a period of ten (10) business days
following receipt of the Notice of Dispute either to accept the SFX
Amount or to reject the SFX Amount. If the Shareholders reject the SFX
Amount and the amount in dispute is $25,000 or less in the aggregate,
then the disputed amount shall be shared equally between SFX and the
Shareholders. If the Shareholders reject the SFX Amount and the SFX
Amount exceeds $25,000, and the Shareholders and SFX are unable to
resolve any remaining differences within ten (10) business days
following the rejection of the SFX Amount by the Shareholders, then
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. The Apportionment Arbitrator shall
be a certified public accountant designated by the American
Arbitration Association. SFX and the Shareholders 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 Shareholders shall be paid promptly in cash. Judgment may be
entered on the Apportionment Arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction
of the New York courts for that purpose.
4. INTENTIONALLY OMITTED
5. CONDITIONS TO OBLIGATIONS OF SFX
The obligations of SFX to perform this Agreement are subject
to the satisfaction of the following conditions on or prior to the Closing
Date, unless waived in writing by SFX, and the Shareholders and GDT shall use
commercially reasonable efforts to cause such conditions to be fulfilled:
(a) Representations and Warranties. The representations and
warranties of the Shareholders and GDT in this Agreement or in any schedule or
certificate delivered in connection
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herewith shall be true and accurate in all material respects on the Closing
Date as though made on and as of the Closing Date, except for such changes
permitted or contemplated by the terms of this Agreement and except insofar as
any such representations and warranties refer solely to a particular date or
period, in which case they shall be true and correct in all material respects
on the Closing Date with respect to such date and period, and SFX shall have
received a certificate signed by the Shareholders to that effect.
(b) Performance of Agreements. (i) The Shareholders and GDT
shall have duly performed in all material respects, on or before the Closing
Date, all agreements and obligations required to be performed by them under
this Agreement, (ii) SFX shall have received a certificate signed by the
Shareholders to that effect, and (iii) the closing conditions contained in
Section 5 of each of the Membership Interest Purchase Agreement, the Asset
Purchase Agreement and the Albuquerque/Festivals Agreement shall have been
satisfied or waived.
(c) Litigation; Consents. No action, suit or other proceeding
shall be pending or overtly threatened before or by any court, tribunal or
governmental authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or seeking to
obtain substantial damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree, rule or
regulation of any governmental authority having appropriate jurisdiction, which
violation would result in a Material Adverse Effect with respect to GDT and its
Subsidiaries taken as a whole. The Shareholders shall have obtained the
consents, waivers and amendments, if any, identified on Schedule 7(e), from
third parties or governmental authorities in connection with the consummation
of the transactions contemplated hereby.
(d) Other Events. The Newco Transfers, for which the
consideration payable to GDT shall be $2 million, and the NTC/Xxx Prop Buyout
shall have been consummated and the agreements to be terminated as provided in
Section 12(o) shall have been terminated.
(e) Closing Deliveries. The Shareholders shall have delivered
to SFX all closing deliveries as contemplated in Sections 3(e)(i) and (ii).
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods in respect of the Transaction contemplated by this Agreement under the
HSR Act shall have expired at or prior to the Closing.
(g) The amendment to the Lease with respect to the
Xxxxxxxxxxxx Post Pavilion in the form of Exhibit 3(e)(i)(J) shall be in full
force and effect and the amount payable to the Landlord (as defined therein)
pursuant to Section 7 thereof shall have been paid.
6. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders to perform this Agreement
are subject to the satisfaction of the following conditions on or prior to the
Closing Date, unless waived in writing by the Shareholders, and SFX shall use
commercially reasonable efforts to cause such conditions to be fulfilled:
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(a) Representations and Warranties. The representations and
warranties of SFX in this Agreement or in any certificate or document delivered
in connection herewith shall be true and accurate in all material respects on
the Closing Date as though made on and as of the Closing Date except for such
changes permitted or contemplated by the terms of this Agreement and except
insofar as any such representations and warranties refer solely to a particular
date or period, in which case they shall be true and correct in all material
respects on the Closing Date with respect to such date and period, and the
Shareholders shall have received a certificate signed by a duly authorized
officer of SFX to that effect.
(b) Performance of Agreements. SFX shall have duly performed
in all material respects all agreements and obligations required to be
performed by it under the Agreements on or before the Closing Date, and the
Shareholders shall have received a certificate signed by a duly authorized
officer of SFX to that effect.
(c) Litigation; Consents. No action, suit or other proceeding
shall be pending or overtly threatened before or by a court, tribunal or
governmental authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or seeking to
obtain substantial damages in respect thereof or involving a claim that
consummation thereof would result in the violation of any law, decree, rule or
regulation of any governmental authority having appropriate jurisdiction, which
violation would result in a Material Adverse Effect with respect to SFX and its
Subsidiaries taken as a whole. SFX shall have obtained all necessary material
consents, if any, from third parties or governmental authorities in connection
with the consummation of the transactions contemplated hereby.
(d) Intentionally Omitted.
(e) Closing Deliveries. SFX shall have delivered to the
Shareholders all closing deliveries as contemplated in Section 3(e)(iii).
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods in respect of the Transaction contemplated by this Agreement under the
HSR Act shall have expired at or prior to the Closing.
7. REPRESENTATIONS AND WARRANTIES OF GDT
GDT represents and warrants to SFX as follows:
(a) Organization, Standing and Power. GDT is a duly organized
and validly existing corporation in good standing under the laws of the state
of New Jersey and has full power and authority to own, lease and operate its
properties and to carry on its business as now being conducted in the manner
and in the places in which such business is now being conducted. GDT is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction set forth on Schedule 7(a), which are all of the
jurisdictions in which it is required to be so qualified, except such
jurisdictions where the failure so to qualify would not result in a Material
Adverse Effect with respect to GDT.
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(b) Capitalization. GDT has an authorized capitalization of
498 shares of common stock, all of which are issued and outstanding. The
Shareholders own all of the Shares as set forth in Schedule A free and clear of
all Encumbrances except as set forth on Schedule 7(b). The Shares are duly
authorized, validly issued and outstanding, fully paid and nonassessable.
Except for the Shares, there are no other shares of capital stock or equity
securities of GDT issued or outstanding. Except as set forth in Schedule 7(b),
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 GDT or its Subsidiaries or
any securities convertible into, or other rights to acquire, any of the capital
stock of GDT or its Subsidiaries; or (ii) obligates GDT 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.
(c) Subsidiaries of GDT.
(i) Schedule 7(c) sets forth the name, jurisdiction
of incorporation and capitalization of each Subsidiary of GDT. Except
as set forth in Schedule 7(c), GDT 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, limited
liability company, business trust, firm, association, partnership,
joint venture, entity or organization.
(ii) Except as set forth in Schedule 7(c), all of
the issued and outstanding capital stock of each Subsidiary is owned,
directly or indirectly, by GDT 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.
(iii) Except as set forth in Schedule 7(c), each
Subsidiary of GDT: (i) is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization; 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.
(d) Due Authorization; Legal Authority, Binding Effect. The
execution and delivery of this Agreement and all other agreements, consents and
documents relating hereto to be executed and delivered by the Shareholders and
GDT (the "Nederlander Closing Documents"), and the consummation by the
Shareholders and GDT of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary action. The Shareholders and GDT have,
and will on the Closing Date have, full legal right, power and authority to
execute, deliver and perform this Agreement and the Nederlander Closing
Documents and to consummate the transactions contemplated hereunder and
thereunder, including selling and transferring the Shares to SFX. This
Agreement and the Nederlander Closing Documents, when executed by the
Shareholders , GDT and SFX, shall constitute legal, valid and binding
obligations of the Shareholders and GDT, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, liquidation, reorganization, moratorium or other laws
affecting the rights
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of creditors generally and subject to the exercise of judicial discretion in
accordance with general principles of equity (whether applied by a court of law
or equity).
(e) No Conflicts; Consents. Except as set forth on Schedule
7(e), the execution and delivery of this Agreement or any of the other
Nederlander Closing Documents, or the consummation by the Shareholders and GDT
of the transactions contemplated hereby or thereby, or compliance with any of
the provisions hereof or thereof, will not: (i) conflict with or result in a
breach of the Certificate of Incorporation or By-laws of GDT or the comparable
organizational documents of any of its Subsidiaries; (ii) violate any statute,
law, rule or regulation applicable to the Shareholders, GDT or its
Subsidiaries, or, to the actual knowledge of the Shareholders, any order, writ,
injunction or decree of any court or governmental authority presently in
effect; (iii) violate or conflict with, result in any breach of, constitute a
default under or give rise to any right of termination or acceleration of, any
Material Contract or (iv) result in the creation of any Lien or Encumbrance on
any of the Shares. Except as set forth on Schedule 7(e), neither GDT 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
GDT or any of its Subsidiaries. Except as set forth on Schedule 7(e), no
consent or approval of any person, court, governmental authority or other
entity is required to be obtained by the Shareholders or GDT in connection with
the execution and delivery of this Agreement or the consummation of the
transactions provided for herein.
(f) Organizational Documents. The Shareholders have delivered
to SFX a true, correct and complete copy of the certificate of incorporation or
analogous organizational document (including all amendments thereto), of GDT
and each of its Subsidiaries (as identified in Schedule 7(c), certified by the
Secretary of State of the state of its organization, and a true, correct and
complete copy of the by-laws or analogous organizational document of GDT and
each of its Subsidiaries currently in effect, certified by the Secretary of
GDT, respectively. No action or proceeding is pending or contemplated for the
amendment of any such organizational documents or for the dissolution or
liquidation of GDT or any of its Subsidiaries.
(g) Financial Statements. The Shareholders have delivered to
SFX the Financials, a copy of which are attached hereto as Schedule 7(g).
Except as set forth on Schedule 7(g), the Financials (i) were prepared in
accordance with all books, records and accounts of GDT and its Subsidiaries on
an accrual basis, and (ii) present fairly in all material respects the
financial position of GDT and its Subsidiaries and the results of operations
and stockholders' equity as of the dates and for the respective periods
indicated. The expenses reflected on the income statement in the Financials
include all expenses necessary to conduct the operations of GDT and its
Subsidiaries as currently conducted.
(h) Liabilities. (i) Other than as specifically disclosed in
the notes thereto or on Schedule 7(h) hereto, the balance sheet contained in
the Financials makes adequate provision for all material fixed and contingent
obligations and liabilities of GDT and its Subsidiaries (including all taxes)
as of the date indicated. Except as set forth on the balance sheet as of
November 30, 1998, included in the Financials (the "Balance Sheet") or on
Schedule 7(h) hereto, neither GDT nor any of its Subsidiaries have any
outstanding indebtedness, accrued expenses, liabilities or obligations
11
required to be provided for in such Balance Sheet other than those incurred
since November 30, 1998, in the ordinary course of business.
(ii) The accounts receivable, if any, reflected on
the Balance Sheet (except those collected since the date thereof), and
such additional accounts receivable as are reflected on the books and
records of GDT and its Subsidiaries as of the date hereof, if any,
represent obligations due to GDT and its Subsidiaries arising in the
ordinary course of business.
(i) Absence of Changes. Except as otherwise set forth on
Schedule 7(i) since November 30, 1998, GDT and its Subsidiaries have been
operated in the ordinary course consistent with past practices and have not:
(i) experienced a Material Adverse Effect; (ii)
declared, set aside, made or paid any dividend or other distribution
in respect of its capital stock, or purchased or redeemed, directly or
indirectly, any shares of its capital stock; (iii) issued or sold any
shares of its capital stock of any class (or that of any Subsidiary),
or any options, warrants or other rights to purchase any such shares
or any securities convertible into or exchangeable for such shares (or
that of any Subsidiary); (iv) incurred any indebtedness for borrowed
money or issued or sold any debt securities; (v) sold, assigned,
mortgaged, transferred, encumbered or granted a security interest in
any material asset, tangible or intangible, to any party, except in
the ordinary course of business; (vi) forgiven or canceled any
material debt or claim or terminated or waived any material right of
value, except for the release of certain intercompany obligations owed
to or by any of the Shareholders, their immediate family members or
any of their Affiliates for the fiscal year beginning December 1,
1997; (vii) amended its Certificate of Incorporation, By-laws or
analogous organizational documents; (viii) made any material change in
their respective accounting methods, principles or practices; (ix)
established, amended or materially increased the benefits under any
bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option, stock purchase or other
employee benefit plan; (x) materially increased the compensation
payable to their respective directors, officers or employees except
with respect to bonuses payable for 1998; (xi) agreed to or permitted
any of the foregoing; or (xii) suffered any material damage,
destruction or loss not covered by insurance with respect to any of
their respective assets involving cost or loss in excess of $50,000 in
the aggregate.
(j) Foreign Person. Each of GDT and its Subsidiaries is not a
foreign person within the meaning of Section 1445 of the Internal Revenue Code
of 1986, as amended (the "Code"). At the Closing, each of GDT and its
Subsidiaries shall deliver, if required, an executed certificate in the
applicable form set forth in Treasury Regulation Section 1. 1445-2(b)(2).
(k) Environmental Matters. To the knowledge of GDT, and
subject to the provisions of Section 15(d) hereof, except as set forth on
Schedule 7(k):
(i) Neither GDT nor any of its Subsidiaries nor any
of the Venues is in violation of or has any liability under any
applicable Environmental Law, nor are there any Hazardous Substances
in, on, over, under or at any of the Venues in concentrations which
would currently violate any applicable Environmental Laws or would be
reasonably likely
12
to result in the imposition of liability or obligations on GDT or any
of its Subsidiaries or any of the Venues under any applicable
Environmental Laws, other than such violations or liabilities that
would not, individually or in the aggregate, result in a Material
Adverse Effect with respect to the operation of its businesses.
(ii) GDT, each of its Subsidiaries and each of the
Venues has in effect, or has applications pending for, all material
Permits required under applicable Environmental Laws for the operation
of its business, and is not in violation in any material respect of
the terms and conditions of such Permits. Schedule 7(k)(ii) contains a
list of all material Permits held by GDT or its Subsidiaries issued
under applicable Environmental Laws.
(iii) Other than as would not, individually or in
the aggregate, result in a Material Adverse Effect with respect to its
businesses, neither GDT nor any of its Subsidiaries nor any of the
Venues is subject to any consent decree, compliance order, or
administrative order issued pursuant to applicable Environmental Laws,
and has not received any written notice or request for information,
notice of violation, demand letter, administrative inquiry, complaint
or claim from any Governmental Authority pursuant to any Environmental
Law.
(iv) Neither GDT nor any of its Subsidiaries has
received notice that it or any of the Venues is subject to any Liens
recorded by any Governmental Authority under applicable Environmental
Laws.
(l) Insurance. Schedule 7(l) contains a list of all insurance
policies maintained by GDT with respect to its businesses, copies of which have
been made available to SFX, and a summary of the claims history under such
policies for the past 2 years. GDT is in substantial compliance with all of the
provisions of such insurance policies listed on Schedule 7(1) and such policies
are in full force and effect. All premiums and other payments due from GDT
under or on account of any such policy listed on Schedule 7(l) have been, or by
the Closing Date will be, paid. All material property damage or personal injury
claims asserted but unresolved against GDT and each of its Subsidiaries are
described on Schedule 7(1) and have previously been provided to SFX. At the
Closing, except as otherwise described on Schedule 7(l), all insurance policies
maintained by GDT and each of its Subsidiaries shall be canceled and/or
endorsed to withdraw coverage for any future claim with respect to GDT and each
of its Subsidiaries. GDT has not received any notice of any default (including
with respect to any payment of premiums or the giving of notices), under any of
the policies, and no party to the policy has repudiated any provision thereof.
GDT and its Subsidiaries have been covered during the past three (3) years by
insurance in scope and amount customary for the business in which it is
engaged.
(m) Litigation, Etc. Except as set forth on Schedule 7(m),
there are no actions, suits, claims, proceedings or investigations pending or,
to the knowledge of GDT, threatened against GDT or any of its Subsidiaries or,
to the knowledge of GDT, any of the Venues, at law or in equity, before or by
any court, commission, board, bureau, agency or other federal, state, local or
other governmental authority that would result, individually or in the
aggregate, in a Material Adverse Effect with respect to its businesses. There
is no outstanding order, injunction or decree of any court, governmental agency
or arbitrator against GDT or any of its Subsidiaries or the Shares, and
13
neither GDT nor any of its Subsidiaries has received any complaints which have
been filed with any consumer protection agency, which would result,
individually or in the aggregate, in a Material Adverse Effect with respect to
its businesses.
(n) Material Contracts. Schedule 7(n) contains a list of all
Material Contracts to which GDT or any of its Subsidiaries is a party. With
respect to all such Material Contracts, except as otherwise set forth on
Schedule 7(n) (i) such Material Contracts are in full force and effect and
constitute legal, valid and binding obligations of the respective parties
thereto; (ii) GDT has substantially performed all obligations required to be
performed by it and no material default, or event that with notice or lapse of
time or both would constitute a material default, exists in respect thereof on
the part of GDT or the other parties thereto, (iii) the continuation, validity
and effectiveness of such Material Contracts under the current terms thereof
will not be affected by the transfer of the Shares to SFX under this Agreement
and (iv) no party to any such Material Contracts has repudiated a material
provision thereof.
(o) Compliance; Governmental Authorizations. Except as set
forth on Schedule 7(k) or 7(o), GDT and each of its Subsidiaries and their
respective properties and assets and, to the knowledge of GDT, each of the
Venues, is in substantial compliance with all federal, state and local laws,
statutes, ordinances, rules, regulations and orders applicable to the
operation, conduct or ownership of its business or properties. Except as set
forth on Schedule 7(o), (i) GDT and each of its Subsidiaries and, to the
knowledge of GDT, each of the Venues, have all material Permits necessary in
the conduct of their respective businesses, and such material Permits are in
full force and effect, (ii) no material violations are or have been recorded in
respect of any such material Permits, and (iii) no proceeding or, to the
knowledge of GDT and each of its Subsidiaries, investigation is pending or
threatened to revoke or limit any such material Permits. Schedule 7(o) sets
forth a list of all such material Permits of GDT and its Subsidiaries.
(p) Employee Benefit Plans.
(i) Schedule 7(p) hereto contains a list of (A) each
employee benefit plan, as defined in Section 3(3) of ERISA, and (B) to
the extent not covered under (A) above, each stock option, bonus,
deferred compensation, incentive, fringe benefit, excess, supplemental
executive compensation, employee stock purchase, vacation, sickness,
disability, severance, restricted stock or other employee benefit
plan, policy or arrangement, sponsored, maintained or contributed to
by GDT or by an ERISA Affiliate (as defined below) for the benefit of
employees or former employees of GDT or a Subsidiary and under which
GDT or a Subsidiary currently has an obligation or a liability (the
"Benefit Plans"). For purposes hereof, an ERISA Affiliate is any
entity that would be deemed a "single employer" with GDT under Section
414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA. With
respect to each Benefit Plan (other than a Multiemployer Plan, as
defined below), GDT has heretofore delivered or made available to SFX
true and complete copies of the following documents, where applicable:
(A) the text of the Benefit Plan and of any trust maintained in
connection therewith, and each amendment thereto, (B) the annual
report (Form 5500 series) filed for the most recent three plan years
together with required schedules, (C) the most recent summary plan
description, (D) a copy of the most recent determination letter issued
by the IRS regarding the qualified and tax exempt status of such
Benefit Plans under Section
14
401(a) and 501(a) of the code, (E) all material administrative
documents used in connection with the Benefit Plans, including without
limitation, enrollment forms, distribution or claim forms, loan forms,
beneficiary designation forms and investment selection forms; and (F)
any employee handbook or employee manual for employees of GDT.
(ii) Except as set forth in Schedule 7(p), none of
the Benefit Plans is (A) a "multiemployer plan", as defined in Section
3(37) (other than any Multiemployer Plan) of ERISA (a "Multiemployer
Plan"), or (B) otherwise subject to Title IV of ERISA. No event or set
of circumstances has occurred under which, and there exist no
conditions or set of circumstances under which, GDT or any Subsidiary
could be subject to any liability that would result in a Material
Adverse Effect with respect to a Multiemployer Plan to which GDT, any
Subsidiary or any other ERISA Affiliate contributes other than for
contributions made in the ordinary course of business, none of which
are overdue (including but not limited to contributions arising under
Sections 4201, 4242 or 4245 of ERISA). With respect to any Benefit
Plan subject to Section 412 of the Code, no "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA and Section
412 of the Code) has been incurred that would result in a Material
Adverse Effect. Other than as would result in a Material Adverse
Effect, with respect to each employee pension benefit plan subject to
Title IV of ERISA or Section 412 of the Code (other than the Benefit
Plans) maintained or contributed to by an ERISA Affiliate, (A) there
is no actual or contingent liability of GDT under Title IV of ERISA or
Section 412 of the Code to such plan or the Pension Benefit Guaranty
Corporation and (B) the assets of GDT have not been subject to a lien
under ERISA or the Code.
(iii) Each Benefit Plan (other than a Multiemployer
Plan) intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service (the "IRS") that such Benefit Plan is qualified and that its
related trust has been determined to be exempt from taxation under
Section 501(a) of the Code. No act or failure to act has occurred
since the effective date of any such IRS determination letter that
would cause the qualified status of any Benefit Plan (other than a
Multiemployer Plan) to be revoked. Neither GDT nor, to the knowledge
of GDT, any ERISA Affiliate, any of the Benefit Plans (other than a
Multiemployer Plan) or any trust created thereunder, or any trustee or
administrator or fiduciary thereof has engaged in a transaction or has
taken or failed to take any action that could reasonably be expected
to subject the trust or the trustee to either a material civil penalty
under sections 409 or 502(i) of ERISA or a material tax imposed
pursuant to section 4975, 4976 or 4980B of the Code. With respect to
each of the Benefit Plans (other than a Multiemployer Plan) set forth
in Schedule 7(p), (A) each Benefit Plan has, in all material respects,
been administered in accordance with the applicable provisions of
ERISA, the Code and other applicable law and with its terms, (B) there
is no arbitration, claim, suit, or grievance, pending or, to the
knowledge of GDT, threatened, involving a Benefit Plan (other than
routine claims for benefits or appeals of such claims) and (C) no
Benefit Plan (other than a Multiemployer Plan) is under audit or
investigation by the IRS, the United States Department of Labor, or
any other governmental authority.
15
(iv) No Benefit Plan provides health or life
insurance benefits to employees or former employees of GDT or a
Subsidiary after their retirement or other termination of employment
from GDT or a Subsidiary (other than continuation coverage required
under COBRA). The consummation of the transactions contemplated by
this Agreement will not give rise to any material liability under any
Benefit Plan, including, without limitation, liability for or
termination or severance pay, or accelerate the time of payment or
vesting or materially increase the amount of compensation or benefits
due to any employee of GDT or a Subsidiary solely by reason of such
transactions.
(q) Employees. Schedule 7(q) sets forth a true and complete
list of all employees of GDT and its Subsidiaries, their positions, locations,
salaries or hourly wages and severance arrangements. GDT and its subsidiaries
have complied in all material respects with all laws relating to the employment
of labor including, without limitation ERISA, and those laws relating to wages,
hours, collective bargaining, unemployment insurance, workers' compensation,
equal employment opportunity and sexual harassment. Except as set forth on
Schedule 7(q), neither GDT nor any Subsidiary has received notification that
any of its employees that are listed on Schedule 7(q) currently plans to
terminate his or her employment, whether by reason of the transactions
contemplated hereby or otherwise. Except as set forth on the Balance Sheet or
on Schedule 7(q), 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 Closing Date.
Except as set forth on Schedule 7(q), neither GDT nor its Subsidiaries is a
party to or bound by any collective bargaining agreement, nor, except as
otherwise set forth on Schedule 7(q), has it experienced in the past three
years any strikes, employee grievances, claims of unfair labor practices, or
other collective bargaining disputes. Neither GDT nor its Subsidiaries has
committed any unfair labor practice and, to the knowledge of GDT and its
Subsidiaries, there is no organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
GDT and its Subsidiaries.
(r) Taxes.
(i) Except as otherwise disclosed in Schedule 7(r):
(A) GDT and its Subsidiaries have filed (or received an appropriate
extension of time to file) all federal, state, local, and foreign Tax
Returns required to be filed by them prior to the Closing Date and
such Tax Returns were true and correct in all material respects; (B)
GDT and its Subsidiaries have paid all Taxes shown to be due on such
Tax Returns or have made appropriate provisions in the Balance Sheet
for any Taxes which are being contested in good faith; (C) GDT and its
Subsidiaries have 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, shareholder, or other third party;
(D) all tax deficiencies asserted or assessed against GDT and its
Subsidiaries have been paid or finally settled; (E) no claims have
ever been made by any tax authority in a jurisdiction where GDT and
its Subsidiaries do not file Tax Returns that it is or may be subject
to taxation by that jurisdiction; (F) neither GDT nor any of its
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, which waiver or extension is currently in
16
effect; (G) there is no pending or, to the knowledge of GDT,
threatened action, audit, proceeding or investigation for the
assessment or collection of any Taxes; (H) there are no requests for
rulings, subpoenas or requests for information pending with respect to
any taxing authority; (I) 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; (J) no
power of attorney has been granted by GDT or any of its Subsidiaries,
and is currently in force, with respect to any matter relating to
Taxes; and (K) 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 GDT or any of its 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
Effect with respect to GDT.
(ii) Except as otherwise disclosed in any of the
attached Schedules hereto: (i) neither GDT nor any of its Subsidiaries
has made an election under Section 341 (f) of the Code; (ii) neither
GDT nor any of its 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 28OG of the Code; (iii) neither GDT nor any
of its 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);
(iii) For purposes of this Section 7(r), the
following terms will have the following meanings:
(A) "Tax" or "Taxes" shall mean any
federal, state, local and foreign income, franchise, profits
or gross receipts taxes; ad valorem, value added, sales and
use taxes; real or personal property or capital stock taxes;
payroll, employment, social security, workers' compensation
or unemployment compensation taxes; or excise, transfer and
gains taxes; and interest, penalties or additions thereto
imposed by any tax authority payable by GDT or any of its
Subsidiaries, or chargeable or relating to the assets, income
or revenue of GDT or any of its Subsidiaries.
(B) "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;
(iv) Neither SFX nor any of its Affiliates shall
make any election under Section 338 of the Code or under any similar
provision of any state or local law with respect to the Transaction.
(s) No Brokers or Finders. No person or entity is entitled to
any brokerage commission, finder's fees, advisory or other like payment from
the Shareholders in connection with
17
this Agreement or the transactions contemplated hereby except Xxxxxx & Xxxxxxxx
LLP, whose fee shall be paid by the Shareholders.
(t) Title to Properties. Except as set forth on Schedule
7(t), GDT and each of its Subsidiaries have good and marketable title to, or
valid leasehold interests in, the leasehold estates created by the Leases and
in all of their other respective material properties and assets (real, personal
or mixed), including without limitation, all of the material properties and
assets listed on the Balance Sheet or acquired since the date of the Balance
Sheet. There are no outstanding rights or options to acquire the interests of
GDT or its Subsidiaries in their respective properties and assets, whether
owned or leased. The properties and assets owned, leased or licensed by GDT and
each of its Subsidiaries are all of the properties and assets used to conduct
their business and operations in all material respect as now conducted.
(u) Intellectual Property.
(i) GDT and each of 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 ("Intellectual Property") necessary to
conduct their business and operations in all material respect as now
conducted. Except as set forth in Section 12(d), each item of
Intellectual Property owned or used by GDT and each of its
Subsidiaries to conduct their business and operations is owned or
available for use by GDT and each of its Subsidiaries on identical
terms and conditions immediately subsequent to the Closing Date.
(ii) Neither GDT nor any of its Subsidiaries have
interfered with, infringed upon or misappropriated any Intellectual
Property rights of third parties, and have not received any charge,
complaint, claim, demand or notice alleging any such interference,
infringement or misappropriation (including any claim that GDT or any
of its Subsidiaries must license or refrain from using any
Intellectual Property rights of any third party). To the knowledge of
GDT and its Subsidiaries, no third party has interfered with,
infringed upon or misappropriated any Intellectual Property rights of
GDT and its Subsidiaries.
(v) Transactions With Affiliates. Except as set forth on
Schedule 7(v), none of the Shareholders, officers or directors, or any of their
immediate family members, or, to the knowledge of GDT and its Subsidiaries,
none of their respective employees, is currently a party (either directly or
indirectly) to any transaction with or involving GDT and its Subsidiaries or,
to the knowledge of GDT, any of the Venues, including, without limitation, any
arrangement (other than for services in the ordinary course of business as
directors, officers or employees of GDT and its Subsidiaries) providing for (a)
the furnishing of services by or to, (b) the rental of the sites on which the
properties leased by GDT and its Subsidiaries are 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.
(w) Real Property.
18
(i) Schedule 7(w) contains a list and brief
description of all real property owned or leased by GDT or 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"). Complete and
correct copies of all such leases have been made available to SFX
prior to the date hereof. Schedule 7(w) contains a list of all of the
title insurance policies with respect to the Real Property owned,
leased or subleased by GDT and each of its Subsidiaries.
(ii) Except as provided in Schedule 7(w), none of
GDT or its Subsidiaries 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.
(iii) The tenancies described on Schedule 7(w)
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 7(w), (a) the leases described on Schedule
7(w) 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) there are no
pending summary proceedings or other legal actions for eviction of any
such tenant, and (c) no written notice of default on the part of the
tenant under any of the leases has been received by GDT and/or its
Subsidiaries or their respective agents from the landlord thereunder
which has not been cured and neither GDT nor any of its Subsidiaries
has any actual knowledge of any default by the tenant under any such
leases.
(iv) Those management agreements and operating
agreements listed on Schedule 7(w) 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 Schedule 7(w) are terminable upon thirty (30) days notice
by the party to whom services are being provided thereunder.
(v) Except as set forth on Schedule 7(w), 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 GDT or any of its Subsidiaries is a party or any
extension thereof. With respect to any and all such brokerage
commissions, each of GDT and its Subsidiaries covenants and agrees to
pay any such brokerage commissions or compensation at or prior to the
Closing Date and shall hold SFX and Acquisition Sub harmless and
defend each of SFX and Acquisition Sub in regard to any and all claims
for brokerage commissions or other compensation relating to any
leasing activity prior to the Closing 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 Closing Date).
(vi) Except as set forth on Schedule 7(w), neither
GDT nor its Subsidiaries have received any written notice of (a) any
violation of any federal, state or local laws, codes, regulations or
ordinances affecting the Real Property including, without limitation,
zoning, building
19
or similar laws or ordinances, nor do they have any actual knowledge
of any of the foregoing, (b) any covenant, restriction, condition or
agreement contained in any instrument affecting the Real Property or
(c) any default from any third party who shall be benefitted by any
such restriction, condition or agreements referred to in subparagraph
(b) hereof.
(vii) Except as set forth on Schedule 7(w), there
are no charges, complaints, actions, proceedings or investigations
pending or (to the actual knowledge of GDT and its Subsidiaries)
threatened against or involving GDT or any of its Subsidiaries or the
Real Property.
(viii) There are no, and on the Closing Date there
will be no, mechanics', materialmen's or similar liens against the
Real Property or any portion thereof (except for work performed in the
ordinary course of business or such other work which may be performed
with the prior written consent of SFX) which are the responsibility of
GDT or any of its Subsidiaries to remove.
(ix) Schedule 7(w) contains a list of all parking
agreements to which GDT or any of its Subsidiaries is a party. Except
as set forth on Schedule 7(w), all parking for the Venues is either
located within the real property or is provided pursuant to the
parking agreements and neither GDT nor any of its Subsidiaries has
received written notice of any violation of any material federal,
state or municipal laws or ordinances with respect to such agreements,
all such agreements are in full, force and effect, and, to the actual
knowledge of the Shareholders (a) no material default has occurred and
is continuing under and any such agreements and no event has occurred
which, with the giving of notice or the lapse of time, has occurred
and is continuing which would constitute a material default under any
such agreements and (b) the current and continued use of the parking
provided to the Venues pursuant to such agreements does not violate
any applicable legal requirements.
(x) Neither GDT or its Subsidiaries has received any
written notice from any insurance company that has issued a policy
with respect to the Real Property or from any landlord of the Real
Property requesting performance of any structural or other repairs or
alterations to the Real Property.
(x) Outstanding Indebtedness. Except for the GDT Shareholder
Debt, the ANB Bank Debt and the Xxxxx Debt, neither GDT nor any of its
Subsidiaries has any outstanding indebtedness for borrowed money (excluding
leases).
8. REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
Each Shareholder represents and warrants for itself and not
with respect to any other Shareholder to SFX as follows:
(a) Authorization of Transaction. Such Shareholder 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 Shareholder, enforceable in accordance with
its terms and conditions. Such Shareholder 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
20
behalf or with respect to any of his or her property. If such Shareholder is
not a natural person: such Shareholder 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 Shareholder is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby;
and this Agreement has been duly delivered by such Shareholder.
(b) Noncontravention. Neither the execution and the delivery
of this Agreement nor the consummation of the transactions contemplated hereby,
will (A) violate the certificate of incorporation and by-laws or other
organizational documents of such Shareholder or (B) except as set forth on
Schedule 8(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 Shareholder is a party, by which it is bound or to which any of its assets
is subject.
(c) The Shares. Except as set forth on Schedule A or Schedule
7(b), such Shareholder holds of record and owns beneficially the number of
Shares set forth next to its name on Schedule A, 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 Shareholder is not a party to
any option, warrant, purchase right, or other contract or commitment that could
require such Shareholder to sell, transfer, or otherwise dispose of any capital
stock of GDT or any of its Subsidiaries (other than this Agreement).
9. REPRESENTATIONS AND WARRANTIES OF SFX AND ACQUISITION SUB
SFX and Acquisition Sub represent and warrant to the
Shareholders as follows:
(a) Organization, Standing and Power. Each of SFX and
Acquisition Sub is a duly organized and validly existing corporation in good
standing under the laws of its state of incorporation and has full power and
authority to own, lease and operate its properties 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. Each of SFX and Acquisition Sub is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which it is required to be so qualified, except such
jurisdictions where the failure so to qualify would not result in a Material
Adverse Effect with respect to SFX or Acquisition Sub.
(b) Due Authorization; Legal Authority; Binding Effect. The
execution and delivery of this Agreement and all other agreements, consents and
documents relating hereto to be executed and delivered by SFX and Acquisition
Sub (collectively, the "SFX Closing Documents"), and the consummation by SFX
and Acquisition Sub of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action by SFX and Acquisition
Sub. SFX and Acquisition Sub have, and will on the Closing Date have, full
legal right, power and authority to execute, deliver and perform this Agreement
and the SFX Closing Documents, and to consummate the transactions contemplated
hereunder and thereunder. This Agreement and the SFX
21
Closing Documents, when executed by SFX and Acquisition Sub, on the one hand,
and the Shareholders, on the other hand, shall constitute legal, valid and
binding obligations of SFX and Acquisition Sub enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, liquidation, reorganization, moratorium and
other laws affecting the rights of creditors generally and subject to the
exercise of judicial discretion in accordance with general principles of equity
(whether applied by a court of law or equity).
(c) No Conflicts, Etc. Except as set forth on Schedule 9(c),
neither the execution and delivery of this Agreement, nor any of the other SFX
Closing Documents, nor the consummation by SFX and Acquisition Sub of the
transactions contemplated hereby or thereby, nor compliance with any of the
provisions hereof or thereof, will: (i) conflict with or result in a breach of
the Certificate of Incorporation or By-laws of SFX or Acquisition Sub, (ii) to
the knowledge of SFX, violate any statute, law, rule or regulation applicable
to SFX or any order, writ, injunction or decree of any court or governmental
authority presently in effect; (iii) violate or conflict with, result in any
breach of, constitute a default under, give rise to any right of termination or
acceleration of any mortgage, indenture, or other agreement or writing of any
nature to which SFX or Acquisition Sub is a party or by which they or their
assets or properties may be bound. No consent or approval of, or notification
to any person, party, court, governmental authority or other entity is required
to be obtained by SFX or Acquisition Sub in connection with the execution and
delivery of this Agreement or the performance of the terms hereof or the
consummation of the transactions provided for herein, other than under the HSR
Act.
(d) Litigation. Except as disclosed in the reports,
registration statements, definitive proxy statements and other documents filed
by SFX with the SEC since January 1, 1997, together with any amendments
thereto, to the knowledge of SFX and Acquisition Sub, there are no actions,
suits, claims, proceedings or investigations pending or threatened against SFX
or Acquisition Sub at law or in equity, before or by any court, commission,
board, bureau, agency or other federal, state, local or other governmental
authority that would result, individually or in the aggregate, in a Material
Adverse Effect or otherwise prevent, delay or materially impact the performance
of SFX or Acquisition Sub under this Agreement or with respect to the
transactions contemplated hereby. There is no outstanding order, injunction or
decree of any court or governmental agency against SFX or Acquisition Sub which
would result, individually or in the aggregate, in a Material Adverse Effect
with respect to SFX or Acquisition Sub or otherwise prevent, delay or
materially impact the performance of SFX or Acquisition Sub under this
Agreement or with respect to the transactions contemplated hereby.
(e) Compliance; Governmental Authorizations. SFX and its
properties and assets are in substantial compliance with all federal, state and
local laws, statutes, ordinances, rules, regulations and orders applicable to
the operation, conduct or ownership of its business or properties, except as
set forth on Schedule 9(e). SFX has all material Permits necessary in the
conduct of its business, and such material Permits are in full force and
effect, no material violations are or have been recorded in respect of any
thereof, and no proceeding is pending or, to the knowledge of SFX, threatened
to revoke or limit any thereof, except as set forth on Schedule 9(e).
(f) No Required Stockholder Vote or Consent. The affirmative
vote or consent of the holders of a majority of the outstanding shares of
common stock of SFX or Acquisition Sub
22
is not required to adopt this Agreement and approve the transaction
contemplated hereby. No other vote or consent of the holders of any class or
series of capital stock is required by law, the Certificate of Incorporation or
By-Laws of SFX or Acquisition Sub or otherwise to adopt this Agreement and
approve the other transactions contemplated hereby.
(g) No Brokers or Finders. No person or entity is entitled to
any brokerage commission, finder's fees, advisory or other like payment from
SFX or Acquisition Sub in connection with this Agreement or the transactions
contemplated hereby except Bear Xxxxxxx & Co., Inc., whose fee shall be paid by
SFX.
(h) Investment Intent. On the Closing Date, SFX or
Acquisition Sub is acquiring the Shares for investment purposes and not with a
view to or in connection with a distribution within the meaning of the
Securities Act. Each of SFX and Acquisition Sub is an accredited investor as
defined in Regulation D of the Securities Act with such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of entering into the transactions contemplated by this
Agreement. The provisions of this Section 9(h) shall survive the Closing.
(i) Financial Capacity. Each of SFX and Acquisition Sub will
have sufficient funds readily available to satisfy all of its obligations under
this Agreement to be performed at Closing. Consummation of the transactions
contemplated under this Agreement will not result in SFX or Acquisition Sub
being deemed insolvent.
(j) Intentionally Omitted.
(k) Due Diligence. Each of SFX and Acquisition Sub has had
the full opportunity to review all requested documents from the Shareholders
concerning GDT and/or the transactions contemplated by this Agreement,
including, without limitation, the documents listed on Schedule 9(k). Each of
SFX and Acquisition Sub has undertaken such due diligence regarding such
documents as SFX and Acquisition Sub deem adequate.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Except for the representation set forth in Section 7(r),
which shall survive for the applicable statute of limitations with respect
thereto, or any voluntary extensions thereof, all representations and
warranties made by any party to this Agreement or pursuant hereto are made as
of the date hereof and shall survive the Closing for a period of 15 months and
upon the expiration of such period shall lapse and be of no further force and
effect.
11. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
(a) By the Shareholders.
(i) Access to Records and Properties of GDT. From
and after the date hereof until the Closing Date, upon the prior
consent of the Shareholders, which shall not be unreasonably withheld,
the Shareholders shall afford and, with respect to clause (B) below,
23
shall use reasonable efforts to cause GDT's independent accountants to
afford, (A) to the officers, independent accountants, counsel and
other representatives of SFX, access at all reasonable times to the
offices, properties, contracts, books and records of GDT, and to such
additional financial and operating data and other information about
the business of GDT, as SFX shall from time to time reasonably
request; and (B) to SFX's independent accountants, confidential access
to work papers and other records of GDT's independent accountants.
(ii) Operation of the Business of GDT. From the date
hereof to the Closing Date, except as consented to or approved by an
officer of SFX in writing or as required by this Agreement, the
business of GDT shall be operated and conducted in the ordinary course
of business consistent with present practices.
12. ADDITIONAL COVENANTS
(a) Cooperation.
(i) Subject to Section 16, SFX and the Shareholders
shall cooperate with one another in order to lift any injunctions or
remove any other impediment to the consummation of the transactions
contemplated herein.
(ii) After the Closing, each of SFX and the
Shareholders shall allow, and SFX and the Shareholders shall cause
their respective Affiliates to allow, each of their respective
counsel, accountants and other representatives, such reasonable access
to data and records of or relating to GDT as each of SFX and the
Shareholders shall reasonably request.
(iii) Each of SFX and Acquisition Sub agrees that it
shall preserve and keep the records of GDT delivered to it hereunder
for a period of five (5) years from the Closing, or for any longer
period as may be required by any government agency or as identified by
SFX and the Shareholders as being required for claims or litigation
matters, and each of SFX and Acquisition Sub shall cause GDT to make
such records available to the Shareholders as may be reasonably
required in connection with any legal proceedings by or against the
Shareholders or governmental investigations or tax examination of the
Shareholders. In the event that SFX and Acquisition Sub wishes to
destroy such records after the appropriate time periods, SFX shall
give 180 days' prior written notice to the Shareholders which shall
have the right at its option and expense to take possession of said
records within such 180-day period.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) No License; Name Change; Subsequent Filings. Neither SFX
nor Acquisition Sub shall have any license or right to use in any manner the
trademarks, tradenames, service marks, service names, copyrights, patents,
trade secrets, know-how, or any applications relating to any of the foregoing,
or other intellectual property rights, directly or indirectly, owned by,
licensed to or relating to the Shareholders, their Affiliates or otherwise
incorporating or relating to the name
24
"Nederlander" or any derivation or combination thereof in any form. As soon as
practicable and in any event within five business days after the Closing Date,
SFX or Acquisition Sub shall file with the Secretary of State or other
appropriate official of each state or county in which GDT and any of its
Subsidiaries is incorporated or qualified to transact business such documents,
notices or certificates as are necessary to change the name of GDT and any of
its Subsidiaries to a name that does not include the word "Nederlander," and
shall promptly deliver written confirmation of such filing to the Shareholders.
As promptly as practicable and in any event within 45 days after the Closing
Date, SFX or Acquisition Sub shall cause GDT and any of its Subsidiaries to
cease using and shall use its best efforts to remove from all assets and
property of GDT and any of its Subsidiaries the name "Nederlander," all related
logos and trademarks and all derivatives thereof. SFX hereby indemnifies and
holds the Shareholders and their Affiliates harmless from and against
any and all Losses in connection with SFX's or Acquisition Sub's breach or
alleged breach of this Section 12(d), including, but not limited to legal,
investigative and other professional fees and expenses.
(e) Release of Guaranties, Etc. SFX shall use commercially
reasonable efforts to obtain the release of the Shareholders or any Affiliate
of the Shareholders from those guaranties, bonds, letters of credit or similar
contingent obligations set forth in Schedule 12(e) hereto prior to the Closing,
and shall indemnify and hold the Shareholders and their Affiliates harmless
from and against, and shall on demand reimburse them for, any Losses incurred
by the Shareholders and their Affiliates following Closing as a result of the
failure by SFX to obtain any such release or to provide a replacement guaranty,
bond, letter of credit or similar item. Without limiting the generality of the
foregoing, SFX agrees to post a replacement letter of credit in favor of the
landlord of Alpine Valley Music Theatre in principal amount equivalent to the
existing letter of credit provided by the Shareholders. In no event shall SFX
be liable to the Shareholders and their Affiliates for any nonperformance by
the Shareholders and their Affiliates with respect to any of the obligations of
the Shareholders and their Affiliates covered by any guaranty, bond, letter of
credit or similar item prior to Closing.
(f) Intentionally Omitted.
(g) Notice of Events. From time to time prior to the Closing
Date, each party shall notify the others if it becomes aware of any matters or
events arising or discovered subsequent to the date hereof that, if existing or
known on the date hereof, would have rendered any statement, representation or
warranty made by the other party (including any information contained in any
schedule hereto) inaccurate or incomplete.
(h) Filings and Governmental Consents. Subject to Section
12(j), after the execution and delivery of this Agreement, the Shareholders and
SFX each shall use their commercially reasonable 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.
(i) Xxxx-Xxxxx Xxxxxx Filing. On February 10, 1999, SFX and
the Shareholders shall file with the United States Department of Justice and
the Federal Trade Commission a
25
Notification and Report Form in accordance with the notification requirements
of the HSR Act and shall use their reasonable best efforts to achieve the
prompt termination or expiration of the waiting period or any extension thereto
provided for under the HSR Act as a prerequisite to the consummation of the
transaction provided for herein.
(j) Confidentiality.
(i) Except for disclosure to accountants, attorneys,
financial advisors and other consultants or advisors, each of SFX and
Acquisition Sub and their subsidiaries agrees that they shall, and
shall cause their officers, employees and authorized representatives
to, hold in strict confidence the terms of this Agreement and all data
and information obtained by them from the Shareholders (unless such
information is a matter of public knowledge or has heretofore been or
is hereafter published or filed as public information through no
action or fault of SFX, Acquisition Sub, their subsidiaries or persons
under their control, or becomes readily ascertainable from public or
published information or trade sources) and shall ensure that such
officers, employees and authorized representatives do not, disclose
such terms or information to others without the prior written consent
of the Shareholders, except if required by a Court of competent
jurisdiction or otherwise required by law. If any party hereto, or any
officer, employee or authorized representative thereof, is requested
in any proceeding to disclose any information described in the
immediately preceding sentence, such party shall give the other
parties prompt notice of such request so they may seek an appropriate
protective order. If, in the absence of such a protective order, a
party hereto, or any officer, employee or authorized representative
thereof, is nonetheless compelled to disclose any information
described in the first sentence of this Section 12(j)(i), such person
or entity may disclose such information provided, however, that such
person shall use his, her or its best efforts to obtain assurances
that confidential treatment will be accorded to such information.
(ii) Except for disclosure to accountants,
attorneys, financial advisors and other consultants or advisors, the
Shareholders each agree that they shall, and shall cause their
officers, employees and authorized representatives to, hold in strict
confidence the terms of this Agreement and all data and information
obtained by them from SFX (unless such information is a matter of
public knowledge or has heretofore been or is hereafter published or
filed as public information through no action or fault of the
Shareholders or becomes readily ascertainable from public or published
information or trade sources) and shall ensure that such officers,
employees and authorized representatives do not disclose such terms or
information to others without the prior written consent of SFX, except
if required by a Court of competent jurisdiction or otherwise required
by law. If any party hereto, or any officer, employee or authorized
representative thereof, is requested in any proceeding to disclose any
information described in the immediately preceding sentence, such
party shall give the other parties prompt notice of such request so
they may seek an appropriate protective order. If, in the absence of
such a protective order, a party hereto, or any officer, employee or
authorized representative thereof, is nonetheless compelled to
disclose any information described in the first sentence of this
Section 12(j)(ii), such person or entity may disclose such information
provided, however, that such person shall use his, her or its best
efforts to obtain assurances that confidential treatment will be
accorded to such information.
26
(iii) In the event this Agreement is terminated, the
Shareholders, on the one hand, and SFX 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 publicly available.
(k) "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 real or personal property or
other assets, tangible and intangible, which become property of SFX by virtue
of the Transaction, 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 such assets except as expressly set forth 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 except as expressly set forth herein.
(l) Further Actions. Except as provided in Section 12(i),
each of the parties hereto agrees to use its commercially reasonable 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 commercially
reasonable 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.
(m) Intentionally Omitted.
(n) Pre-Closing Transactions. The Shareholders shall effect
the Newco Transfers and the NTC/Xxx Prop Buy-out immediately prior to or
contemporaneously with the Closing.
(o) Termination of Certain Agreements. The Agreements set
forth on Schedule 12(o) shall have been terminated.
(p) Newco Transfers Tax Liability. The Newco Transfers Tax
Liability shall not be greater than $800,000.
(q) Increased Down Payment. In the event that, following the
submission of the Xxxx-Xxxxx-Xxxxxx Filing, either the U.S. Department of
Justice or the U.S. Federal Trade Commission serves a "second request" on one
or more of the parties to this Agreement, then SFX shall promptly deposit with
the Shareholders an additional $2,500,000. The parties agree that such
27
amount shall be added to the Down Payment such that the aggregate amount of the
Down Payment shall become $6,250,000. In such event, all references to the Down
Payment in this Agreement shall mean the Down Payment as so increased.
13. INDEMNIFICATION OF PURCHASER
Subject to Sections 10 and 16, the Shareholders, jointly and
severally, hereby agree that they will indemnify, save harmless and defend SFX
and each of its Subsidiaries, Affiliates, officers and directors, from and
against any and all Losses incurred by any of them by reason of, or arising out
of:
(i) any claims of any broker or finder engaged by
the Shareholders, GDT or any of its Subsidiaries;
(ii) any breach of any representation or warranty by
the Shareholders, GDT or any of its Subsidiaries contained in this
Agreement (including the schedules hereto);
(iii) any breach by the Shareholders, GDT or any of
its Subsidiaries of any covenant of this Agreement (or any other
agreements entered into pursuant hereto); and
(iv) any personal injury or property damage claim
attributable to the period prior to Closing up to an amount equal to
the amount paid by SFX in respect of any such claim (but in no event
to exceed an amount equal to the deductible under the applicable
insurance policy); provided, however, that the Basket Amount (as
defined below), shall not apply to any Losses incurred by SFX or its
subsidiaries under this Section 13(iv) and shall not be counted toward
determining any limitation on the Shareholders' indemnity obligations
under the Agreements.
14. INDEMNIFICATION OF THE SHAREHOLDERS
Subject to the provisions of Sections 10 and 16, SFX and
Acquisition Sub, jointly and severally, shall indemnify, save harmless and
defend the Shareholders and their respective shareholders, Subsidiaries,
parents, Affiliates, officers and directors from and against any and all Losses
incurred by any of them by reason of, or arising out of:
(i) any claims of any broker or finder engaged by
SFX or Acquisition Sub;
(ii) any breach of any representation or warranty by
SFX or Acquisition Sub contained in this Agreement (including the
schedules hereto);
(iii) any breach by SFX or Acquisition Sub of any
covenant of this Agreement (or any other agreements entered into
pursuant hereto); and
(iv) any claim asserted against the Shareholders
under the Non- Imputation Affidavit (collectively, the "Non-Imputation
Losses") (a) up to an amount equal to
28
the Basket Amount (as hereinafter defined) (which amount shall be
reduced by the aggregate amount of any Deductible Losses suffered by
SFX or Acquisition Sub for which they have been indemnified by the
Shareholders under Section 13(ii) or 13(iii) of all of the Agreements)
and SFX shall reimburse the Shareholders on demand for any such
Non-Imputation Losses covered by this Section 14(iv)(a), provided,
however, if Deductible Losses under all of the Agreements in the
aggregate exceed the Basket Amount, the Shareholders shall promptly
reimburse SFX for any amounts paid to the Shareholders by SFX under
this Section 14(iv)(a), and (b) which exceed the sum of $6,500,000
(which amount shall be reduced by the amount of all Deductible Losses
suffered by SFX or Acquisition Sub for which they have been
indemnified by the Shareholders under Section 13(ii) or 13(iii) of all
of the Agreements) and the amount of any such Non- Imputation Losses
shall be paid by SFX to the Shareholders upon demand.
15. RULES REGARDING INDEMNIFICATION
(a) The rights and obligations of each party claiming a right
to indemnification hereunder ("Indemnitee") from the other party ("Indemnitor")
shall be governed by the following rules:
(i) The Indemnitee shall give prompt written notice
to the Indemnitor of any state of facts which Indemnitee determines
will give rise to a claim by the Indemnitee against the Indemnitor
based on the indemnity agreements contained in Sections 13 and 14,
stating the nature and basis of said claims and the amount thereof, to
the extent known; provided, however, that any claim for
indemnification hereunder must be received by the Indemnitor within
six months after the Closing Date.
(ii) In the event any action, suit or proceeding is
brought against the Indemnitee, with respect to which the Indemnitor
may have liability under the indemnity agreements contained in Section
13 and 14, the Indemnitor shall have thirty (30) days after receipt of
notice of such action, suit or proceeding to undertake, conduct and
control, through counsel of its own choosing and at its own expense,
the settlement or defense thereof (including all proceedings on appeal
or for review which counsel for the Indemnitee shall deem
appropriate), and the Indemnitee shall cooperate with it in connection
therewith. The Indemnitor shall permit the Indemnitee to participate
in such settlement or defense through counsel chosen by such
Indemnitee. If the Indemnitee elects to so participate, the fees and
expenses of such counsel shall be borne by the Indemnitee. So long as
the Indemnitor, at Indemnitor's cost and expense, (1) has undertaken
the defense of, and assumed full responsibility for all indemnified
liabilities with respect to, such claim, (2) is reasonably contesting
such claim in good faith, by appropriate proceedings, and (3) has
taken such action (including the posting of a bond, deposit or other
security) as may be necessary to prevent any action to foreclose a
lien against or attachment of the property of the Indemnitee for
payment of such claim, the Indemnitee shall not pay or settle any such
claim. Notwithstanding compliance by the Indemnitor with the preceding
sentence, the Indemnitee shall have the right to pay or settle any
such claim, provided that in such event it shall waive any right to
indemnity therefor by the Indemnitor for such claim. If, within thirty
(30) days after the receipt of a notice of a claim of indemnity
hereunder, the Indemnitor does not notify the Indemnitee
29
that it elects, at Indemnitor's cost and expense, to undertake the
defense thereof and assume full responsibility for all indemnified
liabilities with respect thereto, or gives such notice and thereafter
fails to contest such claim in good faith or to prevent action to
foreclose a lien against or attachment of the Indemnitee's property as
contemplated above, the Indemnitee shall have the right to contest,
settle and/or compromise the claim and, to the extent the actions, if
any, taken by the Indemnitee in settling or compromising such claim
are reasonable and in good faith, the Indemnitee shall not thereby
waive any right to indemnity therefor pursuant to this Agreement.
(iii) The Indemnitee shall be kept fully informed by
the Indemnitor of such action, suit or proceeding at all stages
thereof, whether or not it is represented by counsel. The parties
hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and
adequate defense of any such action, suit or proceeding.
(b) The Indemnitor shall make no settlement of any claims
which Indemnitor has undertaken to defend without Indemnitee's consent unless
the Indemnitor fully indemnifies the Indemnitee for all Losses and such
settlement does not involve (i) the entry of injunctive or other equitable
relief against the Indemnitee or (ii) an admission of guilt or wrongdoing.
(c) Subject to Section 15(d), the Shareholders in the
aggregate shall not be responsible for Losses indemnifiable under Sections
13(ii) or (iii) ("Deductible Losses") unless and until such Deductible Losses
in the aggregate exceed an amount equal to $450,000 (the "Basket Amount") as
reduced by any Non-Imputation Losses theretofore reimbursed by SFX to the
Shareholders. In the event that the aggregate of such Deductible Losses exceeds
the Basket Amount, the Shareholders in the aggregate shall indemnify SFX and
all other indemnified parties for all Deductible Losses including the Basket
Amount. For purposes of this Section 15(c), Deductible Losses shall be
comprised of the aggregate amount of such Deductible Losses under each of the
Agreements. In no event shall the collective indemnity obligations of the
Shareholders, the Members, the Seller and the Sellers (as each such term is
defined herein and in the Membership Interest Purchase Agreement, the Asset
Purchase Agreement and the Albuquerque/Festivals Agreement, respectively) for
Deductible Losses under Section 13 in all of the Agreements plus an amount
equal to all Non-Imputation Losses in the aggregate exceed $6.5 million,
provided, however, that the Basket Amount shall not apply to any breach of the
representation and warranty set forth in Section 7(x) or the covenant set forth
in Section 12(p) and such Losses shall not be counted towards determining
whether the aggregate Deductible Losses or Non-Imputation Losses exceed $6.5
million. Deductible Losses subject to indemnification under this Section 15(c)
shall not include Compliance Losses (defined below) subject to indemnification
under Section 15(d).
(d) Notwithstanding the first two sentences of Section 15(c)
and solely with respect to the representations and warranties contained in
Section 7(k) and Section 7(o) of this Agreement (and, for purposes of
determining whether or not a breach of such representations and warranties has
occurred, without giving effect to whether such representations are limited to
the actual knowledge of the Shareholders), the Shareholders shall indemnify SFX
and all other indemnified parties for all actual out-of-pocket expenditures by
such parties with respect to
30
Compliance Losses (as defined below) in the aggregate in excess of $700,000
(the "Special Basket Amount") which are incurred by SFX or any such other
indemnified parties as a result of: (x) any structural repairs to any Real
Property which SFX or any such indemnified parties shall, on or before the date
which is fifteen months following the Closing Date, commence the performance
of, but only to the extent that such structural repairs are required to be
performed by the tenant pursuant to the express provisions of the applicable
Lease for such Real Property or, if the applicable Lease is silent as to
whether the landlord or the tenant is required to perform such work, as
required by law solely because of such party's status as a tenant under such
applicable Lease, and (y) SFX or any such indemnified parties shall be required
to remediate and shall, on or before the date which is fifteen months following
the Closing Date commence such remediation, of any hazardous substances on any
of the Real Property which hazardous substances were released, discharged or
disposed of by GDT or any of its Subsidiaries on such Real Property and the
remediation of which is (a) required to be performed in order to comply with an
Environmental Law and (b) is required to be performed by the tenant under the
applicable Lease for such Real Property or, if the applicable Lease is silent
as to whether the landlord or the tenant is required to perform such work, as
required by law solely because of such party's status as a tenant under such
applicable Lease (collectively, the "Compliance Losses"). For purposes of this
Section 15(d), Compliance Losses shall be comprised of the aggregate amount of
such Compliance Losses under all of the Agreements. Notwithstanding the
limitation on the aggregate amount of the indemnity obligations of the
Shareholders, the Members, the Seller and the Sellers under Section 13
contained in the second to last sentence of Section 15(c), in the event that
the amount of the Compliance Losses, when added to the total amount of
Deductible Losses subject to indemnification under Section 13 with respect to
all Agreements, shall cause the aggregate Deductible Losses and Compliance
Losses to exceed the sum of $6,500,000, then, solely to the extent of the
amount of the Compliance Losses, such limitation shall be increased to the sum
of $8,500,000 with respect to all such Compliance Losses in the aggregate. By
way of example, (A) in the event that all Deductible Losses under Section 13
shall equal the sum of $6,000,000 in the aggregate and the Compliance Losses
shall equal the sum of $3,000,000 in the aggregate, SFX shall be entitled to
recover the amount of $6,000,000 in respect of such Deductible Losses and the
amount of $2,300,000 in respect of such Compliance Losses, and (B) in the event
that all Deductible Losses under Section 13 shall equal the sum of $8,000,000
and Compliance Losses shall equal the sum of $1,200,000, SFX shall be entitled
to recover the aggregate sum of $7,000,000 representing $6,500,000 of
Deductible Losses and $500,000 of Compliance Losses. Any breach of the
representations and warranties set forth in Section 7(o) which is not subject
to this Section 15(d) shall be subject to Section 15(c).
(e) If any Indemnitee shall have actual knowledge as of the
Closing Date that any of the representations or warranties of any other party
hereto contained herein are false or inaccurate or that an Indemnitor is in
breach of any covenant or obligation under this Agreement, then the Indemnitor
shall have no liability for any loss resulting from or arising out of the
falsity or inaccuracy of such representations or warranties, or the breach of
such covenant or obligation.
(f) Any indemnifiable Loss hereunder shall be calculated on a
net after tax basis and shall be reduced by the amounts actually recovered by
the Indemnitee from its insurance carriers and any amounts recovered by such
party subsequent to the payment by the Indemnitor with respect to the same
claim shall be remitted to the Indemnitor; provided that such
31
remittance shall not exceed the amount of the indemnification payment made by
such Indemnitor.
(g) The remedies provided in Sections 13, 14 and 15 shall be
the sole and exclusive remedies of the parties with respect to any breach of a
representation, warranty or covenant by another party under this Agreement,
except as set forth elsewhere in this Agreement.
(h) All indemnification payments shall be treated by the
parties as adjustments to the Purchase Price.
16. TERMINATION
(a) This Agreement may be terminated at any time prior to the
Expiration Date:
(i) by mutual consent of all of the parties; or
(ii) by either SFX or the Shareholders if there has
been a breach of this Agreement on the part of the other party which
have or could reasonably be expected to have a Material Adverse Effect
on such other party and its Subsidiaries and Affiliates taken as a
whole, and such other party has failed to cure such breach after not
less than 10 days' notice thereof; or
(iii) by SFX during the period between May 17, 1999
and May 21, 1999, if the Shareholders have provided SFX with ten
business days prior written notice that, notwithstanding their
commercially reasonable efforts, the Shareholders will be unable to
obtain one or more of the consents, waivers or amendments listed on
Schedule 7(e) prior to the Closing Date; provided that if SFX does not
terminate the Agreement during such period then the requirement to
obtain the consents, waivers and amendments specified in the
Shareholders' notice to SFX shall be deemed waived; or
(iv) by either SFX or the Shareholders if the
transactions contemplated herein have not been consummated by August
31, 1999 (the "Expiration Date").
(b) If this Agreement is terminated by the Shareholders
pursuant to Section 16(a)(iv) and as of such date (i) the condition set forth
in Section 6(f) has not been fulfilled and (ii) each of the conditions in
Section 5 other than the condition set forth in Section 5(f) have been
satisfied or are readily capable of being satisfied and the Shareholders shall
have delivered to SFX a certificate signed by each of them to such effect, then
(x) $3,750,000 of the Down Payment shall become non-refundable liquidated
damages (the "Termination Fee") and (y) the Shareholders shall promptly (and in
no event later than five business days from the date of termination) refund the
remaining $2,500,000 of the Down Payment, together with all accrued interest
thereon; provided, however, that the Termination Fee shall be increased by
$2,500,000 such that the entire Down Payment shall become non-refundable
liquidated damages if SFX failed to use its reasonable best efforts to obtain
HSR Clearance.
32
(c) If this Agreement is terminated by SFX pursuant to
Section 16(a)(iv) and as of such date the condition set forth in Section 6(f)
has not been fulfilled, then the Shareholders shall be entitled to retain the
entire Down Payment as liquidated damages.
(d) If this Agreement is terminated by the Shareholders under
Section 16(a)(ii), then the Shareholders shall be entitled to the Termination
Fee as liquidated damages, provided that there has not been a breach on the
part of the Shareholders which gives SFX the right to terminate this Agreement
under Section 16(a)(ii). If the Shareholders retain the Termination Fee
pursuant to this Section 16(d), then the Shareholders promptly shall refund the
remaining $2,500,000 of the Down Payment together with all accrued interest
thereon, if such amount has theretofore been deposited with the Shareholders
under Section 12(q). If this Agreement is terminated by SFX under Section
16(a)(ii), then the Shareholders promptly shall refund the Down Payment
together with all accrued interest thereon, provided that there has not been a
breach on the part of SFX which gives the Shareholders the right to terminate
this Agreement under Section 16(a)(ii).
(e) Notwithstanding any other provision of this Agreement, if
each of the conditions set forth in Section 5 have been satisfied or are
readily capable of being satisfied and the Shareholders have delivered to SFX a
certificate signed by each of them to such effect and SFX refuses to effect the
transactions contemplated by this Agreement, then the Shareholders shall be
entitled to retain the entire Down Payment as liquidated damages.
(f) The parties agree that the amounts payable pursuant to
paragraphs (b), (c), (d) and (e) above are reasonable liquidated damages
considering all of the actual damages reasonably expected to result from the
termination of this Agreement as described therein. The parties further agree
that, to the fullest extent permitted by law, the payment of such liquidated
damages as provided therein shall be its sole and exclusive remedy if the
Closing does not occur because of a termination of this Agreement under the
circumstances described therein.
(g) If this Agreement is terminated pursuant to this Section
16, notwithstanding any provision in the Confidentiality Agreement to the
contrary, SFX's obligations under the Confidentiality Agreement shall continue
for 18 months from the date of termination.
17. MISCELLANEOUS
(a) Expenses, Etc. Except for all real property transfer
taxes, if any, which shall be paid by the Shareholders, all costs, fees or
expenses (including, without limitation, legal and accounting fees), incurred
by the parties hereto, shall be borne by such party incurring such costs, fees
or expenses.
(b) Parties in Interest; Assignment. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the Shareholders
and their respective successors and permitted assigns, and SFX and its
successors and permitted assigns. No third party rights shall attach to any
parties other than the parties hereto. This Agreement shall not be assignable
without the written consent of the other parties, except that SFX may assign
its rights and
33
obligations hereunder to any direct or indirect subsidiary, provided that SFX
remains a party to this Agreement and shall be primarily responsible for all
obligations of any subsidiary of SFX hereunder.
(c) Appointment of Agent for Shareholders. Each Shareholder
hereby appoints and authorizes Xxxxxx Xxxxxxxxxxx to act as agent on its behalf
and to exercise those powers and discretion under the terms of this Agreement
as are delegated to the Shareholders, together with such powers and discretion
as are reasonably incidental thereto, including, without limitation, those
powers necessary to carry out this Agreement. As to any matters not expressly
provided for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or refrain from
acting (and shall be fully protected by the Shareholders in so acting or
refraining from acting) on the instructions of the Shareholders and such
instructions shall be binding on the Shareholders. The Agent shall not be
liable to the Shareholders for any action taken or omitted to be taken by him
under or in connection with this Agreement except for gross negligence, willful
misconduct or fraud.
(d) Specific Performance. The parties hereto recognize that,
in the event the Shareholders refuse to perform the provisions of this
Agreement, monetary damages will not be adequate. SFX shall therefore be
entitled in such event to obtain specific performance of the terms of this
Agreement. In any action to enforce the provisions of this Agreement by SFX,
the Shareholders shall waive the defense that there is an adequate remedy at
law or equity and shall agree that SFX has 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.
(e) Mutual Release. Effective as of the Closing, each of the
Shareholders and GDT, for themselves and their respective representatives,
Affiliates, immediate family members, successors and assigns (collectively,
"Releasors"), hereby forever release and discharge the other and their
respective Affiliates, immediate family members, predecessors, successors, and
assigns and their respective stockholders, members, principals, partners,
directors, officers, agents, employees and representatives, past, present or
future, and their respective successors and assigns (collectively,
"Releasees"), from and against any and all claims (including, without
limitation, claims for indemnification or contribution), causes of action,
liabilities, obligations, costs, expenses (inclusive of attorneys fees and
expenses), suits, debts, sums of money, account, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
vacancies, trespasses, damages, judgments, executions and demands whatsoever,
in law or in equity, whether known or unknown, of any kind or nature
whatsoever, that Releasors, or any of them, ever had, now have or may have in
the future, against Releasees, or any of them by reason of any actual or
alleged act, omission, transaction, practice, conduct, occurrence or other
matter prior to the Closing Date, whether the same be in administrative
proceedings, at law, in equity or mixed, in the United States of America or in
any other jurisdiction. Nothing contained in this Section 17(e) shall effect a
release, modification, waiver or amendment of the indemnification obligations
set forth in Sections 13, 14 and 15 of this Agreement or the obligations in
Section 12.
(f) Entire Agreement; Amendments. This Agreement, including
all schedules, exhibits and other writings referred to herein or delivered in
connection herewith contain the entire understanding of the parties with
respect to its subject matter, except that the
34
terms and conditions of the Confidentiality Agreement dated as of August 10,
1998, by and between SFX, on the one hand, and GDT, Arena, Nederlander
Cincinnati LLC, Nederlander of Ohio, Inc. and Nederlander Club Management LLC,
on the other hand, as amended pursuant to that certain amendment dated August
17, 1998 shall remain in full force and effect. This Agreement may be amended,
modified or terminated only by a written instrument duly executed by all of the
parties hereto.
(g) Interpretation. When a reference is made in this
Agreement to a Section or Schedule, such reference will be to a Section of, or
a Schedule to, this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to "knowledge" or "actual knowledge" in
this Agreement with respect to the entities which are parties hereto shall
refer to the actual knowledge of the signatories for such parties and such
officers or responsible employees of the parties reasonably necessary to assure
the material accuracy of the representations and warranties. The terms used in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders
of such term. Any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to any person are also to its permitted successors and
assigns.
(h) Notices. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement ("notice") shall be sufficiently given or made
if in writing and delivered in person with receipt acknowledged, sent by
registered or certified mail, return receipt requested, postage prepaid, sent
by overnight courier with guaranteed next day delivery or sent by telex or
facsimile to the party to whom directed at the following address:
If to the Shareholders to:
Xxxxxx Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
35
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
and
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to SFX, to:
SFX Entertainment, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxx, Esq.
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice shall be deemed to
have been duly given or served on the date on which personally delivered, with
receipt acknowledged, three business days after the same shall have been
deposited in the United States mail, one business day after sent by overnight
courier or on the day telexed or faxed.
(i) Materiality/Schedules. Inclusion of information on any
schedule or other writing annexed to or delivered pursuant to this Agreement
does not constitute an admission or acknowledgment of the materiality of such
information. Information disclosed in any particular schedule annexed hereto
shall, for the purposes of all representations and warranties made herein, be
deemed included in all other schedules annexed hereto.
(j) Further Assurances. After the Closing Date, without
further consideration, the Shareholders and SFX shall take such further action
and shall execute and deliver such further documents as either party shall
reasonably request in order to carry out the provisions and purposes of this
Agreement.
(k) Waivers. No waiver of any breach or default hereunder
shall be considered valid unless in writing and signed by the party giving such
waiver. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent, same
or different breach.
(l) Counterparts. This Agreement may be executed
simultaneously 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.
36
(m) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED SOLELY WITHIN SUCH STATE. THE
PARTIES EXPRESSLY AGREE THAT ANY CONTROVERSY, DISPUTE OR CLAIM WITH RESPECT TO
ANY PROVISION OF THIS AGREEMENT BROUGHT BY ANY PARTY HERETO SHALL BE
ADJUDICATED SOLELY BY THE FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, APPLYING NEW YORK LAW WITHOUT REGARD TO THE RULES OF CONFLICTS OF LAW
AND THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SAID
COURT AND WAIVE ANY OBJECTION THEY MAY HAVE TO THE DESIGNATION OF A FORUM OR
VENUE OF SUCH COURT SET FORTH HEREIN AND FURTHER WAIVE ANY RIGHTS TO A JURY
TRIAL.
(n) Severability. To the extent possible, each provision of
this Agreement shall be interpreted in a manner as to be valid, legal and
enforceable. Any determination that any provision of this Agreement or any
application thereof is invalid, illegal or unenforceable in any respect or in
any instance shall be effective only to the extent of such invalidity,
illegality or unenforceability and shall not affect the validity, legality or
enforceability of any other provision of this Agreement.
37
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first set forth above.
GREATER DETROIT THEATRES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
XXXXXX X. XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------------
XXXXX X. XXXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------------
XXXXX X. XXXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------------
SFX ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
CONCERT ACQUISITION SUB, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
TABLE OF CONTENTS
1. Definitions..............................................................................................2
2. Purchase and Sale of Capital Stock.......................................................................2
3. Closing..................................................................................................2
(a) Time and Place of Closing.......................................................................2
(b) Down Payment....................................................................................3
(c) Purchase Price..................................................................................3
(d) Adjusted Closing Cash Payment...................................................................3
(e) Closing Transactions............................................................................3
(f) Apportionments..................................................................................5
4. Intentionally Omitted....................................................................................7
5. Conditions to Obligations of SFX.........................................................................7
(a) Representations and Warranties..................................................................8
(b) Performance of Agreements.......................................................................8
(c) Litigation; Consents............................................................................8
(d) Other Events....................................................................................8
(e) Closing Deliveries..............................................................................8
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period................................................................8
6. Conditions to Obligations of the Shareholders............................................................9
(a) Representations and Warranties..................................................................9
(b) Performance of Agreements.......................................................................9
(c) Litigation; Consents............................................................................9
(d) Intentionally Omitted...........................................................................9
(e) Closing Deliveries..............................................................................9
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period................................................................9
7. Representations and Warranties of GDT....................................................................9
(a) Organization, Standing and Power...............................................................10
(b) Capitalization.................................................................................10
(c) Subsidiaries of GDT............................................................................10
(d) Due Authorization; Legal Authority, Binding Effect.............................................11
(e) No Conflicts; Consents.........................................................................11
(f) Organizational Documents.......................................................................11
(g) Financial Statements...........................................................................12
(h) Liabilities....................................................................................12
(i) Absence of Changes.............................................................................12
(j) Foreign Person.................................................................................13
(k) Environmental Matters..........................................................................13
(l) Insurance......................................................................................13
(m) Litigation, Etc................................................................................14
i
(n) Material Contracts.............................................................................14
(o) Compliance; Governmental Authorizations........................................................14
(p) Employee Benefit Plans.........................................................................15
(q) Employees......................................................................................16
(r) Taxes..........................................................................................17
(s) No Brokers or Finders..........................................................................18
(t) Title to Properties............................................................................18
(u) Intellectual Property..........................................................................18
(v) Transactions With Affiliates...................................................................19
(w) Real Property..................................................................................19
(x) Outstanding Indebtedness.......................................................................21
8. Representations And Warranties Of Each Shareholder......................................................21
(a) Authorization of Transaction...................................................................21
(b) Noncontravention...............................................................................21
(c) The Shares.....................................................................................21
9. Representations and Warranties of SFX and Acquisition Sub...............................................22
(a) Organization, Standing and Power...............................................................22
(b) Due Authorization; Legal Authority; Binding Effect.............................................22
(c) No Conflicts, Etc..............................................................................22
(d) Litigation.....................................................................................23
(e) Compliance; Governmental Authorizations........................................................23
(f) No Required Stockholder Vote or Consent........................................................23
(g) No Brokers or Finders..........................................................................23
(h) Investment Intent..............................................................................23
(i) Financial Capacity.............................................................................24
(j) Intentionally Omitted..........................................................................24
(k) Due Diligence..................................................................................24
10. Survival of Representations and Warranties..............................................................24
11. Conduct and Transactions Prior to Closing...............................................................24
(a) By the Shareholders............................................................................24
12. Additional Covenants....................................................................................25
(a) Cooperation....................................................................................25
(b) Intentionally Omitted..........................................................................25
(c) Intentionally Omitted..........................................................................25
(d) No License; Name Change; Subsequent Filings....................................................25
(e) Release of Guaranties, Etc.....................................................................26
(f) Intentionally Omitted..........................................................................26
(g) Notice of Events...............................................................................26
(h) Filings and Governmental Consents..............................................................26
(i) Xxxx-Xxxxx Xxxxxx Filing.......................................................................26
(j) Confidentiality................................................................................26
(k) "As Is, Where Is" Acquisition..................................................................28
ii
(l) Further Actions................................................................................28
(m) Intentionally Omitted..........................................................................28
(n) Pre-Closing Transactions.......................................................................28
(o) Termination of Certain Agreements..............................................................28
(p) Newco Transfers Tax Liability..................................................................28
(q) Increased Down Payment.........................................................................28
13. Indemnification of Purchaser............................................................................29
14. Indemnification of the Shareholders.....................................................................29
15. Rules Regarding Indemnification.........................................................................30
16. Termination.............................................................................................33
17. Miscellaneous...........................................................................................34
(a) Expenses, Etc..................................................................................34
(b) Parties in Interest; Assignment................................................................35
(c) Appointment of Agent for Shareholders..........................................................35
(d) Specific Performance...........................................................................35
(e) Mutual Release.................................................................................35
(f) Entire Agreement; Amendments...................................................................36
(g) Interpretation.................................................................................36
(h) Notices........................................................................................36
(i) Materiality/Schedules..........................................................................37
(j) Further Assurances.............................................................................37
(k) Waivers........................................................................................38
(l) Counterparts...................................................................................38
(m) GOVERNING LAW..................................................................................38
(n) Severability...................................................................................38
LIST OF SCHEDULES AND EXHIBITS...................................................................................iv
iii
LIST OF SCHEDULES AND EXHIBITS
Exhibit 1 Definitions
Schedule A Shareholders
Exhibit 3(e)(i)(E) Form of Opinion of Counsel to the Shareholders
Exhibit 3(e)(i)(F) Form of Non-competition Agreement
Schedule 3(e)(i)(G) Estoppel Certificates
Exhibit 3(e)(i)(I) Form of Non-Imputation Affidavit
Exhibit 3(e)(i)(J) Form of Lease Amendment
Exhibit 3(e)(ii)(D) Form of Opinion of Counsel to SFX
Exhibit 3(e)(ii)(F) Form of SFX Guarantee
Schedule 7(a) Jurisdictions Qualified
Schedule 7(b) Outstanding Securities and Commitments
Schedule 7(c) Subsidiaries of GDT
Schedule 7(e) Violations, Conflicts and Required Consents
Schedule 7(g) Financial Statements
Schedule 7(h) Outstanding Financial Liabilities
Schedule 7(i) Material Changes in Operations
Schedule 7(k) Environmental Law Violations
Schedule 7(k)(ii) Material Environmental Permits
Schedule 7(l) Insurance Policies and Unresolved Claims Thereunder
Schedule 7(m) Pending and Threatened Litigation
Schedule 7(n) Material Contracts
Schedule 7(o) Compliance and Governmental Authorizations of GDT
Schedule 7(p) Employee Benefit Plans
Schedule 7(q) Employee Information
Schedule 7(r) Tax Returns Not Filed
Schedule 7(t) Exceptions to Title
Schedule 7(v) Transactions with Affiliates
iv
Schedule 7(w) Real Property
Schedule 8(b) Noncontravention
Schedule 9(c) Violations and Conflicts
Schedule 9(e) Compliance and Governmental Authorizations of SFX
Schedule 9(k) Documents Provided to SFX and Acquisition Sub
Schedule 12(e) Release of Guarantees
Schedule 12(o) Agreements to be Terminated
v
EXHIBIT 1
DEFINITIONS
As used in the Agreement, the following terms have the following definitions:
"Adjusted Closing Cash Payment" has the meaning set forth in Section 3(d) of the Agreement.
"Affiliate" means, with respect to any person, any other person that directly or
indirectly through one or more intermediaries controls, is
controlled by or is under common control with such person.
"Agreement" means this Stock Purchase Agreement, including the Exhibits
and Schedules attached hereto.
"Agreements" means this Stock Purchase Agreement, the Membership
Interest Purchase Agreement, the Asset Purchase Agreement
and the Albuquerque/Festivals Agreement.
"Apportionment Arbitration" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"Arena" Nederlander Arena Management, Inc.
"Balance Sheets" has the meaning set forth in Section 7(h) of the Agreement.
"Basket Amount" has the meaning set forth in Section 15(c) of the Agreement.
"Benefit Plans" has the meaning set forth in Section 7(p)(i) of the Agreement.
"Closing" means the consummation of the transactions contemplated by
the Agreement.
"Closing Date" has the meaning set forth in Section 3(a) of the Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, and any regulations promulgated thereunder.
"Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Confidentiality Agreement" means the Confidentiality Agreement dated as of August 10,
1998, by and between SFX, on the one hand, and GDT,
i
Arena, Nederlander Cincinnati LLC, Nederlander of Ohio, Inc. and
Nederlander Club Management LLC, on the other hand, as amended pursuant
to that certain amendment dated August 17, 1998.
"Deductible Losses" has the meaning set forth in Section 15(c) of the Agreement.
"Disputed Apportionments" has the meaning set forth Section 3(f)(iii) of the Agreement
and as may be modified by Section 12(q) of the Agreement.
"Down Payment" has the meaning set forth in Section 3 of the Agreement and
as may be modified by Section 12(q) of the Agreement.
"Encumbrances" means any security interests, liens, pledges, claims of third
parties of any nature whatsoever, leases, charges, escrows,
encumbrances, options, rights of first refusal, transfer
restrictions, mortgages, hypothecations, indentures,
security agreements or other similar agreements, arrangements,
contracts, commitments, understandings or obligations.
"Environmental Laws" means any federal, state, or local statute, rule, regulation,
ordinance, code, order or judgment (including any judicial or
administrative interpretations, guidances, directives, policy
statements, opinions, injunctions, or orders) relating to the
injury to, or the pollution or protection of, the environment or
to human health or safety.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in Section 16(a)(iii) of the
Agreement.
"Final Schedule" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"Financials" means the consolidated financial statements of GDT and its
Subsidiaries as of and for the period ended November 30,1998.
"GDT" Greater Detroit Theatres, Inc.
ii
"Governmental Authority" means any federal, state or local government, or political
subdivision thereof and any person exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
Xxxx-Xxxxx-Xxxxxx Filing means the Notification and Report Form[s] filed by SFX and the
Shareholders with the United States Department of Justice and the
Federal Trade Commission in accordance with the notification
requirements of the HSR Act.
Xxxx-Xxxxx-Xxxxxx Waiting Period means all applicable waiting periods in respect of the
transactions contemplated by this Agreement under the HSR Act.
Hazardous Substances means petroleum, petroleum products, petroleum-derived
substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, radon, urea
formaldehyde, asbestos or any materials containing asbestos,
and any materials or substances regulated or defined as or
included in the definition of "hazardous substances,"
"hazardous materials," "hazardous constituents," "toxic
substances," "pollutants," "contaminants" or any similar
denomination intended to classify or regulate substances by
reason of toxicity, carcinogenicity, ignitability, corrosivity or
reactivity under any Environmental Law.
"Health Plans" has the meaning set forth in Section 12(b)(iii) of the Agreement.
HSR Act means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and any regulations promulgated therein.
"HSR Clearance" means the expiration or termination of the Xxxx-Xxxxx-Xxxxxx
Waiting Period.
"Indemnitee" has the meaning set forth in Section 15(a) of the Agreement.
"Indemnitor" has the meaning set forth in Section 15(a) of the Agreement.
"IRS" the Internal Revenue Service
"Law" means any federal, foreign, state, or local statute, rule, regulation,
ordinance, code, order or judgment (including any
iii
judicial or administrative interpretations, guidances, directives, policy
statements, opinions, injunctions, or orders).
"Leases" means any of the real property, leases, royalty interests, net
profits interests, licenses, concessions or other interests in
real property of GDT.
"Legal Requirement" means an action which an individual or entity is required
to take, or to refrain from taking, by any Law.
"Liens" has the meaning set forth in Section 7(c)(ii) of the Agreement.
"Losses" means all claims, damages, liabilities, losses, costs, and
expenses, including without limitation attorneys' fees and
expenses.
"Material Adverse Effect" means an event, loss, damage, condition or state of facts of
any character which materially adversely affects or can
reasonably be expected in the ordinary course of events to
materially adversely affect the business, financial condition,
results of operations, assets or liabilities of an entity as a
whole, provided, however, that any loss or damage shall be
disregarded to the extent it is caused by or attributable to a
change in the economic or political conditions or events
affecting an entity's industry generally (whether general or
regional in nature or limited to any area where any assets of
an entity are located); and provided further that in no event
shall any occurrence, event, loss, damage, condition or state
of facts of any character affecting SFX or its business be
construed to be a Material Adverse Effect with respect to the
Shareholders.
"Material Contract" means a written contract or other legally binding obligation of
a contractual nature to which GDT or any of its Subsidiaries
is a party that (i) is an agreement for the lease of personal
property to or from any person providing for lease payments
in excess of $50,000 per year; (ii) is an agreement for the
purchase or sale of raw materials, commodities, supplies or
other personal property, or for the furnishing or receipt of
services, the performance of which has a remaining term of
more than 12 months or involves unpaid consideration in
excess of $50,000; (iii) is a 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; (iv) is a contract for the employment of any
iv
current or former director or officer of GDT or any of its
Subsidiaries; (v) involves a transaction with an Affiliate of
the Shareholders that is not arms-length or on terms that are
less than fair market, (vi) is an indenture, note, loan or credit
agreement or other contract relating to the borrowing of money
or the issuance of letters of credit by GDT or any of its
Subsidiaries or (vii) otherwise involves the payment or receipt by
GDT of a net amount of $100,000 or more within a one-year period.
"Nederlander Closing Documents" has the meaning set forth in Section 7(d) of the Agreement.
"Nedmas" Nedmas, Inc.
"Xxx Prop" has the meaning set forth in the Preamble of the Agreement.
"Newco Transfers" has the meaning set forth in the Preamble of the Agreement.
"Newco Transfers Tax Liability" has the meaning set forth in the Preamble of the Agreement.
"Notice of Dispute" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"NTC" has the meaning set forth in the Preamble of the Agreement.
"NTC/Xxx Prop Buyout" has the meaning set forth in the Preamble of the Agreement.
"Xxxxx Debt" means the Shareholders' pro rata share, in the aggregate amount
of $359,571.50, of that certain loan in the original principal
amount of $2,400,000 made by Xxxxx Entertainment Services, Inc. to
NEJA Group LLC.
"PALP" means Pacific Amphitheater Limited Partnership, a California
limited partnership.
"Participant" has the meaning set forth in Section 12(b)(i) of the
Agreement.
"Permits" means any permit, license, order, approval or other authorization
which is required under applicable Laws.
"Preamble" means the introductory paragraph and recitals and other text
of the Agreement preceding Section 1.
"Purchase Price" has the meaning set forth in Section 3(c) of the Agreement.
v
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in Section 12(r)(i) of the
Agreement.
"SF Associates" Nederlander San Francisco Associates
"SFX" SFX Entertainment, Inc.
"SFX Amount" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"SFX Benefit Plans" means (A) each employee benefit plan, as defined in Section
3(3) of ERISA, and (B) to the extent not covered under (A)
above, each material stock option, bonus, deferred
compensation, excess, supplemental executive compensation,
employee stock purchase, vacation, sickness, disability,
severance, restricted stock or other material employee benefit
plan, policy or arrangement, sponsored, maintained or
contributed to by SFX or by a SFX ERISA Affiliate for the
benefit of employees or former employees of SFX and under
which SFX currently has an obligation or a liability.
"SFX Closing Documents" has the meaning set forth in Section 9(b) of the Agreement.
"SFX Contribution" has the meaning set forth in Section 3(d) of the Agreement.
"SFX ERISA Affiliate" means any entity
that would be deemed a "single
employer" with SFX under Section
414(b), (c), (m), or (o) of the
Code or Section 4001 of ERISA.
"SFX 401(k) Plan" has the meaning set forth in Section 12(b)(i) of the
Agreement.
"Shares" has the meaning set forth in Section 2 of the Agreement.
"Shareholders" means the individuals and/or entities listed on Schedule A.
"Special Basket Amount" has the meaning set forth in Section 15(d) of the Agreement.
"Subsidiary" means, with respect to any person, any corporation, limited liability
company, partnership, association or other business entity of which
securities or other ownership interests representing more than
50% of the ordinary voting power are,
vi
at the time as of which any determination is being made,
owned or controlled, directly or indirectly, by the parent of such
person or one or more subsidiaries of the parent of such person,
provided, however, that, for purposes of this Agreement, NEJA
Group LLC, a Delaware limited liability company, shall be treated
as a Subsidiary of GDT.
"Tax" has the meaning set forth in Section 7(r)(iii)(A) of the
Agreement.
"Tax Returns" has the meaning set forth in Section 7(r)(iii)(B) of the
Agreement.
"Taxes" has the meaning set forth in Section 7(r)(iii)(A) of the
Agreement.
"Termination Fee" has the meaning set forth in Section 16(c)(ii) of the
Agreement.
"401(k) Plan" has the meaning set forth in Section 12(b)(i) of the
Agreement.
"Venues" has the meaning set forth in the Preamble of the Agreement.
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