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PURCHASE AGREEMENT
BETWEEN
NEDERLANDER OF NEW MEXICO LLC,
NEDERLANDER FESTIVALS, INC.
THE PARTIES LISTED ON SCHEDULE A
AND
SFX ENTERTAINMENT, INC.
AND CONCERT ACQUISITION SUB, INC.
Dated February 1, 1999
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PURCHASE AGREEMENT dated February 1, 1999 ("Agreement") among
Nederlander of New Mexico LLC, a New Mexico limited liability company ("Xxx
NM"), Nederlander Festivals, Inc., a Michigan corporation ("Xxx Festivals"),
the equity owners of Xxx NM and Xxx Festivals as listed on Schedule A hereto
(the "Sellers"), 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 Sellers desire to sell and SFX desires to
purchase all of the membership interests in Xxx NM and all of the shares of
capital stock of Xxx Festivals. The sale and purchase of the membership
interests in Xxx NM and the capital stock of Xxx Festivals is sometimes
referred to herein as the "Transaction."
WHEREAS, Xxx NM has certain interests in the Mesa del Sol
Centre for the Performing Arts to be constructed in Albuquerque, New Mexico
("Mesa del Sol"), and Xxx Festivals 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 with an
initial six-year term and automatic, successive three-year extensions unless
sooner terminated by either party, pursuant to a Memorandum dated December 12,
1996 (the "Festivals Joint Venture").
WHEREAS, Xxx NM has been engaged in planning the construction
of Mesa del Sol and the construction process has not commenced.
WHEREAS, simultaneously with the consummation of the
Transaction under this Agreement, (i) SFX, Acquisition Sub and Greater Detroit
Theatres, Inc. ("GDT"), which owns certain 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, shall effect a transaction under a stock purchase agreement of even
date herewith (the "Stock Purchase Agreement") pursuant to which Acquisition
Sub shall acquire 100% of the capital stock of GDT, (ii) 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 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, and (iii) 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. (This Agreement, the Stock Purchase Agreement, the Membership
Interest Purchase Agreement and the Asset Purchase Agreement are sometimes
referred to herein collectively 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 MEMBERSHIP INTERESTS AND 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 Sellers shall sell, assign and deliver to
SFX, and SFX shall purchase from the Sellers, all of the membership interests
in Xxx NM (the "Membership Interests") and all of the shares of capital stock
of Xxx Festivals (the "Festivals Shares"), free and clear of all Encumbrances,
at the price and on the terms set forth in this Agreement. The Membership
Interests and the Festivals Shares are referred to herein collectively as the
"Equity Interests."
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").
(b) Intentionally Omitted.
(c) Purchase Price. The aggregate consideration to be paid by SFX to
the Sellers in connection with the Transaction (the "Purchase Price") shall be
as follows:
(i) On the Closing, SFX shall pay the Sellers the
sum of One Million Six Hundred Fifty Thousand Dollars ($1,650,000) in
full payment for the Festivals Shares (the "Festivals Payment");
(ii) On the Closing, SFX shall pay the Sellers the
sum of One Million Dollars ($1,000,000) as a down payment (the "Down
Payment") toward the Post-Closing Albuquerque Payment (as defined
below);
(iii) On the Closing, SFX shall pay the Sellers the
sum of Forty-Nine Thousand, Nineteen Dollars ($49,019) in
reimbursement for the third party costs actually paid to date by the
Sellers without reimbursement from any unrelated third party in
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connection with the construction of Mesa del Sol excluding costs, if
any, associated with the Necessary Road Improvements (the
"Construction Cost Payment"); provided that the Sellers shall provide
SFX with documentation reasonably satisfactory to SFX in connection
with such construction costs;
(iv) The sum of the Down Payment, the Festivals
Payment and the Construction Cost Payment shall be paid by wire
transfer of immediately available federal funds no later than 3:00
p.m. New York time on the Closing Date to an account or accounts
designated by the Sellers in writing at least two Business Days prior
to the Closing.
(v) SFX shall pay the Sellers the Post-Closing
Albuquerque Payment by wire transfer of immediately available federal
funds no later than 3:00 p.m. New York time on the Post-Closing
Albuquerque Payment Date to an account or accounts designated by the
Sellers in writing. The "Post-Closing Albuquerque Payment" and the
"Post-Closing Albuquerque Payment Date" shall be determined as set
forth in Section 3(d).
(d) Post-Closing Albuquerque Payment. SFX acknowledges that
certain items set forth on the budget annexed hereto as Schedule 3(d) are
marked to indicate that such items are to be constructed on a "modular basis"
(the "Modular Construction Items") and SFX agrees that it shall cause Xxx NM to
construct the Modular Construction Items on a modular basis. With respect to
those items which are not to be constructed on a modular basis as contemplated
by the budget annexed hereto as Schedule 3(d) (the "Non-Modular Construction
Items"), SFX shall, prior to the commencement of the construction of any such
Non-Modular Construction Items, submit to the Sellers copies of the bids or
other estimates it has received in respect of the performance of any such
Non-Modular Construction Items. The Sellers shall have a period of thirty (30)
days following their receipt of any such bid or other estimate to object to any
amount set forth therein with respect to such work. If the Sellers fail to so
object within said thirty (30) day period, such bid or other estimate shall be
deemed approved. If the Sellers shall object within said thirty (30) day
period, the Sellers and SFX shall attempt in good faith to resolve such dispute
within ten (10) days following such objection. If SFX and the Sellers are
unable to resolve such dispute, then such dispute shall be submitted to binding
arbitration pursuant to the expedited rules of Commercial Arbitration of the
American Arbitration Association in the City of New York and the sole issue
with respect to such arbitration shall be the determination whether the amount
proposed by SFX is reasonable in light of all relevant conditions at the time
of construction and consistent with the obligations of SFX in respect of the
construction of Mesa del Sol as set forth in Section 12(m)(i). In any such
event, the amount determined by the arbitrator shall be deemed the allowable
construction cost for such item for the purpose of the computing the
Post-Closing Albuquerque Payment. The "Post-Closing Albuquerque Payment" shall
be an amount equal to (i) ten times the average of the Net Earnings of Mesa del
Sol in the Measurement Season and in the Second Measurement Season minus (ii)
the sum of (x) the Down Payment and the Construction Cost Payment and (y) the
total construction costs actually paid by SFX, without reimbursement by any
unrelated third party, in connection with the performance of all Modular
Construction Items and the total construction amounts either (1) agreed upon or
deemed approved by the Sellers in connection with all Non-Modular Construction
Items, or (2) determined by arbitration with respect to Non-Modular
Construction Items as set forth above in each case as such amounts may be
increased by unforseen circumstances or events (collectively, the "Construction
Costs"). Notwithstanding the foregoing, in the event that Full Capacity shall
be
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achieved prior to the commencement of the Second Measurement Season but shall
not have been achieved for the entire Measurement Season, then for the purposes
of computing the Post Closing Albuquerque Payment, the amount set forth in (i)
of the preceding sentence shall be ten times the Net Earnings of Mesa del Sol
in the Second Measurement Season only.
(i) The "Measurement Season" shall be the first
operating season of Mesa del Sol in which it is available to be
operated at "Full Capacity" and in which at least eight shows or
concerts are performed which are headlining events of the type and
kind of talent booked by SFX elsewhere in the United States during
that touring season at outdoor amphitheaters. If eight such shows or
concerts are not performed at Mesa del Sol during the first operating
season in which it is available to be operated at "Full Capacity,"
then the Measurement Season shall be the next season. Notwithstanding
the foregoing, if the Measurement Season has not occurred prior to
2002, then the Measurement Season shall be the operating season of
Mesa del Sol in 2002 regardless of whether it is available to be
operated at "Full Capacity" in such season. The "Second Measurement
Season" shall be the operating season of Mesa del Sol in the first
season following the Measurement Season. During the Second Measurement
Season, SFX shall use commercially reasonable efforts to book eight
shows or concerts at Mesa del Sol.
(ii) Mesa del Sol shall be deemed to be available to
operate at "Full Capacity" when the Necessary Road Improvements have
been completed and/or the limitation contained in the Sub-Lease
Agreement dated November 18, 1997 between Xxx NM and the County of
Bernalillo, New Mexico, has by its terms been lifted so that at least
15,000 seats can be utilized in staging shows, concerts and other
events. "Necessary Road Improvements" shall mean the extension of
University Boulevard to the site of Mesa del Sol.
(iii) The "Post-Closing Albuquerque Payment Date"
shall be the first Business Day at least 45 days after the year end of
the Second Measurement Season.
(iv) "Net Earnings" of Mesa del Sol shall mean the
excess of revenues over the actual, direct, third party, out-of-pocket
expenses paid by Xxx NM in operating Mesa del Sol prior to interest
expense, income taxes, depreciation and amortization (hereinafter
"Expenses"), for the Measurement Season and the Second Measurement
Season, as applicable, as reflected in financial statements of Xxx NM,
provided, however, that, with respect to the indirect general and
administrative costs of Xxx NM, SFX or its Affiliates with respect to
Mesa del Sol, only $6,250 per show shall be included as Expenses in
calculating Net Earnings, and provided, further, that the per person
ticketing rebate used in the calculation of Net Earnings for the
Measurement Session and the Second Measurement Session, as applicable,
shall be $2.00 per person. SFX, on behalf of itself and its
Subsidiaries and Affiliates, agrees to use commercially reasonable
efforts to book shows and concerts at Mesa del Sol after the Closing,
provided, that if SFX or its Subsidiaries or Affiliates book shows or
concerts in New Mexico other than at Mesa del Sol which are being
performed elsewhere in the United States at outdoor amphitheaters,
then if SFX or its Subsidiaries or Affiliates fail to exercise
reasonable commercial efforts to cause any such show or concert to be
booked at Mesa del Sol, then the net revenues from such shows and
concerts shall be included in calculating Net Earnings for the
Measurement Season or the
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Second Measurement Season, as applicable. At least 15 days in advance
of the Post-Closing Albuquerque Payment Date, SFX shall provide the
Sellers with (i) a calculation of Net Earnings for the Measurement
Season and the Second Measurement Season, (ii) copies of the financial
statements of Xxx NM for the Measurement Season and the Second
Measurement Season, adjusted to reflect the $6,250 per show amount for
indirect general and administrative costs of SFX and its Affiliates
included in calculating Expenses for such year, and (iii) a
certificate duly signed by the chief financial officer of SFX stating
that (x) such calculation is true and correct and (y) such financial
statements are in accordance with the books, records and accounts of
Xxx NM and present fairly in all material respects the financial
position and the results of operations of Xxx NM as of the date
reported. The Sellers shall be entitled to reasonable access to the
books and records of Xxx NM from time to time subsequent to the
Closing to verify the accuracy of the Financial Statements delivered
with respect to the Measurement Season and the Second Measurement
Season pursuant to this Section 3(d)(iv).
(e) Intentionally Omitted.
(f) Closing Transactions. On the Closing Date:
(i) The Sellers shall deliver or cause to be delivered to
SFX:
(A) a duly executed instrument of assignment for the
Membership Interests;
(B) the minute book and membership interest records of
Xxx NM;
(C) duly issued certificates for the Festivals 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;
(D) the minute book and stock records of Xxx
Festivals;
(E) the certificates, agreements and other instruments
referred to in Section 5;
(F) the written resignation of each officer and
director of Xxx Festivals effective as of the Closing Date,
as directed by SFX at least five (5) days prior to the
Closing Date, in their capacities as such;
(G) a written opinion or opinions of counsel, dated
the Closing Date, substantially in the form annexed hereto
as Exhibit 3(f)(i)(G);
(H) Estoppel certificates from the parties listed on
Schedule 3(f)(i)(H);
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(I) An estoppel certificate from the New Mexico State
Land Office in form and substance reasonably satisfactory
to SFX relating to the status of the ground lease (the
"Groundlease") between the New Mexico State Land Office and
the County of Bernalillo, which instrument shall be dated
not more than 30 days prior to the Closing provided,
however, that if, notwithstanding their commercially
reasonable efforts, the Sellers are unable to obtain such
estoppel certificate, the Sellers may deliver at Closing a
certificate signed by an officer or member of Xxx NM
representing to SFX the facts that were to be covered by
such estoppel certificate and provided, further, that the
accuracy of such representation shall be subject to the
indemnification by Sellers in favor of SFX pursuant to
Section 13(ii). It is further agreed that Sellers shall
request that the landlord under the Groundlease deliver an
estoppel certificate in recordable form reasonably
satisfactory to SFX. Notwithstanding the foregoing,
provided Sellers had used their commercially reasonable
efforts to obtain such estoppel certificate, the failure of
such landlord to deliver an estoppel certificate or an
estoppel certificate in recordable form shall not give rise
to any liability on the part of the Sellers and, provided
Sellers had used their commercially reasonable efforts to
obtain such estoppel certificate, the failure to obtain the
same shall not constitute a condition to the performance by
SFX of its obligations under this Agreement;
(J) An estoppel certificate from the County of
Bernalillo in form and substance reasonably satisfactorily
to SFX relating to the status of the sublease (the
"Sublease") between County of Bernalillo, as sublandlord,
and Xxx NM, as subtenant (and the reciprocal easement
agreement referred to in such sublease), which instrument
shall be dated not more than 30 days prior to the Closing
provided, however, that if, notwithstanding their
commercially reasonable efforts, the Sellers are unable to
obtain such estoppel certificate, the Sellers may deliver
at Closing a certificate signed by an officer or member of
Xxx NM representing to SFX the facts that were to be
covered by such estoppel certificate and provided, further,
that the accuracy of such representation shall be subject
to the indemnification by Sellers in favor of SFX pursuant
to Section 13(ii). It is further agreed that Sellers shall
request that the sublandlord under the Sublease deliver an
estoppel certificate in recordable form reasonably
satisfactory to SFX. Notwithstanding the foregoing,
provided Sellers had used their commercially reasonable
efforts to obtain such estoppel certificate, the failure of
such sublandlord to deliver an estoppel certificate or an
estoppel certificate in recordable form shall not give rise
to any liability on the part of the Sellers and, provided
Sellers had used their commercially reasonable efforts to
obtain such estoppel certificate, the failure to obtain the
same shall not constitute a condition to the performance by
SFX of its obligations under this Agreement;
(K) A nondisturbance and recognition agreement from
the New Mexico State Land Office in substantially the form
annexed hereto as Exhibit 3(f)(i)(K);
(L) Originals or certified true, correct and complete
copies of approved budgets, plans, specifications, permits,
licenses, bonds, and other
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documents, instruments,
information, and materials (including without limitation
electronic information and materials -- i.e. CAD Plans),
relating to the development, construction, use, operation,
maintenance, and repair of Mesa del Sol and related
improvements in the possession or control of Sellers;
(M) An original counterpart of the fully executed
Sublease (with all exhibits) and all documents and
instruments executed and delivered therewith or relating
thereto; and
(N) In the event that prior to the Closing Date either
(x) the Groundlease and the Sublease or memoranda thereof
shall be recorded, or (y) the landlord under the
Groundlease and the sublandlord under the Sublease shall
each deliver estoppel certificates or notices of lease in
recordable form, and, in either such case, SFX shall elect
to obtain leasehold title insurance with respect to the
subleasehold estate created by the Sublease, then Sellers
shall deliver a non- imputation affidavit in the form
annexed hereto as Exhibit 3(f)(i)(N) (the "Non- Imputation
Affidavit"), provided, however, it is expressly understood
and agreed that (a) SFX shall be required to indemnify the
Sellers with respect to any Losses incurred by the Sellers
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 such subleasehold estate created
by the Sublease shall not constitute a condition to the
performance by SFX of its obligations under this Agreement.
(ii) SFX shall deliver or cause to be delivered:
(A) the Down Payment, the Construction Cost Payment
and the Festivals Payment to the Sellers as required under
Sections 3(c) above;
(B) the certificates, agreements and other instruments
to be delivered to the Sellers as referred to in Section 6;
and
(C) a written opinion of counsel, dated as of the
Closing Date, substantially in the form annexed hereto as
Exhibit 3(f)(ii)(C).
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 Sellers and Xxx NM and Festivals
shall use reasonable commercial efforts to cause such conditions to be
fulfilled:
(a) Representations and Warranties. The representations and
warranties of the Sellers and Xxx NM and Festivals in this Agreement or in any
schedule or certificate delivered in
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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 or such
changes which are beyond the control of the Sellers 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 Sellers to that effect.
(b) Performance of Agreements. (i) The Sellers and Xxx NM and
Festivals 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
Sellers to that effect, and (iii) the closing conditions contained in Section 5
of each of the Stock Purchase Agreement, the Membership Interest Purchase
Agreement and the Asset Purchase 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 Xxx NM or
Festivals. The Sellers 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) Festivals Conditions. The Festivals Joint Venture shall
remain in full force and affect in accordance with that certain Memorandum
dated December 12, 1996, and SFX, with the prior written authorization of
Nederlander Festivals in form reasonably satisfactory to Nederlander Festivals
and SFX, which shall be provided no sooner than 10 days prior to the Closing
Date, shall have received reasonable assurances from The Event Group that
business operations of the Festivals Joint Venture shall continue following the
Closing, provided, however, that such conditions shall solely constitute
conditions to the acquisition of the Festivals Shares and the making of the
Festivals Payment on the Closing and shall not constitute conditions to the
performance by SFX or Acquisition Sub of their obligations under this Agreement
with respect to the acquisition of the Membership Interests or the payment of
any other component of the Purchase Price.
(e) Closing Deliveries. The Sellers shall have delivered to
SFX all closing deliveries as contemplated in Sections 3(f)(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.
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6. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers 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 Sellers, and SFX shall use
reasonable commercial efforts to cause such conditions to be fulfilled:
(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 or such
changes which are beyond the control of SFX 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 Sellers 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
Sellers 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
Sellers all closing deliveries as contemplated in Section 3(f)(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 XXX NM AND XXX FESTIVALS
Xxx NM and Xxx Festivals represent and warrant to SFX as
follows:
(a) Organization, Standing and Power. Each of Xxx NM and Xxx
Festivals is a duly organized and validly existing corporation or limited
liability company in good standing under the laws of its state of organization
and has full power and authority to own, lease and operate its
9
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. Except as set
forth on Schedule 7(a), each of Xxx NM and Xxx Festivals 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 Xxx NM or Xxx Festivals.
(b) Capitalization.
(i) Xxx Festivals has an authorized
capitalization of 1,000 shares of common stock, all of which are issued and
outstanding. The Sellers own all of the Festivals Shares as set forth in
Schedule A free and clear of all Encumbrances. 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 Xxx
Festivals 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 Xxx Festivals or any securities convertible
into, or other rights to acquire, any of the capital stock of Xxx Festivals; or
(ii) obligates Xxx Festivals 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.
(ii) The Sellers own all of the Membership Interests as set forth
in Schedule A free and clear of all Encumbrances. The Membership Interests are
duly authorized, validly issued and outstanding. Except for the Membership
Interests, there are no other membership interests or equity securities of Xxx
NM 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 of the membership interests in Xxx NM or any securities
convertible into, or other rights to acquire, any of the membership interests
in Xxx NM; or (ii) obligates Xxx Festivals to grant, offer or enter into any of
the foregoing; or (iii) relates to the voting or control of such membership
interests, securities or rights.
(c) Subsidiaries. Neither Xxx NM or Xxx Festivals has any
Subsidiaries.
(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 Sellers and Xxx
NM and Xxx Festivals (the "Nederlander Closing Documents"), and the
consummation by the Sellers and Xxx NM and Xxx Festivals of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary action. The Sellers and Xxx NM and Xxx Festivals 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 Membership Interests and the Festivals Shares to
SFX. This Agreement and the Nederlander Closing Documents, when executed by the
Xxxxxxx, Xxx NM and Xxx Festivals and SFX, shall constitute legal, valid and
binding obligations of the Sellers and Xxx NM and Xxx Festivals, enforceable in
accordance with their respective terms, except as such enforceability may
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be limited by applicable bankruptcy, insolvency, liquidation, reorganization,
moratorium or 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).
(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 Sellers and Xxx NM and Xxx
Festivals 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 Xxx
Festivals or the Articles of Organization or Operating Agreement of Xxx NM;
(ii) to the actual knowledge of the Sellers, violate any statute, law, rule or
regulation applicable to the Sellers 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 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 Membership
Interests or the Festivals Shares. Except as set forth on Schedule 7(e),
neither Xxx NM or Xxx Festivals 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 Xxx NM or Xxx Festivals. 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 Sellers in connection with the
execution and delivery of this Agreement or the consummation of the
transactions provided for herein.
(f) Organizational Documents.
(i) The Sellers have delivered to SFX a true, correct and
complete copy of the certificate of incorporation (including all amendments
thereto), of Xxx Festivals, certified by the Secretary of State of the state of
its incorporation, and a true, correct and complete copy of the by-laws of Xxx
Festivals currently in effect, certified by the Secretary of Xxx Festivals. No
action or proceeding is pending or contemplated for the amendment of any such
certificate of incorporation or by-laws or for the dissolution or liquidation
of Xxx Festivals.
(ii) The Sellers have delivered to SFX a true, correct and
complete copy of the Articles of Organization (including all amendments
thereto), of Xxx NM, certified by the Secretary of State of the state of its
organization, and a true, correct and complete copy of the Operating Agreement
of Xxx NM currently in effect, certified by the Secretary of Xxx NM. No action
or proceeding is pending or contemplated for the amendment of any such Articles
of Organization or Operating Agreement or for the dissolution or liquidation of
Xxx NM.
(g) Financial Statements. The Sellers 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 Xxx NM and Festivals, respectively, on an
accrual basis and (ii) present fairly in all material respects the financial
position of Xxx NM and Festivals and the results of operations and
stockholders' equity as of the dates and for the respective periods indicated.
The expenses reflected on the income statements in the Financials include all
expenses necessary to conduct the operations of Xxx NM and Festivals as
currently conducted.
11
(h) Liabilities. Other than as specifically disclosed in the notes
thereto or on Schedule 7(h) hereto, the balance sheets of Xxx NM and Xxx
Festivals contained in the Financials make adequate provision for all material
fixed and contingent obligations and liabilities of Xxx NM and Xxx Festivals
(including all taxes) as of the date indicated. Except as set forth on the
balance sheet of Xxx NM as of November 30, 1998, included in the Financials
(the "Balance Sheets") or on Schedule 7(h) hereto, Xxx NM and Xxx Festivals do
not have any outstanding indebtedness, accrued expenses, liabilities or
obligations required to be provided for in such Balance Sheets other than those
incurred since November 30, 1998, in the ordinary course of business.
(i) Absence of Changes. Except as otherwise set forth on Schedule 7(i)
since November 30, 1998, Xxx NM and Xxx Festivals 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 their capital stock, or purchased or redeemed, directly
or indirectly, any shares of their capital stock; (iii) issued or sold
any shares of their 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 Sellers, their
immediate family members or any of their Affiliates for the fiscal
year beginning December 1, 1998; (vii) amended their respective
organizational documents; (viii) made any material change in any of
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 any of 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 Xxx NM and Xxx Festivals is not a foreign
person within the meaning of Section 1445 of the Internal Revenue Code of 1986,
as amended. At the Closing, each of Xxx NM and Xxx Festivals 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 Xxx NM and Xxx
Festivals, except as set forth on Schedule 7(k):
(i) Neither Xxx NM or Xxx Festivals or Mesa del Sol
is in violation of any applicable Environmental Law, nor are there any
Hazardous Substances in, on, over, under or at the Theater in
concentrations which would currently violate any applicable
12
Environmental Laws, other than such violations that would not,
individually or in the aggregate, result in a Material Adverse Effect
with respect to the operation of its businesses.
(ii) As of the date hereof, each of Xxx NM and Xxx
Festivals and Mesa del Sol 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 as of the date hereof
held by Xxx NM or Xxx Festivals 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
their respective businesses, neither Xxx NM or Xxx Festivals or Mesa
del Sol 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 Xxx NM or Xxx Festivals has received
any notice that it is subject to, and Xxx NM has not received any
notice that Mesa del Sol 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 Xxx NM and Xxx Festivals with respect to their businesses, copies
of which have bee made available to SFX, and a summary of the claims history
under such policies for the past two years (or such shorter period in which
either Xxx NM or Xxx Festivals has been in existence). Each of Xxx NM and Xxx
Festivals 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 each of Xxx NM and Xxx
Festivals 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 each of Xxx NM and Xxx
Festivals 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 each of Xxx NM and Xxx Festivals shall be
canceled and/or endorsed to withdraw coverage for any future claim with respect
to each of Xxx NM and Xxx Festivals. Neither Xxx NM or Xxx Festivals has
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. Each of Xxx NM and Xxx
Festivals has 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 Xxx NM or Xxx Festivals, threatened against Xxx NM or Xxx
Festivals or Mesa del Sol 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 their respective businesses. There is
no outstanding order, injunction or decree
13
of any court, governmental agency or arbitrator against Xxx NM or Xxx Festivals
or the Membership Interests or the Festivals Shares, and neither Xxx NM or Xxx
Festivals 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 Xxx NM or Xxx Festivals is a party. With respect to all
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) each of Xxx NM and
Xxx Festivals 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 Xxx NM or Xxx Festivals 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 Membership
Interests or the Festivals 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), each of Xxx NM and Xxx Festivals and their respective
properties and assets 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) each of Xxx NM and Xxx Festivals 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 each of Xxx NM and Xxx Festivals,
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 each
of Xxx NM and Xxx Festivals.
(p) Intentionally Omitted.
(q) Employees. Schedule 7(q) sets forth a true and complete list of
all employees of each of Xxx NM and Xxx Festivals, their positions, locations,
salaries or hourly wages and severance arrangements. Neither Xxx NM or Xxx
Festivals 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 Sheets 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. Xxx NM and Xxx Festivals have complied in
all material respects with all laws relating to the employment of labor
including, without limitation the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and sexual harassment. Except as set forth on Schedule 7(q),
neither Xxx NM or Xxx Festivals 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 Xxx
NM or Xxx
14
Festivals has committed any unfair labor practice and, to the knowledge of Xxx
NM and Xxx Festivals, there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of Xxx
NM or Xxx Festivals.
(r) Taxes.
(i) Except as otherwise disclosed in Schedule 7(r):
(A) each of Xxx NM and Xxx Festivals has 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) each of Xxx NM and Xxx Festivals has paid all Taxes
shown to be due on such Tax Returns or have made appropriate
provisions in the Balance Sheets for any Taxes which are being
contested in good faith; (C) each of Xxx NM and Xxx Festivals has
withheld and paid over to the appropriate Governmental Authority all
Taxes required by law to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor,
creditor, shareholder, or other third party; (D) all tax deficiencies
asserted or assessed against Xxx NM or Xxx Festivals have been paid or
finally settled; (E) no claims have ever been made by any tax
authority in a jurisdiction where Xxx NM or Xxx Festivals do not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction; (F) neither Xxx NM or Xxx Festivals 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 effect; (G) there is no pending or, to
the knowledge of Xxx NM or Xxx Festivals, 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 Xxx NM or Xxx Festivals, 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 Xxx NM or Xxx
Festivals 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 Xxx NM or Xxx Festivals.
(ii) Except as otherwise disclosed in any of the
attached Schedules hereto: (i) neither Xxx NM or Xxx Festivals has
made an election under Section 341 (f) of the Code; (ii) neither Xxx
NM or Xxx Festivals 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 Xxx NM or Xxx
Festivals 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:
15
(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 Xxx NM or Xxx
Festivals, or chargeable or relating to the assets, income or
revenue of Xxx NM or Xxx Festivals.
(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
Sellers in connection with this Agreement or the transactions contemplated
hereby except Xxxxxx & Xxxxxxxx LLP, whose fee shall be paid by the Sellers.
(t) Title to Properties. Except as set forth on Schedule 7(t), each of
Xxx NM and Xxx Festivals has good and marketable title to, or valid leasehold
interests in, the subleasehold estate created by the Sublease 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 Sheets or acquired since the date of the Balance Sheets,
except for any properties and assets sold or disposed of since the date of the
Balance Sheets consistent with customary industry practice. The properties and
assets owned or leased by each of Xxx NM and Xxx Festivals are all of the
properties and assets necessary to conduct their business and operations in all
material respect as now conducted.
(u) Intellectual Property.
(i) Each of Xxx NM and Xxx Festivals 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 Xxx NM or Xxx Festivals to
conduct their business and operations is owned or available for use by Xxx NM
or Xxx Festivals on identical terms and conditions immediately subsequent to
the Closing Date.
(ii) Neither Xxx NM or Xxx Festivals has 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
Xxx NM or Xxx Festivals must license or refrain from using any
16
Intellectual Property rights of any third party). To the knowledge of Xxx NM
and Xxx Festivals, no third party has interfered with, infringed upon or
misappropriated any Intellectual Property rights of Xxx NM or Xxx Festivals.
(v) Transactions With Affiliates. Except as set forth on
Schedule 7(v), none of the Sellers, officers or directors, or any of their
immediate family members, or, to the knowledge of Xxx NM or Xxx Festivals, none
of their respective employees, is currently a party (either directly or
indirectly) to any transaction with or involving Xxx NM or Xxx Festivals or
Mesa del Sol including, without limitation, any arrangement (other than for
services in the ordinary course of business as directors, officers or employees
of Xxx NM or Xxx Festivals) providing for (a) the furnishing of services by or
to, (b) the rental of the sites on which the properties leased by Xxx NM or Xxx
Festivals 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.
(i) Schedule 7(w) contains a list and brief
description of all real property owned or leased by Xxx NM or Xxx
Festivals 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 Xxx NM and Xxx Festivals.
(ii) Except as provided in Schedule 7(w), neither
Xxx NM or Festivals 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 Xxx NM or
Festivals or their respective agents from the landlord thereunder
which has not been cured and neither Xxx NM or Xxx Festivals 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
17
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 Xxx NM or Festivals is a party or any
extension thereof. With respect to any and all such brokerage commissions, each
of Xxx NM and Festivals 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) Neither Xxx NM or Xxx Festivals 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 or similar laws or ordinances, (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 Xxx NM and Festivals) threatened against or involving Xxx NM or
Festivals 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 Xxx NM or Festivals to remove.
(ix) Schedule 7(w) contains a list of all parking agreements to which
Xxx NM or Festivals is a party. Except as set forth on Schedule 7(w), neither
Xxx NM or Festivals 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 Sellers: (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.
18
(x) Neither Xxx NM or Festivals 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.
(xi) Without limiting any other representations or warranties
contained in this Section 7:
(A) (1) The Sublease dated November 18, 1997 (the "Sublease") between
Xxx NM and the County of Bernalillo, New Mexico, is in full force and
effect and, except as disclosed in Schedule 7(w), has not been amended,
modified, transferred or assigned by either party thereto. Except as
disclosed in Schedule 7(w), to the actual knowledge of the Sellers and Xxx
NM, neither party is in default under the Sublease and no condition exists
which, with the giving of notice, the passage of time or both, would
constitute a default thereunder. The County of Bernalillo has not notified
any Seller or Xxx NM in writing that it intends to, nor, to the knowledge
of the Sellers and Xxx NM, has the County of Bernalillo threatened to
terminate or cancel the Sublease. Xxx NM's right under the Sublease and
related agreements to develop, own and operate Mesa del Sol has not been
challenged by pending or, to the knowledge of the Sellers and Xxx NM,
threatened government action or litigation or by similar action of any
private parties; and
(2) To the knowledge of Xxx NM, the Groundlease is in full force
and effect and pursuant to the terms of the Sublease and the
Groundlease, the New Mexico State Land Office has consented to the
Sublease.
(B) The Sellers have no reason to believe that the plans and
specifications for Mesa del Sol which have been heretofore submitted by
Xxx NM for approval to the City of Albuquerque will not be approved
promptly without material changes thereto.
(C) The Sellers have no reason to believe that Mesa del Sol will not,
upon completion of Mesa del Sol as contemplated by the plans and
specifications therefor, comply in all material respects with all
applicable municipal and regional zoning, subdivision and land use
requirements.
(D) To the actual knowledge of the Sellers, no portion of the site
upon which Mesa del Sol is to be constructed consists of "wetlands" under
applicable law and the Sellers have no actual knowledge that the approval
of the United States Army of Engineers or any similar governmental agency
is required in connection with the development or construction of Mesa del
Sol.
(E) Excluding the conditions and requirements in respect of
establishing sound monitoring procedures as contemplated by the Sublease
and the Environmental Planning Commission conditions included in Schedule
7(w) annexed hereto, to the actual knowledge of the Sellers, (x) those
environmental impact reports
19
of which the Sellers are currently aware, and those which the Sellers
have been requested to obtain, if any, for the construction of Mesa del
Sol have been duly submitted and approved, and (y) there are no notice
periods or waiting periods which have not expired in respect of any such
environmental impact reports without objection or rejection by any
governmental agencies or third parties, and (z) Xxx NM will not be
required to perform any remediation relating to any Hazardous
Substances in connection with the completion of the construction of Mesa
del Sol.
(F) Sellers have delivered to SFX true and complete copies of all
plans and specifications, studies, consultants' reports and feasibility
analyses in the possession and control of the Sellers relating to Mesa del
Sol and have made available to SFX all material correspondence in the
possession and control of the Sellers relating to Mesa del Sol.
(G) No third-party consent (from any governmental authority or other
person) is required in connection with the transfer of ownership and
control of Xxx NM to SFX or Acquisition Sub.
(H) True, correct and complete copies of the site plan, budget and
schedules referred to in the letter of Xxxx Xxxxxx to Xxxxxxx Xxxx dated
January 22, 1999 are annexed hereto as Exhibit 7(w)(xi)(H).
8. REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller represents and warrants for itself and not with respect to
any other Seller to SFX as follows:
(a) Authorization of Transaction. Such Seller 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 Seller, enforceable in accordance with its terms and
conditions. Such Seller if a natural person, is over 21 years of age and has
not had a legal representative appointed by a court of law or otherwise act in
his or her behalf or with respect to any of his or her property. If such Seller
is not a natural person: such Seller 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 Seller is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby;
and this Agreement has been duly delivered by such Seller.
(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 Seller 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
20
any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which such Seller is a party, by which it is bound or to which
any of its assets is subject.
(c) The Festivals Shares and Membership Interests. Each Seller holds
of record and owns beneficially the number of Shares and/or Membership
Interests 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. Each Seller is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require such Seller to sell, transfer, or otherwise dispose of any capital
stock of Xxx Festivals or Xxx NM (other than this Agreement).
9. REPRESENTATIONS AND WARRANTIES OF SFX AND ACQUISITION SUB
SFX and Acquisition Sub represent and warrant to the Sellers 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 Closing Documents, when
executed by SFX and Acquisition Sub, on the one hand, and the Sellers, 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
21
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 all 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) Intentionally Omitted.
(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 Subis not required to adopt this Agreement and approve
the other 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
22
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 Sellers concerning Xxx
NM and Xxx Festivals 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 Sellers.
(i) Access to Records and Properties of the Sellers.
From and after the date hereof until the Closing Date, upon the prior
consent of the Sellers, which shall not be unreasonably withheld, the
Sellers shall afford and, with respect to clause (B) below, shall
use reasonable efforts to cause Xxx NM's and Xxx Festivals'
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 Xxx NM and Xxx Festivals, and to such additional financial
and operating data and other information about the business of Xxx NM
and Xxx Festival, 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 Xxx NM's and Xxx Festivals' independent
accountants.
(ii) Operation of the Business of Xxx NM and Xxx
Festivals. 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 Xxx NM and Xxx Festivals
shall be operated and conducted in the ordinary course of business
consistent with present practices.
12. ADDITIONAL COVENANTS
23
(a) Cooperation.
(i) Subject to Section 16, SFX and the Sellers 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 Sellers shall
allow, and SFX and the Sellers 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 Xxx NM and Xxx Festivals as each of SFX and the Sellers
shall reasonably request. In addition, prior to Closing, Sellers shall
cause Xxx NM to provide SFX with written authorization in form
reasonably satisfactory to both Xxx NM and SFX which shall (x) confirm
that SFX may request confirmation from the appropriate zoning
authorities that the intended use of Mesa del Sol for the promotion of
live musical events and other live entertainment will be in compliance
with all applicable zoning ordinances, and (y) authorize SFX to make
inquiry with other governmental authorities relating to the
development of Mesa del Sol including the landlord under the
Groundlease and the sublandlord under the Sublease.
(iii) Each of SFX and Acquisition Sub agrees that it shall
preserve and keep the records of Xxx NM and Xxx Festivals 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 Sellers as being required for claims or
litigation matters, and each of SFX and Acquisition Sub shall cause
Xxx NM and Xxx Festivals to make such records available to the Sellers
as may be reasonably required in connection with any legal proceedings
by or against the Sellers or governmental investigations or tax
examination of the Sellers. 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 Sellers
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 Sellers, their Affiliates or otherwise
incorporating or relating to the name "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 either of Xxx NM or Xxx Festivals is incorporated or qualified
to transact business such documents, notices or certificates as are necessary
to change the name of Xxx NM and Xxx Festivals to a name that does not include
the word "Nederlander," and shall promptly deliver written confirmation of such
filing
24
to the Sellers. As promptly as practicable and in any event within 45
days after the Closing Date, SFX or Acquisition Sub shall cause Xxx NM and Xxx
Festivals to cease using and shall use its best efforts to remove from all
assets and property of Xxx NM and Xxx Festivals the name "Nederlander," all
related logos and trademarks and all derivatives thereof. SFX hereby
indemnifies and holds the Sellers 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 Sellers or any Affiliate of the
Sellers 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 Sellers and their Affiliates harmless from and against,
and shall on demand reimburse them for, any Losses suffered or incurred by the
Sellers 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. In no event shall SFX be liable to the
Sellers and their Affiliates for any nonperformance by the Sellers and their
Affiliates with respect to any of the obligations of the Sellers 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 Sellers 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 Sellers shall file with the United States Department of Justice and the
Federal Trade Commission a 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,
25
hold in strict confidence the terms of this Agreement and all data
and information obtained by them from the Sellers (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 Sellers, 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
Sellers 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 Sellers 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.
(iii) In the event this Agreement is terminated, the
Sellers, 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.
26
(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) Construction of Mesa del Sol; Non-Compliance;
Liquidated Damages.
(i) SFX hereby agrees, after the Closing Date, to
use its commercially reasonable efforts to commence and complete, or
cause to be commenced and completed, the construction of Mesa del Sol
substantially in conformance with the plans and specifications for
Mesa del Sol previously provided by the Sellers to SFX, including,
without limitation, with respect to the scope of the work and quality
of materials to be used, to effect, or cause to be effected, to the
extent within its control, the Necessary Road Improvements, in both
cases in such time that Mesa del Sol is available for partial
operation for the entire 2000 season and is available for operation at
Full Capacity for the entire 2001 season, and otherwise to cause Xxx
NM to fulfill its obligations under the Sublease. Notwithstanding the
foregoing, in the event that SFX is unable or is prevented from
constructing the project on or before January 31, 2003, for reasons
beyond its control and notwithstanding the exercise of commercially
reasonable efforts by SFX, then the Sellers shall be required to
return the Down Payment and the Construction Cost Payment to SFX.
(ii) If the construction of Mesa del Sol, is not
completed in such time that the theater is available for operation by
January 31, 2001, then, unless Xxx NM was unable to construct or was
prevented from constructing Mesa del Sol for reasons beyond its
control notwithstanding the exercise of its commercially reasonable
efforts, then (x) Sellers shall retain the Down Payment, and (y) SFX
promptly shall pay to the Sellers the sum of $2,500,000 as and for
liquidated damages for the material breach of this Agreement in lieu
of any other rights or remedies which the Sellers may have against
SFX. The parties agree that such amount shall be reasonable liquidated
damages. The parties further agree that, to the fullest extent
permitted by law, the payment of such liquidated damages as provided
27
herein shall be the sole and exclusive remedy if the construction of
Mesa del Sol is not completed in such time that the theater is
available for operation by January 31, 2001.
(iii) SFX acknowledges that the County of Bernalillo
is in default under the Sublease with respect to those items set forth
in Schedule 7(w) and hereby agrees to grant the County an extension of
time to satisfy such items, provided, however, that such extension
shall not be so long as to prevent SFX from completing, or causing to
be completed, the construction of Mesa del Sol so that it is available
for operation by January 31, 2001.
13. INDEMNIFICATION OF PURCHASER
Subject to Sections 10 and 16, the Sellers, 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 Sellers or
Xxx NM or Xxx Festivals;
(ii) any breach of any representation or warranty by the Sellers
or Xxx NM or Xxx Festivals contained in this Agreement (including the
schedules hereto); and
(iii) any breach by the Sellers or Xxx NM or Xxx Festivals of
any covenant of this Agreement (or any other agreements entered into
pursuant hereto).
(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 Sellers' indemnity obligations under the
Agreements.
14. INDEMNIFICATION OF THE SELLERS
Subject to the provisions of Sections 10 and 16, SFX and Acquisition
Sub shall indemnify, save harmless and defend the Sellers and their respective
Sellers, 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);
28
(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 Sellers under the
Non-Imputation Affidavit (collectively, the "Non-Imputation Losses")
(a) up to an amount equal to 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 Sellers under Section 13(ii) or
13(iii) of all of the Agreements) and SFX shall reimburse the Sellers
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 Sellers
shall promptly reimburse SFX for any amounts paid to the Sellers 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 Sellers 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 Sellers 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
29
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 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) The Sellers 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 Sellers. In the event that the aggregate of
such Deductible Losses exceeds the Basket Amount, the Sellers in the aggregate
shall indemnify SFX and all other indemnified parties for all Deductible Losses
including the Basket Amount; provided, however, in no event shall the indemnity
obligations of the Sellers, for Deductible Losses under Section 13 of this
Agreement plus an amount equal to all Non-Imputation Losses exceed the purchase
price theretofore paid by SFX under Section 3(c) of this Agreement.
(d) Intentionally Omitted.
(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 remittance shall
not exceed the amount of the indemnification payment made by such Indemnitor.
30
(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 Sellers 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 Sellers have provided SFX with ten Business
Days prior written notice that, notwithstanding their commercially
reasonable efforts, the Sellers 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 Sellers' notice to
SFX shall be deemed waived; or
(iv) By either SFX or the Sellers if the
transactions contemplated herein have not been consummated by August
31, 1999 (the "Expiration Date").
(b) 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 such termination.
17. MISCELLANEOUS
(a) Expenses, Etc. Except for all real property transfer
taxes, which shall be paid by the Sellers, 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 Sellers 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
obligations hereunder to any direct or indirect subsidiary, provided that SFX
remains a party to this Agreement and shall be
31
primarily responsible for all obligations of any subsidiary of SFX hereunder.
(c) Appointment of Agent for Sellers. Each Seller 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 Sellers, 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 Sellers in so acting or refraining
from acting) on the instructions of the Sellers and such instructions shall be
binding on the Sellers. The Agent shall not be liable to the Sellers 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 Sellers 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 Sellers 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
Sellers and Xxx NM and Xxx Festivals, 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, arising out of or relating to
the ownership of the Membership Interests or the Festivals Shares by the
Sellers prior to the Closing Date, 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, 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 terms and conditions of the
Confidentiality Agreement dated as of August 10, 1998, by and between SFX, on
the one hand, and GDT, Arena, Xxx Cincinnati, Nederlander of Ohio, Inc. and
Xxx Club, on the other hand,
32
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 Sellers to:
Xxxxxx Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxxx LLP
1900 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
33
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 Sellers 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.
(m) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
34
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED SOLELY WITHIN SUCH
STATE.
(n) Arbitration.
(i) Any dispute or controversy arising out of or relating to
this Agreement, or any breach or alleged breach of this Agreement,
shall be settled exclusively by arbitration to be held in the City of
New York in accordance with the rules of the American Arbitration
Association. There shall be one arbitrator designated by the American
Arbitration Association under the expedited procedures then in effect
for the resolution of commercial disputes. SFX and the Sellers shall
share equally the costs and expenses of such arbitrator, but each
party shall bear its own legal and other expenses, if any. The
arbitrator shall render his or her award within thirty (30) days
after the commencement of the arbitration; provided, however, that no
failure on the part of the arbitrator to render such award within
such thirty (30) day period shall constitute a release from liability
or otherwise affect the liability of any party hereto. Failure by
either party to submit to arbitration under this Section 17(n) shall
result in the arbitrator ruling in favor of the other party if such
other party has submitted to arbitration under this Section 17(n).
Judgment may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction
of the New York courts for that purpose.
(ii) In connection with any arbitration under this Section
17(n), to the extent that the subject of the arbitration is the
determination of an amount that is due from one party to this
Agreement to another party to this Agreement, then each party shall
submit to the arbitrator its estimate of the amount due within ten
(10) days after the appointment of the arbitrator. The arbitrator
shall be charged solely with determining, within ten (10) days after
expiration of the period during which the parties are to submit their
respective estimates, which estimate is closest to the amount that is
due and shall award the amount of that estimate to the party to which
or to whom it is due; except that, if the larger of the two estimates
is equal to or less than 120% of the smaller of the two estimates,
the amount to be awarded by the arbitrator shall be the average of
the two estimates. No failure on the part of the arbitrator to make
such determination within such ten (10) days shall constitute a
release from liability or otherwise affect the liability of any party
to this Agreement with respect to the dispute at issue in the
arbitration.
(iii) Discovery shall be permitted in connection with any
arbitration under this Section 17(n). All aspects of the arbitration
shall be treated as confidential. Neither the parties nor the
arbitrator may disclose the existence, content or results of the
arbitration, except as necessary to comply with legal or regulatory
requirements. Before making any such disclosure, a party shall give
written notice to all other parties and shall afford such parties a
reasonable opportunity to protect their interests.
(o) 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
35
unenforceability and shall not affect the validity, legality or enforceability
of any other provision of this Agreement.
36
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first set forth above.
NEDERLANDER OF NEW MEXICO LLC
By: /s/ Xxxx Xxxxxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President
NEDERLANDER FESTIVALS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President
XXXX XXXXXXXXXXX
/s/ Xxxx Xxxxxxxxxxx
-------------------------------
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
-------------------------------
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 Membership Interests and Capital Stock.......2
3. Closing...........................................................2
(a) Time and Place of Closing................................2
(b) Intentionally Omitted....................................2
(c) Purchase Price...........................................2
(d) Post-Closing Albuquerque Payment.........................3
(e) Intentionally Omitted....................................5
(f) Closing Transactions.....................................5
4. Intentionally Omitted.............................................7
5. Conditions to Obligations of SFX..................................8
(a) Representations and Warranties...........................8
(b) Performance of Agreements................................8
(c) Litigation; Consents.....................................8
(d) Festivals Conditions.....................................8
(e) Closing Deliveries.......................................9
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period.........................9
6. Conditions to Obligations of the Sellers..........................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 Xxx NM and Xxx Festivals.......10
(a) Organization, Standing and Power........................10
(b) Capitalization..........................................10
(c) Subsidiaries............................................10
(d) Due Authorization; Legal Authority, Binding Effect......10
(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
i
(l) Insurance...............................................13
(m) Litigation, Etc.........................................14
(n) Material Contracts......................................14
(o) Compliance; Governmental Authorizations.................14
(p) Intentionally Omitted...................................14
(q) Employees...............................................14
(r) Taxes...................................................15
(s) No Brokers or Finders...................................16
(t) Title to Properties.....................................16
(u) Intellectual Property...................................17
(v) Transactions With Affiliates............................17
(w) Real Property...........................................17
8. Representations And Warranties Of Each Seller....................20
(a) Authorization of Transaction............................21
(b) Noncontravention........................................21
(c) The Festivals Shares and Membership Interests...........21
9. Representations and Warranties of SFX and Acquisition Sub........21
(a) Organization, Standing and Power........................21
(b) Due Authorization; Legal Authority; Binding Effect......21
(c) No Conflicts, Etc.......................................22
(d) Litigation..............................................22
(e) Intentionally Omitted...................................22
(f) No Required Stockholder Vote or Consent.................22
(g) No Brokers or Finders...................................23
(h) Investment Intent.......................................23
(i) Financial Capacity......................................23
(j) Intentionally Omitted...................................23
(k) Due Diligence...........................................23
10. Survival of Representations and Warranties.......................23
11. Conduct and Transactions Prior to Closing........................23
(a) By the Sellers..........................................23
12. Additional Covenants.............................................24
(a) Cooperation.............................................24
(b) Intentionally Omitted...................................25
(c) Intentionally Omitted...................................25
(d) No License; Name Change; Subsequent Filings.............25
(e) Release of Guaranties, Etc..............................25
(f) Intentionally Omitted...................................25
(g) Notice of Events........................................25
(h) Filings and Governmental Consents.......................26
(i) Xxxx-Xxxxx Xxxxxx Filing................................26
ii
(j) Confidentiality.........................................26
(k) "As Is, Where Is" Acquisition...........................27
(l) Further Actions.........................................27
(m) Construction of Mesa del Sol; Non-Compliance;
Liquidated Damages.....................................28
13. Indemnification of Purchaser.....................................28
14. Indemnification of the Sellers...................................29
15. Rules Regarding Indemnification..................................30
16. Termination......................................................31
17. Miscellaneous....................................................32
(a) Expenses, Etc...........................................32
(b) Parties in Interest; Assignment.........................32
(c) Appointment of Agent for Sellers........................32
(d) Specific Performance....................................33
(e) Mutual Release..........................................33
(f) Entire Agreement; Amendments............................33
(g) Interpretation..........................................33
(h) Notices.................................................34
(i) Materiality/Schedules...................................35
(j) Further Assurances......................................35
(k) Waivers.................................................35
(l) Counterparts............................................35
(m) Governing Law...........................................35
(n) Arbitration.............................................35
(o) Severability............................................36
LIST OF SCHEDULES AND EXHIBITS............................................iv
iii
LIST OF SCHEDULES AND EXHIBITS
Exhibit 1 Definitions
Schedule A Membership Interests
Schedule 3(d) Budget of Construction Costs
Exhibit 3(f)(i)(G) Form of Opinion of Counsel to the Sellers
Schedule 3(f)(i)(H) Estoppel Certificates
Exhibit 3(f)(i)(K) Form of Nondisturbance and Recognition Agreement
Exhibit 3(f)(i)(N) Form of Non-Imputation Affidavit
Exhibit 3(f)(ii)(C) Form of Opinion of Counsel to SFX
Schedule 7(a) Jurisdictions Qualified
Schedule 7(b) Outstanding Securities and Commitments
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 Xxx NM and
Xxx Festivals
Schedule 7(q) Employee Information
Schedule 7(r) Tax Returns Not Filed
Schedule 7(t) Exceptions to Title
Schedule 7(v) Transactions with Affiliates
Schedule 7(w) Real Property
iv
Exhibit 7(w)(ix)(H) Site Plan Information
Schedule 8(b) Noncontravention
Schedule 9(c) Violations and Conflicts
Schedule 9(k) Documents Provided to SFX and Acquisition Sub
Schedule 12(e) Release of Guaranties
v
EXHIBIT 1
DEFINITIONS
As used in the Agreement, the following terms have the following definitions:
"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 Purchase Agreement, including Exhibits and
Schedules attached hereto.
"Agreements" means this Agreement and the Stock Purchase Agreement, the
Membership Interest Purchase Agreement and the Asset
Purchase 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.
"Business Day" means any day that is not a Saturday, Sunday or legal holiday
in the State of New York.
"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 means the Confidentiality Agreement
Agreement" dated as of August 10, 1998, by and between
SFX, on the one hand, and GDT, Arena, Nederlander
Cincinnati LLC, Nederlander of Ohio,
i
Inc. and Nederlander Club Management LLC, on the other
hand, as amended pursuant to that certain amendment dated
August 17, 1998.
"Construction Cost Payment" has the meaning set forth in Section 3(c)(iii) of the
Agreement.
"Construction Costs" Has the meaning set forth in Section 3(d) of the Agreement.
"Deductible Losses" has the meaning set forth in Section 15(c) of the Agreement.
"Down Payment" has the meaning set forth in Section 3(c)(ii) 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.
"Equity Interests" means the Membership Interests and the Festivals Shares.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulations promulgated
thereunder.
"Expenses" has the meaning set forth in Section 3(d)(iv) of the
Agreement.
"Expiration Date" means June 15, 1999.
"Festivals Joint Venture" has the meaning set forth in the Preamble of the Agreement.
"Festivals Payment" has the meaning set forth in Section 3(c)(i) of the Agreement.
"Festivals Shares" has the meaning set forth in Section 2 of the Agreement.
"Financials" means the separate financial statements of Xxx NM and Xxx
Festivals as of and for the period
ended [September 30],
ii
199[8].
"GDT" Greater Detroit Theatres, Inc.
"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
Sellers 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
At.
"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,
iii
regulation, ordinance, code, order or judgment
(including any 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 Xxx NM or Xxx Festivals.
"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
Sellers.
"Material Contract" means a written contract or other legally binding obligation of
a contractual nature to which Xxx NM or Xxx Festivals 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 either of their current
or former directors, officers
iv
and employees; (iv) is a contract for the employment of any
current or former director or officer of Xxx NM or Xxx
Festivals; (v) involves a transaction with an Affiliate of
the Sellers 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
Xxx NM or Xxx Festivals; or (vii) otherwise involves the
payment or receipt by Xxx NM or Xxx Festivals of a net
amount of $100,000 or more within a one-year period, other
than agreements entered into the ordinary course of
business.
"Measurement Season" has the meaning set forth in Section 3(d)(i) of the Agreement.
"Membership Interests" has the meaning set forth in Section 2 of the Agreement.
"Necessary Road Improvements" has the meaning set forth in Section 3(d)(i) of the Agreement.
"Nederlander Closing Documents" has the meaning set forth in Section 3(d)(ii) of the Agreement.
"Net Earnings" has the meaning set forth in Section 3(d)(iv) of the
Agreement.
"Non-Imputation Losses" has the meaning set forth in Section 14(iv) of the Agreement.
"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.
"Post-Closing Albuquerque
Payment" has the meaning set forth in Section 3(d) of the Agreement.
"Post-Closing Albuquerque
Payment Date" has the meaning set forth in
Section 3(d)(iii) of the Agreement.
"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.
"Second Measurement Season" has the meaning set forth in Section 3(d)(i) of the Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
v
"Sellers" means the individuals and/or entities listed on Schedule A.
"SFX" SFX Entertainment, Inc.
"SFX 401(k) Plan" has the meaning set forth in Section 12(b)(i) 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 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.
"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,
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.
"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.
"401(k) Plan" has the meaning set forth in Section 12(b)(i) of the
Agreement.
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