EXHIBIT 2.1
ASSET PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
LAKE CARNEGIE, LLC
AS PURCHASER
AND
CELTICS BASKETBALL, L.P.
AS SELLER
DATED AS OF SEPTEMBER 27, 2002
TABLE OF CONTENTS Page
SECTION 1. DEFINITIONS. 1
1.1 Definitions 1
1.2 Accounting Terms 5
1.3 Interpretation 5
1.4 References to Schedules 5
SECTION 2. PURCHASE AND SALE OF ASSETS; PURCHASE PRICE 6
2.1 Purchase and Sale of Assets 6
2.2 Assumption of Liabilities 9
2.3 Purchase Price 11
2.4 Payment of Cash Portion of the Purchase Price 12
2.5 Liquidated Damages 12
2.6 Transfer Tax 13
2.7 Further Assurances 13
2.8 Allocation of Purchase Price 13
2.9 Procedures for Assets not Transferable 14
SECTION 3. THE CLOSING 14
3.1 Closing Date and Place 14
3.2 Extension of the Closing Date 14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER 15
4.1 Organization, Qualification, And Limited
Partnership Power 15
4.2 Authorization 15
4.3 No Conflicts 15
4.4 Consents 16
4.5 Financial Statements 16
4.6 Undisclosed Liabilities 16
4.7 Events Subsequent To Most Recent Fiscal Period End 16
4.8 Compliance 18
4.9 Tax Matters 18
4.10 Title To Properties; Absence Of Liens And
Encumbrances; Condition Of Equipment 19
4.11 Sole Ownership and Management 19
4.12 Contracts 20
4.13 Power Of Attorney 21
4.14 Litigation 21
4.15 Restrictions On Business Activities 21
4.16 Employees 21
4.17 Employee Matters And Benefit Plans 22
4.18 Environmental Liabilities 26
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TABLE OF CONTENTS Page
4.19 Fees 26
4.20 Complete Copies Of Materials 27
4.21 Approval 27
4.22 Full Disclosure 27
4.23 Insurance 27
4.24 National Basketball Association 27
4.25 No Other Representations and Warranties 27
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER 28
5.1 Organization, Qualification, And Limited
Liability Company Power 28
5.2 Authorization 28
5.3 No Conflicts 28
5.4 Consents 29
5.5 Fees 29
5.6 Sufficient Funds 29
5.7 No Other Representations and Warranties 29
SECTION 6. PRE-CLOSING COVENANTS 29
6.1 Operation of the Celtics Basketball Businesses 29
6.2 Access to Information 31
6.3 Notice of Developments 31
6.4 No Solicitation 32
6.5 Regulatory Filings 33
6.6 NBA Documents and Approvals 33
6.7 Reasonable Efforts 33
6.8 Notices and Consents 33
6.9 Compliance with Contracts and Applicable Law 34
6.10 Affiliate Contracts 34
6.11 Public Statements 34
SECTION 7. OTHER AGREEMENTS AND COVENANTS 34
7.1 Confidentiality 34
7.2 Additional Documents and Further Assurances 34
7.3 Retained Employees; Benefits 35
7.4 Reasonable Cooperation of Seller 37
7.5 Boston Celtics Name 37
7.6 Books and Records 37
7.7 Transition Arrangements 37
SECTION 8. CONDITIONS 37
8.1 Conditions to the Obligations of Purchaser 37
8.2 Conditions to Obligations of Seller 39
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TABLE OF CONTENTS Page
SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING 40
9.1 Non-Survival of Representations, Warranties
and Agreements 40
9.2 Collection of Assets 40
SECTION 10. TERMINATION OF AGREEMENT 40
10.1 Termination 40
10.2 Effect of Termination 41
SECTION 11. MISCELLANEOUS 41
11.1 Fees and Expenses 41
11.2 Governing Law 41
11.3 Notices 41
11.4 Entire Agreement 42
11.5 Assignability; Binding Effect 43
11.6 Execution in Counterparts 43
11.7 Amendments 43
11.8 Severability of Provisions 43
11.9 Injunctive Relief 43
11.10 No Third-Party Beneficiaries 43
11.11 No Joint Venture 43
11.12 Good Faith Covenant 44
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ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
This ASSET PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of September 27, 2002 (the "Effective Date"), by and between LAKE
CARNEGIE, LLC, a Delaware limited liability company ("Purchaser"), and
CELTICS BASKETBALL, L.P., a Delaware limited partnership ("Seller").
Purchaser and Seller are sometimes herein referred to collectively as the
"Parties" and individually as a "Party".
W I T N E S S E T H
-------------------
WHEREAS, Seller owns and operates the Boston Celtics professional
basketball team (the "Boston Celtics") of the National Basketball
Association, a joint venture composed of its member teams (the "NBA") and
certain related businesses;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Seller desires to sell, transfer and assign to Purchaser, the
Boston Celtics and certain other assets associated therewith and ancillary
thereto; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Purchaser desires to purchase, acquire and assume the Boston
Celtics and such other assets for the consideration specified herein and
the assumption by Purchaser of certain liabilities and obligations of
Seller.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, and for other good
and valuable consideration, the Parties agree as follows:
SECTION 1. DEFINITIONS.
1.1 Definitions. As used in this Agreement, the following terms
have the meanings specified in this Section 1.1.
"Acquired Assets" has the meaning given in Section 2.1(b) of this
Agreement.
"Additional Escrow Amount" has the meaning given in Section 3.2 of
this Agreement.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person. For purposes of
clarification and not in limitation of the foregoing, Affiliates of Seller
shall include Celtics Basketball Holdings, L.P., Boston Celtics Corp.,
Celtics Pride G.P., Celtics Limited Partnership, Celtics Investments, Inc.,
Celtics Capital Corp., Boston Celtics Holding Corp., Boston Celtics Limited
Partnership II, Boston Celtics Limited Partnership II GP, Inc., Boston
Celtics, Inc., Walcott Partners, L.P., Boston Celtics Limited Partnership,
Castle Creek Partners, L.P. and Castle Creek Partners GP, Inc.
"Agreement" has the meaning given in the preamble.
"Allocation" has the meaning given in Section 2.8.
"Ancillary Agreements" has the meaning given in Section 4.2.
"Assumed Contracts" has the meaning given in Section 2.1(b)(v).
"Assumed Leases" has the meaning given in Section 2.1(b)(i).
"Assumed Obligations" has the meaning given in Section 2.2(a).
"Audited Financials" has the meaning given in Section 4.5(a).
"Balance Sheet" has the meaning given in Section 4.5(a).
"Balance Sheet Date" has the meaning given in Section 4.6.
"Boston Celtics" has the meaning given in the first recital.
"Boston Celtics Name" means "Boston Celtics" or any derivation
thereof.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required
by Law to close.
"Cash Consideration" has the meaning given in Section 2.3.
"Celtics Basketball Businesses" has the meaning given in Section
2.1(a).
"Closing" has the meaning given in Section 3.
"Closing Date" has the meaning given in Section 3.
"COBRA" has the meaning given in Section 4.17(a)(ii).
"Code" has the meaning given in Section 2.8.
"Collective Bargaining Agreement" has the meaning given in Section
4.8.
"Damage Amount" has the meaning given in Section 2.5.
"DOL" has the meaning given in Section 4.17(a)(iv).
"Effective Date" has the meaning given in the preamble.
"Employee" has the meaning given in Section 4.17(a)(v).
"Employment Agreement" has the meaning given in Section 4.17(a)(vi).
"Environmental Laws" are all applicable Laws promulgated by any
Governmental Authority which prohibit, regulate or control any Hazardous
Material or any Hazardous Material Activity, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, the Resource Recovery and Conservation Act of 1976, the Federal
Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules,
regulations, ordinances, orders, treaties, statutes, and codes of other
Governmental Authorities, the regulations promulgated pursuant to any of
the foregoing, and all amendments and modifications of any of the
foregoing.
"ERISA" has the meaning given in Section 4.17(a)(vii).
"ERISA Affiliate" has the meaning given in Section 4.17(a)(i).
"Escrow Account" has the meaning given in Section 2.4(a).
"Escrow Agreement" has the meaning given in Section 2.4(a).
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"Escrow Agent" has the meaning given in Section 2.4(a).
"Escrow Amount" has the meaning given in Section 2.4(a).
"Excluded Assets" has the meaning given in Section 2.1(c).
"Excluded Liabilities" has the meaning given in Section 2.2(b).
"FMLA" has the meaning given in Section 4.17(a)(viii).
"GAAP" has the meaning given in Section 1.2.
"Governmental Authority" means any federal, state, local, provincial,
foreign or other governmental, regulatory or administrative agency,
commission, body, department, board, or other governmental subdivision,
court, tribunal, arbitrating body or any other entity designated to act for
or on behalf of the foregoing.
"International Employee Plan" has the meaning given in Section
4.17(a)(ix).
"IRS" means the Internal Revenue Service, or any successor thereto.
"Laws" means all laws, rules, regulations, codes, injunctions,
judgments, orders, decrees, rulings, charges, licenses, interpretations,
constitutions, ordinances, common law, treatises or other restrictions of
any Governmental Authority.
"Leases" has the meaning given in Section 4.10(a).
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, license, charge, option, right of first refusal,
easement, servitude, transfer restriction, encumbrance, or any other like
restriction or limitation.
"Material Adverse Effect" means any materially adverse effect on the
business, operations, assets (including intangible assets), liabilities,
results of operations or financial condition of the Celtics Basketball
Businesses or Acquired Assets, taken as a whole; provided, however, that
such term shall not include any material adverse effect caused solely by
(i) general economic conditions after the Effective Date, (ii)
circumstances that impact the NBA and its member teams as a whole, (iii)
actions taken by the NBA or the National Basketball Players' Association
affecting all NBA member teams, (iv) the physical condition of any player
under contract to Seller, (v) changes in GAAP, (vi) the entering into or
announcement of this Agreement, (vii) any act or omission or event
contemplated by this Agreement or to which Purchaser consents, (viii) any
outbreak or material escalation of hostilities or other armed conflict or
declaration by the United States of a national emergency or war, or (ix)
the on-court performance of the Boston Celtics.
"Multiemployer Plan" has the meaning given in Section 4.17(a)(x).
"NBA" has the meaning given in the first recital.
"NBA Approvals" has the meaning given in Section 4.4(a).
"NBA Documents" has the meaning given in Section 2.1(b)(vii).
"NBA Filing Fees" has the meaning given in Section 6.6.
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"ordinary course of business" or "ordinary course of business
consistent with past practices" shall mean ordinary course of conducting
business, substantially in the same manner as heretofore conducted.
"Party" and "Parties" have the meaning given in the preamble.
"Permits" has the meaning given in Section 2.1(b)(vi).
"Permitted Liens" has the meaning given in Section 4.10(b).
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company,
trust, unincorporated organization or other business organization.
"Purchase Price" has the meaning given in Section 2.3.
"Purchaser" has the meaning given in the preamble.
"Purchaser Services" has the meaning given in Section 7.7.
"Representatives" of a Person means the Person and its Affiliates and
their directors, officers, employees, agents, consultants, partners,
advisors (including, without limitation, accountants, counsel, financial
advisors and other authorized representatives).
"Reserved Seller's Cash" means any Seller's Cash in an aggregate
amount up to (i) Forty-Eight Million Eight Hundred Thirty-Seven Thousand
Nine Hundred Twenty U.S. Dollars ($48,837,920) in the event that the
Closing occurs on or prior to November 30, 2002, (ii) Forty-Nine Million
Seven Hundred Sixty-Two Thousand Seven Hundred Seventy-Five U.S. Dollars
($49,762,775) in the event that the Closing occurs after November 30, 2002,
but prior to December 31, 2002, or (iii) Fifty Million Six Hundred Eighty
Seven Thousand Six Hundred Thirty U.S. Dollars ($50,687,630) in the event
that the Closing occurs after December 31, 2002, but prior to January 31,
2003.
"Retained Employee" has the meaning given in Section 7.3(a)(i).
"Scheduled Employees" has the meaning given in Section 7.3(a)(i).
"Seller" has the meaning given in the preamble.
"Seller's Cash" means any cash, cash equivalents or similar type of
investments of Seller (i) distributed by Seller or otherwise paid by Seller
as a dividend or returned as capital to any partner of Seller after June
30, 2002, or (ii) used to pay severance or termination pay (other than
under existing policies) or special bonuses or remuneration, in each case
in this (ii) granted on or after the Effective Date to any officer or
employee of Seller.
"Seller Employee Plan" has the meaning given in Section 4.17(a)(iii).
"Seller Services" has the meaning given in Section 7.7.
"Seller's Knowledge" or "to the knowledge of Seller" or any other
similar knowledge qualification in this Agreement means the actual
knowledge of Xxxxxxx X. Xxxx or Xxxx X. Xxxxxx, after due inquiry.
"Superior Proposal" has the meaning given in Section 6.4(c).
"Tax" has the meaning given in Section 4.9(a).
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"Tax Return" has the meaning given in Section 4.9(b).
"Termination Date" has the meaning given in Section 10.1(b).
"Termination Event" has the meaning given in Section 2.5.
"Termination Fee" has the meaning given in Section 11.1(b).
"Third Party" means a Person who is not a Party, a Representative of
a Party, a Representative of an Affiliate of a Party or a shareholder or
other interest-holder of any Party, Party's Affiliate or Party's
Representative.
"Title IV Plan" has the meaning given in Section 4.17(a)(xi).
"Transaction" means the purchase and sale of the Acquired Assets and
the assumption of the Assumed Obligations contemplated by this Agreement
and the other transactions contemplated under this Agreement and the
Ancillary Agreements.
"Transition Services" has the meaning given in Section 7.7.
1.2 Accounting Terms. Any accounting terms used in this Agreement
shall, unless otherwise specifically provided, have the meanings
customarily given them in accordance with United States Generally Accepted
Accounting Principles ("GAAP") and all financial computations hereunder or
thereunder shall, unless otherwise specifically provided, be computed in
accordance with GAAP consistently applied.
1.3 Interpretation. When a reference is made in this Agreement to
a Section, Schedule or Exhibit, such reference shall be to a Section of, or
Schedule or Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall 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 shall be deemed to be
followed by the words "without limitation" or equivalent words. The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The definitions contained 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 terms. Any agreement, instrument or Law defined or
referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or Law 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 Laws) by succession
of comparable Laws and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
1.4 References to Schedules. All references in this Agreement to
Schedules shall mean the Schedules attached hereto; provided such Schedules
shall be deemed to be automatically updated to reflect any changes to the
information contained therein arising out of or resulting from any
transactions or events occurring prior to the Closing Date which are
permitted in accordance with Section 6.1.
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SECTION 2. PURCHASE AND SALE OF ASSETS; PURCHASE PRICE.
2.1 Purchase and Sale of Assets. Upon the terms and subject to the
satisfaction of the conditions set forth in this Agreement, at the Closing,
Seller agrees to sell, assign, convey, transfer and deliver, or cause to be
sold, assigned, conveyed, transferred or delivered, to Purchaser or its
Affiliate, and Purchaser or its Affiliate agrees to purchase, assume, and
acquire at the Closing, the Acquired Assets (as defined in Section 2.1(b))
free and clear of any Liens, except as expressly provided herein.
(a) Definition of Businesses of Seller. As used in this
Agreement, the "Celtics Basketball Businesses" shall mean the
following operations and businesses of Seller:
(i) the ownership and operation of the Boston Celtics,
including all interests as a member of the NBA, and the right
to operate a professional basketball team in the City of
Boston, Massachusetts, and all rights and obligations
appurtenant thereto, including all rights and obligations under
the NBA Documents;
(ii) the rights and obligations of Seller under the
Assumed Contracts, including but not limited to agreements
relating to local television, cable and radio broadcasts and
sponsorship agreements;
(iii) the leasing and use of the FleetCenter and other
facilities used by the Boston Celtics as set forth in the
Assumed Leases; and
(iv) the marketing and promotion of the Boston Celtics
as permitted by the NBA Documents.
(b) Definition of Acquired Assets. For all purposes of and
under this Agreement, the term "Acquired Assets" shall mean, refer to
and include all of Seller's right, title and interest in and to all
tangible and intangible assets, properties and rights that are used
in, held for use in, intended to be used in or necessary to the
Celtics Basketball Businesses, wherever located, including, without
limitation, the following categorical listing of assets existing on
the Closing Date (but specifically excluding the Excluded Assets):
(i) any real estate leaseholds, sub-leaseholds,
licenses and occupancy agreements therein (collectively, the
"Assumed Leases"), buildings, structures, improvements,
fixtures, furnishings and other fittings thereon, and
easements, rights of way, and other appurtenances thereto, used
in, held for use in, intended to be used in, necessary to or
relating to any of the Celtics Basketball Businesses, each as
described on Schedule 2.1(b)(i);
(ii) all tangible personal property (whether or not
located on Seller's premises), including, without limitation,
all machinery, equipment and tools, furniture and furnishings,
computers and computer supplies, telephone, telecommunications,
networking and Internet equipment and infrastructure, office
materials and supplies, inventories of any kind or nature, raw
materials and
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supplies, manufactured and purchased goods, and all goods in
process and finished goods used in, held for use in, intended
to be used in, necessary to or relating to any of the Celtics
Basketball Businesses, including, without limitation, those
categories of items generally described in Schedule 2.1(b)(ii);
(iii) all books, records, ledgers, files, documents,
correspondence, customer, supplier, advertiser, circulation and
other lists (including customer lists, season ticket holders,
camp prospects or attendees and any other subscribers, vendors,
and customers), invoices and sales data, creative, advertising
and other promotional materials, studies, reports, and other
printed or written materials or data used in, held for use in,
intended to be used in, necessary to or directly relating to
any of the Celtics Basketball Businesses, wherever located and
whether existing in hard copy or magnetic or electronic form;
(iv) all intellectual property rights, subject to the
NBA Documents, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, rights
thereunder, remedies against infringements thereof, and rights
to protection of interests therein under applicable Laws, in
each case used in, held for use in, intended to be used in,
necessary to or relating to any of the Celtics Basketball
Businesses, as described in Schedule 2.1(b)(iv);
(v) all rights under the contracts, indentures,
instruments, agreements, purchase orders, leases, and licenses
relating to the ownership, operation and maintenance of the
Celtics Basketball Businesses (not including the NBA Documents
which are addressed in clause (vii) below), including the
material contracts, indentures, instruments, agreements,
purchase orders, leases and licenses listed in Schedule
2.1(b)(v) (the "Assumed Contracts"), true and complete copies
(or, in the case of verbal agreements, written descriptions) of
which have been delivered to Purchaser, but excluding all
Seller Employee Plans and all rights thereto; and
(vi) all rights under all permits, authorizations,
orders, registrations, certificates, variances, approvals,
consents and franchises or any pending applications of Seller
used in, held for use in, intended to be used in, necessary to
or relating to any of the Celtics Basketball Businesses,
including those described in Schedule 2.1(b)(vi) (the
"Permits"), true and complete copies of which have been
delivered to Purchaser;
(vii) all rights under all applicable documents and
agreements with the NBA relating to the Celtics Basketball
Businesses, listed in Schedule 2.1(b)(vii) (the "NBA
Documents"), true and complete copies (or, in the case of
verbal agreements, written descriptions) of which have been
delivered to Purchaser or will be delivered to Purchaser
promptly following the Effective Date;
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(viii) all claims, actions, deposits, prepayments,
refunds, causes of action, chooses in action, rights of
recovery, rights of set off, and rights of recoupment of any
kind or character which have arisen from the operation of the
Celtics Basketball Businesses or relating to any of the Celtics
Basketball Businesses, including those material claims,
actions, deposits, prepayments, refunds, causes of action,
chooses in action, rights of recovery, rights of set off, and
rights of recoupment listed in Schedule 2.1(b)(viii);
(ix) all assignable insurance policies, if any,
including any such insurance policies through the NBA, as
described in Schedule 2.1(b)(ix);
(x) all insurance proceeds and rights thereto derived
from any loss, damage or destruction of or to any of the other
Acquired Assets, but only to the extent not utilized prior to
the Closing to repair or replace the lost, damaged or destroyed
items, as described in Schedule 2.1(b)(x);
(xi) all interests in the operations of all joint
ventures, partnerships and other business entities directly
related to or associated with the operation of the Celtics
Basketball Businesses, as described in Schedule 2.1(b)(xi);
(xii) all goodwill and going concern value associated
with the Celtics Basketball Businesses;
(xiii) all accounts receivable trade or otherwise, notes
and any other amounts receivable, and prepaid expenses of the
Celtics Basketball Businesses, a list of which as of June 30,
2002, is attached hereto as Schedule 2.1(b)(xiii); and
(xiv) all cash, cash equivalents or similar type
investments of Seller, such as certificates of deposit,
Treasury bills and other marketable securities on hand and/or
in banks.
(c) Definition of Excluded Assets. Notwithstanding anything to
the contrary in this Agreement, nothing in this Agreement shall be
construed as conferring on Purchaser, and Purchaser is not acquiring,
any right, title or interest in or to the following specific assets,
which are hereby specifically excluded from the sale and the
definition of Acquired Assets herein (the "Excluded Assets"):
(i) all supplies and items of tangible property
consumed or disposed of in the ordinary course of the Celtics
Basketball Businesses and consistent with prior practice
between the Effective Date and the Closing Date;
(ii) all rights of Seller to enforce the obligations of
Purchaser under or in connection with this Agreement;
(iii) any and all rights necessary to defend against any
and all debts, liabilities and obligations retained by Seller,
including, but not limited to, rights or setoff that Seller
may have with respect to any of such debts, liabilities and
obligations;
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(iv) any and all claims or causes of action against
Third Parties that arise out of or relate to Excluded Assets or
the Excluded Liabilities;
(v) all indemnity, defense or exculpation rights under
any Assumed Contract or NBA Document for occurrences prior to
the Closing Date;
(vi) all management contracts or other similar types of
agreements, or any fee sharing arrangement, between Seller and
one or more of its Affiliates, all of which are listed on
Schedule 2.1(c)(vi);
(vii) Seller's corporate minute books and other corporate
documents and records that are not necessary for the Purchaser
to operate the Celtics Basketball Businesses, and returns of
taxes, including all supporting schedules, attachments, work
papers and similar documents, for taxes accruing on or before
the Closing Date;
(viii) the rights which accrue or will accrue to Seller
under this Agreement, including but not limited to the Cash
Consideration;
(ix) any attorney-client privilege between Seller and
any counsel representing Seller in connection with the
negotiation, preparation, execution and delivery of and closing
under this Agreement and all matters arising from or relating
to this Agreement and the Transaction, and all attorney work
product associated therewith;
(x) those certain assets specified in Schedule
2.1(c)(x);
(xi) all claims for tax refunds relating to pre-Closing
periods;
(xii) all insurance proceeds and rights thereto derived
from any loss, damage or destruction of or to any of the other
Acquired Assets, but only to the extent Seller has incurred
expenses prior to the Closing to repair or replace the lost,
damaged or destroyed items;
(xiii) all rights of Seller in any business other than
the Celtics Basketball Businesses and in any assets other than
the Acquired Assets; and
(xiv) all Seller Employee Plans and all rights
thereunder.
2.2 Assumption of Liabilities.
(a) Subject to the exclusions set forth in Section 2.2(b)
below, at the Closing, Purchaser hereby agrees to assume, pay,
perform, discharge and otherwise satisfy promptly when due, only the
following liabilities and obligations of Seller (the "Assumed
Obligations"):
(i) the liabilities and obligations which arise on or
after the Closing, pursuant to the terms of the Assumed
Contracts, Assumed Leases, NBA Documents, or the Permits;
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(ii) the liabilities and obligations which arise on or
after the Closing as a result of Purchaser's operation of the
Celtics Basketball Businesses or ownership of the Acquired
Assets on and following the Closing Date;
(iii) all accounts payable and accrued expenses and
deferred game revenues and deferred compensation expressly
reflected or reserved against in the Audited Financials or
incurred subsequent to the date of such Audited Financials and
prior to the Closing in the ordinary course of Seller's
business consistent with past practice and otherwise in
conformity with the representations, warranties and covenants
of Seller with respect thereto contained in this Agreement but
excluding all amounts owed to any Affiliate of Seller or any
partner, shareholder or other holder of equity in Seller or any
of its Affiliates; and
(iv) all liabilities for taxes relating to the operation
of the Celtics Basketball Businesses on and after the Closing
Date.
(b) Purchaser shall not assume or be bound by any obligations,
liabilities, Taxes or debts of Seller or any of its Affiliates of any
kind or nature, known, unknown, accrued, absolute, contingent or
otherwise, whether now existing or hereafter arising whatsoever,
including, without limitation, the following (the "Excluded
Liabilities"):
(i) any debts, obligations or liabilities of Seller in
respect of, or otherwise arising from the ownership, operation
or use of any Excluded Asset;
(ii) any debts, obligations or liabilities other than
those expressly included in the listed categories of Assumed
Obligations;
(iii) any debts, obligations or liabilities in connection
with legal, accounting or brokerage services performed for
Seller or any of its Affiliates;
(iv) any debts, obligations or liabilities to past or
present partners or other holders of equity in Seller or any of
its Affiliates;
(v) any debts, obligations or liabilities of Seller or
its Affiliates in respect of Taxes (including any Taxes arising
as a consequence of the Transaction);
(vi) any fines, penalties or costs resulting from any
action taken by a Governmental Authority with respect to the
Acquired Assets or the Celtics Basketball Businesses or any
Permits arising out of events occurring or conditions existing
prior to the Closing, including without limitation, those
arising under or related to (A) any claim under Environmental
Law arising out of the acts or omissions of Seller or any of
its Affiliates or their respective Representatives occurring on
or prior to the Closing, (B) any alleged violation of
Environmental Laws relating to events occurring or conditions
existing on or prior to the Closing, or (C) any illegal acts,
willful misconduct or negligence of Seller or any of its
Affiliates or their respective Representatives;
10
(vii) any debts, obligations or liabilities to Third
Parties (including employees) for personal injury or tort
arising out of the ownership or operation of the Acquired
Assets or the Celtics Basketball Businesses prior to the
Closing, whether or not such liability arose or was made
manifest prior to the Closing;
(viii) subject to Section 7.3, any debts, obligations or
liabilities relating to any Seller Employee Plan;
(ix) subject to Section 7.3, any debts, obligations or
liabilities relating to the employment or termination of
employment, including discrimination, wrongful discharge,
unfair labor practices, the constructive termination by Seller
of any individual or any similar or related claim or cause of
action relating to or in connection with the Acquired Assets or
the Celtics Basketball Businesses, arising or related to the
period prior to the Closing or as a result of the Closing of
the Transaction;
(x) except as provided in Section 7.3, any debts,
obligations or liabilities for wages, withholding obligations,
overtime, employment Taxes, severance pay, retention
obligations, transition payments in respect of compensation or
similar benefits or similar claims or causes of action accruing
or arising at or prior to the Closing or as a result of the
Closing of the Transaction under any term or provision of any
contract, plan, instrument or agreement relating to any of the
Acquired Assets or the Celtics Basketball Businesses;
(xi) any debts, obligations or liabilities of Seller or
any of its Affiliates arising from the making or performance by
Seller of any of its obligations under this Agreement, the
Ancillary Agreements or the Transaction;
(xii) any debt, obligation or liability to any financial
institution or other Third Party for borrowed money, including
the "notes payable to bank" as reflected on the Audited
Financials;
(xiii) any unpaid fees owed to one or more of Seller's
Affiliates under management contracts or other similar types of
agreements or any fee sharing arrangements between Seller and
such Affiliates, whether or not such fees are reflected in the
Audited Financials or have been incurred in the ordinary course
of business since the Balance Sheet Date; and
(xiv) any debt, obligation or liability which is or would
be required to be accrued on a balance sheet as of the Closing
or otherwise disclosed in connection therewith, prepared in
accordance with GAAP, other than those liabilities which are
expressly set forth as Assumed Obligations.
2.3 Purchase Price. Upon the terms and subject to the conditions
set forth in this Agreement, as full payment for the transfer of the
Acquired Assets by Seller to Purchaser, at the Closing (i) Purchaser shall
deliver to Seller in accordance with Section 2.4, the amount of Three
Hundred Sixty Million U.S. Dollars ($360,000,000) less any Seller's Cash in
excess of the
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Reserved Seller's Cash (as adjusted, the "Cash Consideration"), and (ii)
Purchaser shall assume all of the Assumed Obligations pursuant to Section
2.2(a) (the Cash Consideration and such assumption collectively, the
"Purchase Price").
2.4 Payment of Cash Portion of the Purchase Price.
(a) On the Effective Date, as part of the Cash Consideration,
Purchaser shall deposit in trust with Citizens Bank of Massachusetts
or one of its Affiliates (the "Escrow Agent") cash by wire transfer
of immediately available funds in an aggregate amount equal to Five
Million U.S. Dollars ($5,000,000) (the "Escrow Amount"), such amount
to be held in an escrow account (the "Escrow Account") in accordance
with the terms of the escrow agreement in the form attached hereto as
Exhibit A (the "Escrow Agreement"). The Escrow Amount shall be held
by the Escrow Agent and (i) applied to the Cash Consideration
pursuant to Section 2.4(b) if the Transaction is consummated, (ii)
paid to Seller as liquidated damages pursuant to Section 2.5, or
(iii) returned by the Escrow Agent to Purchaser in all other
circumstances.
(b) At the Closing, Purchaser shall instruct the Escrow Agent,
as provided in the Escrow Agreement, to remit the Escrow Amount,
including any interest accrued thereon from the Effective Date to the
date of distribution, and shall deliver cash, by wire transfer of
immediately available funds to a bank account designated in writing
at least two Business Days prior to the Closing by Seller to
Purchaser, the Cash Consideration (which amount shall include the
Escrow Amount and any interest accrued or income earned thereon).
2.5 Liquidated Damages. The Parties hereby agree that it is
impossible to determine accurately the amount of damages that Seller would
suffer if the Transaction is not consummated as contemplated under this
Agreement. As a result, notwithstanding anything in this Agreement to the
contrary, the Parties agree that Purchaser shall be obligated to pay
liquidated damages in the amount of the Damage Amount (as defined below) if
the Agreement is terminated for any reason; provided, however, that
Purchaser shall not be obligated to pay such liquidated damages and shall
be entitled to return of the Escrow Amount if the Agreement is terminated:
(a) By Purchaser pursuant to Section 10.1(d) if the breach
providing the basis for such termination is or is reasonable likely
to have a Material Adverse Effect;
(b) By Purchaser as a result of failure of Seller to satisfy
a condition set forth in Section 8.1(a), (b), (c) or (g);
(c) By Seller pursuant to Section 10.1(f) or the Agreement
expires under Section 10.1(g) under circumstances which involve the
payment of a Termination Fee pursuant to Section 11.1(b); or
(d) as a result of the failure of the parties to obtain the
NBA Approvals (unless the failure is a result of (i) Purchaser's
failure to comply with its obligations under Section 6.6 or (ii) a
determination by the NBA that the Purchaser or any Affiliate of
Purchaser lacks adequate financial capacity or that any Affiliate of
Purchaser (other than the individuals listed in Schedule 2.5) is
deemed to be of unsuitable character).
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Any termination other than in accordance with (a), (b), (c) or (d)
above herein shall be referred to as a "Termination Event." Liquidated
damages as provided herein shall in any event be the sole and exclusive
remedy of Seller against Purchaser by reason on such determination.
Accordingly, if liquidated damages are payable hereunder, the Escrow Agent
shall deliver to Seller, in accordance with the Escrow Agreement, the
Escrow Amount together with interest accrued and income earned thereon
after the date upon which the Closing should have occurred but for the
Termination Event (such amount, the "Damage Amount"). Interest accrued and
income earned on the Escrow Amount prior to such date shall be retained by
Purchaser.
2.6 Transfer Tax. All sales and transfer taxes, fees and duties,
if any, under applicable Law incurred in connection with the sale and
transfer of the Acquired Assets under this Agreement will be borne and paid
by Purchaser. Purchaser shall promptly reimburse Seller for any such tax,
fee or duty that it is required to pay under applicable Laws.
2.7 Further Assurances. Each Party agrees, from time to time after
the Closing, at the request of the other Party, and without further
consideration, to (a) execute and deliver, or cause to be executed and
delivered, further instruments of transfer and assignment and take such
other action as Purchaser may reasonably require to more effectively
transfer and assign to, and vest in, Purchaser each of the Acquired Assets
or to complete the assumption of the Assumed Obligations by Purchaser, and
(b) cooperate with and provide assistance to the other Party in
transferring possession of the Acquired Assets to Purchaser and assumption
of the Assumed Obligations by Purchaser. Effective from and after the
Closing, Seller hereby constitutes and appoints Purchaser and its
successors and assigns as its true and lawful attorney in fact in
connection with the Transaction, with full power of substitution, in the
name and stead of Seller but on behalf of and for the benefit of Purchaser
and its successors and assigns, to demand and receive any and all of the
assets, properties, rights and businesses hereby conveyed, assigned, and
transferred or intended so to be, and to give receipt and releases for and
in respect of the same and any part thereof, and from time to time to
institute and prosecute, in the name of the Seller or otherwise, for the
benefit of Purchaser or its successors and assigns, proceedings at law, in
equity, or otherwise, which is proper in order to collect or reduce to
possession or endorse any of the Acquired Assets and to do all acts and
things in relation to the Acquired Assets that Purchaser or its successors
or assigns reasonably deems desirable.
2.8 Allocation of Purchase Price. The Purchase Price payable by
Purchaser pursuant to Section 2.4 and the amount of the Assumed Obligations
assumed by Purchaser shall represent payment for the Acquired Assets. The
Purchase Price shall be allocated for tax purposes among the assets of the
Company in accordance with the mutual agreement of the parties to be
reached prior to the due date for filing any tax returns for which such
allocation is relevant (the "Allocation"). Purchaser shall propose an
allocation within sixty (60) days after the Closing and shall provide
Seller a written copy of the Allocation. Seller shall have thirty (30)
days to provide written comments or recommendations with respect thereto
and Purchaser shall consider in good faith all such comments and
recommendations. The Parties agree to cooperate to resolve any disputes
regarding such Allocation prior to the due date for filing any tax returns
for which such allocation is relevant. Such Allocation shall be made in
accordance with the provisions of Section 1056 and 1060 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), and
equivalent provisions under applicable state law, which shall be binding
upon
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Purchaser and Seller for all purposes (including financial accounting
purposes, financial and regulatory reporting purposes and tax purposes).
Purchaser and Seller also each agree to file IRS Form 8594 consistent with
the foregoing and in accordance with Section 1056 and 1060 of the Code.
2.9 Procedures for Assets not Transferable. To the extent that any
Acquired Asset or Assumed Obligation to be sold, conveyed, assigned,
transferred, delivered or assumed to or by Purchaser pursuant to this
Agreement, or any claim, right, or benefit arising thereunder or resulting
therefrom, is not capable of being sold, conveyed, assigned, transferred or
delivered without the approval, consent, or waiver of the issuer thereof or
the other party thereto, or any Third Person (including a Governmental
Authority), or if such sale, conveyance, assignment, transfer or delivery
or attempted sale, conveyance, assignment, transfer or delivery would
constitute a breach or termination right thereof or a violation of any Law,
except as expressly otherwise provided in this Agreement, this Agreement
shall not constitute a sale, conveyance, assignment, transfer or delivery
thereof, or an attempted sale, conveyance, assignment, transfer or delivery
thereof absent such approvals, consents or waivers. If any such approval,
consent or waiver shall not be obtained, or if an attempted assignment of
any such Acquired Asset or the assumption of any Assumed Obligation by
Purchaser would be ineffective so that Purchaser would not in fact receive
all such Acquired Assets or assume all such Assumed Obligations pursuant to
this Agreement, Seller and Purchaser shall cooperate in a mutually
agreeable arrangement under which Purchaser would obtain the benefits and
assume the obligations of such Acquired Assets and Assumed Obligations in
accordance with this Agreement, including subcontracting, sub-licensing, or
sub-leasing to Purchaser or under which Seller, at Purchaser's expense,
would enforce for the benefit of Purchaser, any and all rights of Seller
against a Third Party thereto.
SECTION 3. THE CLOSING.
3.1 Closing Date and Place. Unless this Agreement is earlier
terminated pursuant to Section 10, the sale, assignment, conveyance,
transfer and delivery of the Acquired Assets to Purchaser or its Affiliate,
the payment of the Cash Consideration to Seller, and the consummation of
the other respective obligations of the Parties contemplated by this
Agreement shall take place at a closing (the "Closing") (except for
obligations specifically contemplated hereby to be completed after the
Closing), to be held at the offices of Xxxxxxx Procter LLP, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. local time, or another
mutually acceptable time and location, on November 30, 2002. The date on
which the Closing occurs is hereinafter referred to as the "Closing Date".
The Closing shall be effective for all purposes as of noon on the Closing
Date, or such other time on such date as the Parties mutually agree.
3.2 Extension of the Closing Date. Purchaser shall have the right,
in its sole discretion and for any reason, to extend the Closing Date to a
date not later than December 31, 2002; provided, that prior to November 30,
2002, Purchaser shall provide (i) written notice to Seller, and (ii) shall
deposit an additional Two Million Five-Hundred Thousand U.S. Dollars
($2,500,000) cash by wire transfer of immediately available funds (the
"Additional Escrow Amount") to the Escrow Account, such amount to be held
in the Escrow Account, in accordance with the terms of the Escrow
Agreement. The Additional Escrow Amount shall be held by the Escrow Agent
and (i) applied to the Cash Consideration pursuant to Section 2.4(b) if the
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Transaction is consummated, (ii) paid to Seller as liquidated damages
pursuant to Section 2.5, or (iii) returned by the Escrow Agent to Purchaser
in all other circumstances. In the event that as of December 31, 2002,
either (i) the third-party consents and approvals that are a condition to
the obligations of Purchaser pursuant to Section 8.1 have not been
obtained, or (ii) Seller has otherwise not satisfied one or more conditions
to the obligations of Purchaser set forth in Section 8.1 (unless the
failure to satisfy such obligation by such date shall be due to the action
or failure of Purchaser), then by written notice to Seller, Purchaser shall
have the right, in its sole discretion, to further extend the Closing Date
to a date not later than January 31, 2003.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER. As a material
inducement to Purchaser to enter into this Agreement and consummate the
Transaction, subject to such exceptions as are specifically disclosed in
the Schedules to this Agreement, Seller hereby represents and warrants to
Purchaser that the statements contained in this Section 4 are true and
correct as of Effective Date and will be true and correct as of the Closing
Date (as though made at the Closing ); provided that the representations
and warranties made as of a specified date will be true and correct as of
such date.
4.1 Organization, Qualification, And Limited Partnership Power.
Seller is a limited partnership duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Seller is duly
authorized to conduct business and is in good standing under the laws of
each other jurisdiction where such qualification is required and in which
the failure to so qualify is reasonably likely to have a Material Adverse
Effect. Seller has full limited partnership power and authority to carry
on the businesses in which it is engaged and to own and use the properties
owned and used by it.
4.2 Authorization. Seller has full power and authority to execute
and deliver this Agreement and all agreements and instruments delivered
pursuant hereto (the "Ancillary Agreements") and, subject to receipt of
requisite approval from its partners to consummate the Transaction and to
perform its respective obligations hereunder and thereunder and no other
proceedings on the part of Seller or any of its Affiliates are necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which Seller is a party. This Agreement and the
Ancillary Agreements to which Seller is a party and the Transaction have
been approved by Seller's general partners and the requisite vote of its
limited partner. This Agreement and the Ancillary Agreements to which
Seller is a party constitute the valid and legally binding obligations of
Seller, enforceable against Seller in accordance with their respective
terms and conditions, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles.
4.3 No Conflicts. Except as set forth on Schedule 4.3, neither the
execution and the delivery of this Agreement by Seller nor the consummation
of the Transaction will (a) violate any Law to which Seller is subject, (b)
violate or conflict with any provision of the certificate of limited
partnership or limited partnership agreement of Seller, or (c) conflict
with, result in a material breach of, constitute a material default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice or consent under, any
Assumed Contract, NBA Documents, Assumed Lease, Permit or other arrangement
to which Seller or any of its Affiliates are a party relating to the
Celtics Basketball Businesses or by which
15
Seller is bound or to which any of its assets are subject (or result in the
imposition of any Lien upon any of the Acquired Assets or otherwise
interfere in any material respect with the transfer of such Acquired Assets
to Purchaser in accordance with this Agreement). Seller has not granted,
and there is not outstanding, any option, right, agreement or other
obligation pursuant to which any Person could claim a right to acquire in
any way all or part of, or any interest in, any of the Celtics Basketball
Businesses or the Acquired Assets, other than any which might arise in the
ordinary course of the business as a result of a sale or agreement to sell
the Celtics Basketball Businesses' products or services.
4.4 Consents. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Authority
or any Third Party, including a party to any agreement with Seller or any
of its Affiliates, is required by or with respect to Seller or any of its
Affiliates in connection with the execution and delivery of this Agreement,
any Ancillary Agreement or the consummation of the Transaction, except for
(a) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as are required under applicable
rules and regulations of the NBA ("NBA Approvals"), which are set forth in
Schedule 4.4(a), and (b) those consents, waivers, approvals, orders,
authorizations, registrations, declarations, and filings set forth on
Schedule 4.3.
4.5 Financial Statements.
(a) Seller has delivered to Purchaser the consolidated balance
sheet of Seller and its subsidiaries, if any, as of June 30, 2000,
2001, and 2002, and the related consolidated statements of income and
cash flows for the years then ended, including the footnotes thereto,
audited by Ernst & Young LLP, Seller's independent certified public
accountants, which fairly present the consolidated financial position
of Seller as at such dates and the consolidated results of operations
and cash flows of Seller for such respective periods, in each case,
in accordance with GAAP consistently applied for the periods covered
thereby (the "Audited Financials"). The consolidated balance sheet
included in the Audited Financials is sometimes herein called the
"Balance Sheet".
4.6 Undisclosed Liabilities. Except as set forth on Schedule 4.6,
Seller has no liability, indebtedness, obligation, expense, claim,
deficiency, guaranty or endorsement of any type (whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due,
including any liability for Taxes) relating to the Celtics Basketball
Businesses or the Acquired Assets, except for those which individually, or
in the aggregate, (a) are reflected on the Balance Sheet or (b) have
arisen since June 30, 2002 (the "Balance Sheet Date") in the ordinary
course of business consistent with past practice, provided, however, that
Seller shall not be required to list on Schedule 4.6 any liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement that has arisen since the Balance Sheet Date not in the
ordinary course of business, but that is not material to the Celtics
Basketball Businesses or Acquired Assets.
4.7 Events Subsequent To Most Recent Fiscal Period End. Except as
set forth in Schedule 4.7, since the Balance Sheet Date, there have not
been any events, occurrences, changes or effects, which, individually or in
the aggregate, have had or are reasonably likely to have a Material Adverse
Effect. Without limiting the generality of the foregoing, since that date:
16
(a) Seller has not sold, leased, transferred, or assigned any
assets or properties, tangible or intangible, material to the Celtics
Basketball Businesses, other than transactions in the ordinary course
of business;
(b) Seller has not entered into, assumed or become bound
under or obligated by any agreement, contract, lease or commitment,
or extended or modified the terms of any Assumed Contract, Assumed
Lease or NBA Document which and which (i) involves the payment of
greater than $50,000 per annum and which extends for more than one
(1) year, (ii) involves any payment or obligation to any Affiliate
other than in the ordinary course of business, (iii) involves the
sale of any asset with a sale price of more than $50,000, or (iv)
involves any license of any Seller Intellectual Property;
(c) no party (including Seller) has accelerated, terminated,
made modifications to, or canceled any agreement, contract, lease, or
license that, individually or in the aggregate, is material to the
Celtics Basketball Businesses or the Acquired Assets and Seller has
not modified, canceled or waived or settled any debts or claims held
by them, outside the ordinary course of business, or waived or
settled any rights or claims of a substantial value, whether or not
in the ordinary course of business;
(d) none of the Acquired Assets has become subject to any
Lien except for Permitted Liens;
(e) Seller has not made any capital expenditures relating to
any of the Celtics Basketball Businesses or the Acquired Assets
except in the ordinary course of business and not exceeding $50,000
in the aggregate of all such capital expenditures;
(f) Seller has not granted any license or sublicense of any
rights under or with respect to any of the Acquired Assets;
(g) Seller has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to any of the Acquired
Assets or any other property relating to the Celtics Basketball
Businesses in excess of $50,000 in the aggregate of all such damage,
destruction and losses;
(h) Seller has not entered into any employment contract which
is not terminable at will without significant penalty or severance
payment or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement which
relates to the Celtics Basketball Businesses or their employees;
(i) Seller has not granted any increase in the base
compensation or other benefits (including, without limitation,
severance benefits) of any of the employees of the Celtics Basketball
Businesses, except in the ordinary course of business;
(j) Seller has not suffered any significant adverse change or
any threat of any significant adverse change in its relations with,
or any loss or threat of loss of, any of the major customers,
distributors, partners or suppliers of any of the Celtics Basketball
Businesses;
17
(k) Except as may be required by GAAP, Seller has not changed
any of the accounting principles followed by it or the method of
applying such principles with respect to any of the Celtics
Basketball Businesses;
(l) Seller has not entered into any material transaction
relating to any of the Celtics Basketball Businesses or the Acquired
Assets other than in the ordinary course of business; and
(m) Seller has not become obligated to do any of the
foregoing.
4.8 Compliance. Schedule 2.1(b)(vi) lists all licenses, permits,
registrations and approvals necessary for the ownership and operation of
the Celtics Basketball Businesses and the Acquired Assets, all of which are
in full force and effect. Seller (a) is in material compliance with all
applicable (i) Permits and (ii) Laws, and (b) is in compliance with (iii)
the rules and regulations of the NBA relating to or affecting the Celtics
Basketball Businesses or the Acquired Assets; and (iv) terms of the 1999
NBA Collective Bargaining Agreement (the "Collective Bargaining
Agreement"). No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, notice or inquiry is pending, or to Seller's
Knowledge, is threatened against Seller or its employees or agents by any
Governmental Authority or the NBA alleging any failure to so comply.
Neither Seller, nor any of its Affiliates, has received written notice that
any Governmental Authority issuing any Permit intends to cancel, terminate,
modify, or amend any Permit. Except as set forth in Schedule 4.8, since
January 1, 2001, there have been no fines or other penalties imposed by the
NBA against the Boston Celtics or Seller, nor, to Seller's Knowledge, is
there any reason to anticipate any such fines or penalties.
4.9 Tax Matters.
(a) For purposes of this Agreement, (i) "Tax" or,
collectively, "Taxes", means (i) any and all federal, state, local
and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, service, excise and
property taxes, together with all interest, penalties and additions
imposed with respect to such amounts, and (ii) any liability for the
payment of any amounts of the type described in clause (i) as a
result of any express or implied obligation to indemnify any other
Person or as a result of any obligations under any agreements or
arrangements with any other Person with respect to such amounts and
including any liability for taxes of a predecessor entity.
(b) Seller has timely filed with the appropriate Governmental
Authority all information returns or statements, estimates, reports,
claims for refund, returns and other documents that it was required
to file with respect to any Taxes ("Tax Returns") with respect to the
Celtics Basketball Businesses or the Acquired Assets. All such Taxes
owed by Seller (whether or not shown on any Tax Return) with respect
to the Celtics Basketball Businesses or the Acquired Assets were paid
in full when due.
(c) Seller has, with respect to its employees employed in the
Celtics Basketball Businesses, complied in all material respects with
all applicable laws, rules and
18
regulations relating to the payment and withholding of Taxes and
have, within the time and in the manner prescribed by law, withheld
and paid over to the proper Governmental Authorities all material
amounts required to be so withheld and paid over under applicable
laws .
(d) There are no Liens upon any of the Acquired Assets
relating to or attributable to Taxes, except for Permitted Liens. To
Seller's Knowledge there is no basis for the assertion of any claim
relating or attributable to Taxes that, if adversely determined,
would result in any Lien upon any of the Acquired Assets.
(e) None of the Assumed Obligations is an obligation to make
a payment that could fail to be deductible under Section 280G of the
Code.
4.10 Title To Properties; Absence Of Liens And Encumbrances;
Condition Of Equipment.
(a) Seller owns no real property that is or has been used in
or relates or has related to the operation of any of the Celtics
Basketball Businesses. All current real property leases (or other
real property licenses or occupancy agreements of Sellers, all such
being referred to herein as "Leases") are in full force and effect,
are valid and effective in accordance with their respective terms,
and there is not, under any of such Leases, any existing default or
event of default (or event which with notice or lapse of time, or
both, would constitute a default) on the part of Seller and, to
Seller's Knowledge, on the part of any other party thereto.
(b) Except as set forth on Schedule 4.10(b), Seller has good
and valid title to, or, in the case of leased properties and assets,
valid leasehold interests in, all of the tangible properties and
assets, real, personal and mixed, used or held for use in the Celtics
Basketball Businesses, free and clear of any Liens, except (i) liens
for Taxes not yet due and payable, (ii) mechanics', workmens',
landlords' and other statutory liens (or other liens arising by
operation of law) incurred in the ordinary course of business for
amounts not in default, and (iii) such imperfections of title and
encumbrances, if any, which do not detract from the value in any
material respect or interfere with the present use of the property
subject thereto or affected thereby (such exceptions, "Permitted
Liens").
(c) Each item of equipment with a value of $50,000 or more
owned or leased by Seller and used in or held for use in the Celtics
Basketball Businesses is (i) adequate in its current use for the
conduct of the Celtics Basketball Businesses as currently conducted,
and (ii) in good operating condition, subject to normal wear and tear
taking into account the age thereof.
(d) The Acquired Assets constitute all of the assets and
rights used in or reasonably necessary to the operation of the
Celtics Basketball Businesses as currently conducted.
4.11 Sole Ownership and Management. Seller (a) is the sole owner
of the Acquired Assets, (b) has sole management and operating control over
all of the Celtics Basketball Businesses and the Acquired Assets and (c)
subject only to the approval of Seller's partners and the NBA Approvals,
has the sole and exclusive right, power and authority to transfer such
19
Celtics Basketball Businesses and the Acquired Assets to Purchaser in
accordance with the terms of this Agreement.
4.12 Contracts.
(a) Schedule 4.12(a) lists (or provides appropriate cross-
references to Schedules 2.1(b)(i), 2.1(b)(v) and 2.1(b)(vii) with
respect to) all of the material written or oral contracts,
agreements, commitments and other arrangements under which Seller or
any of its Affiliates is obligated or by which Seller or any of its
assets is bound which directly relates to any of the Celtics
Basketball Businesses or the Acquired Assets, including:
(i) each contract, agreement, commitment and other
arrangement which is an Assumed Contract, Assumed Lease, or NBA
Document, and which involves either (A) aggregate annual
payments of more than $50,000, (B) aggregate annual nonmonetary
obligations valued at more than $50,000, or (C) material
nonmonetary obligations or restrictions that are not terminable
by Purchaser after the Closing on less than thirty (30) days
notice without penalty; and
(ii) each contract, agreement, commitment and other
arrangement pursuant to which any Seller has granted any right
or interest in any Acquired Asset.
(b) Seller has made available to Purchaser a correct and
complete copy of each written agreement (as amended to date) listed
in Schedule 4.12(a) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Schedule 4.12(a).
With respect to each such agreement, (i) the agreement, with respect
to Seller and, to Seller's Knowledge, all other parties thereto, is
legal, valid, binding, enforceable, and in full force and effect in
all respects, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or
affecting creditors' rights and to general equity principles; (ii)
neither Seller nor, to Seller's Knowledge, any other party is in
breach or default, and no event has occurred, which with notice or
lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement;
(iii) to Seller's Knowledge, there is no dispute regarding the scope
of such agreement or performance under such agreement; and (iv)
neither Seller nor any of its Affiliates has received notice that any
party has repudiated any provision of the agreement. Except as set
forth on Schedule 4.12(b), following the Closing and subject to
obtaining consents described on Schedule 4.3, Purchaser will be
permitted to exercise all of Seller's rights under the Assumed
Contracts, NBA Documents, Assumed Leases and the Permits to the same
extent Seller would have been able to had the Transaction not
occurred and without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments that
Seller would otherwise be required to pay. Any agreement relating to
the Celtics Basketball Businesses that is between Seller and one of
its Affiliates has material terms that are not materially more or
less favorable to the Celtics Basketball Businesses than terms that
would have been obtained as a result of "arms length" bargaining
between unrelated parties.
20
(c) Schedule 4.12 (c) contains a list of each contract
between any Seller and any Boston Celtics player, coach or trainer.
To Seller's Knowledge, as of the Effective Date there is no player
under contract who does not intend to, or because of physical
condition cannot, perform in accordance with the terms of such
player's contract.
(d) To Seller's Knowledge, no contract between Seller and any
Boston Celtics player breaches any term or condition of the
Collective Bargaining Agreement.
4.13 Power Of Attorney. There are no outstanding powers of
attorney executed on behalf of Seller relating to the Celtics Basketball
Businesses or the Acquired Assets.
4.14 Litigation. Schedule 4.14 sets forth each instance in which
Seller (or any of its assets) (a) is subject to any outstanding injunction,
judgment, judicial or arbitrator's decision order, decree, ruling, or
charge relating to the Celtics Basketball Businesses or the Acquired Assets
or (b) is or has been, or, to Seller's Knowledge, is threatened to be made
a party, to any action, suit, proceeding, hearing, arbitration, appeal or
investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator relating to any of the Celtics Basketball
Businesses or the Acquired Assets that, if determined adversely to Seller,
could reasonably be anticipated to have a Material Adverse Effect. To
Seller's Knowledge, there are no facts or circumstances that would form the
reasonable basis of any claim against Seller or any of its assets relating
to the Celtics Basketball Businesses or the Acquired Assets and that would
reasonably be expected to have a Material Adverse Effect.
4.15 Restrictions On Business Activities. Except as set forth in
Schedule 4.15, there is no agreement (not to compete or otherwise),
commitment, judgment, injunction, order or decree to which Seller or any of
its Affiliates is a party or which is otherwise binding upon Seller or any
of its Affiliates that has the effect of prohibiting or restricting the
operation of the Celtics Basketball Businesses. Without limiting the
foregoing, Seller has not entered into any agreement under which it is
restricted from operating any of the Celtics Basketball Businesses with
respect to any customers or potential customers or any class of customers,
in any geographic area, or in any segment of the market.
4.16 Employees. As of the Effective Date, no executive, key
employee, or significant group of employees has advised Seller or any of
its Affiliates that he, she or they plan to terminate employment with
Seller during the next twelve (12) months. Seller is not a party to or
bound by any collective bargaining agreement, except for the Collective
Bargaining Agreement, nor has Seller experienced any strike or grievance,
claim of unfair labor practices, or other collective bargaining dispute,
except the strike/lockout between the NBA and the Players' Association
ended prior to the 1999-2000 NBA Season. To Seller's Knowledge, there is
no other organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of Seller. No work
stoppage or labor strike involving the Celtics Basketball Businesses is
pending, or, to Seller's Knowledge, threatened or reasonably anticipated
prior to the termination of the Collective Bargaining Agreement. There are
no actions, suits, claims, labor disputes or grievances pending, or, to
Seller's Knowledge, threatened or reasonably anticipated relating to any
labor, employment, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination
21
complaints. Seller has not engaged in any unfair labor practices within
the meaning of the National Labor Relations Act.
4.17 Employee Matters And Benefit Plans.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "ERISA Affiliate" of Seller shall mean any
corporation, partnership, limited liability company, sole
proprietorship, trade, business, organization or other person
or entity that together with Seller, is or ever has been
treated as a single employer under ERISA Section 4001(b) or
part of the same "controlled group" as Seller for purposes of
ERISA Section 302(d)(8)(C);
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iii) "Seller Employee Plan" shall mean any plan,
program, policy, practice, contract, agreement or other
arrangement providing for compensation, severance, termination
pay, deferred compensation, performance awards, stock or other
equity or stock-related or other equity-related awards, fringe
benefits or other employee benefits or remuneration of any
kind, whether written or unwritten or otherwise, funded or
unfunded, including without limitation, each "employee benefit
plan," within the meaning of Section 3(3) of ERISA which is or
ever has been maintained, contributed to, or required to be
contributed to, by Seller or its ERISA Affiliates, or with
respect to which Seller or its ERISA Affiliates has or may have
any liability or obligation, for the benefit of any Employee;
(iv) "DOL" shall mean the United States Department of
Labor;
(v) "Employee" shall mean any current or former or
retired employee, consultant or director of Seller or its ERISA
Affiliates who is employed by or performs services for any of
the Celtics Basketball Businesses;
(vi) "Employment Agreement" shall mean each management,
employment, severance, release, consulting, personal service,
relocation, repatriation, expatriation, visas, work permit or
other agreement, contract or understanding between Seller or
its ERISA Affiliates and any Employee;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
22
(ix) "International Employee Plan" shall mean each
Seller ERISA Employee Plan that has been adopted or maintained
by Seller or any of its Affiliates, whether informally or
formally, or with respect to which Seller or such ERISA
Affiliates will or may have any liability, for the benefit of
Employees who perform services outside the United States;
(x) "Multiemployer Plan" shall mean any "multiemployer
plan," as defined in Section 3(37) or 4001(a)(3) of ERISA or
414(f) of the Code;
(xi) "Title IV Plan" shall mean each Seller Employee
Plan that is an "employee pension benefit plan," within the
meaning of Section 3(2) of ERISA that is covered by Title IV of
ERISA.
(b) Schedule. Schedule 4.17(b) contains an accurate and
complete list of all Seller Employee Plans and all Employment
Agreements. There has been no amendment, interpretation or other
announcement (written or oral) by Seller, any of its ERISA Affiliates
or other Person relating to, or change in participation or coverage
under, any Seller Employee Plan that, either alone or together with
other such items or events, could materially increase the expense of
maintaining such Seller Employee Plan (or Seller Employee Plans taken
as a whole) above the level of expense incurred with respect thereto
for the most recent fiscal year included in the Audited Financials.
Neither Seller nor any ERISA Affiliate has any commitment to
establish, adopt or enter into any additional Seller Employee Plan or
Employment Agreement, or to materially modify any existing Seller
Employee Plan or Employment Agreement.
(c) Documents. Seller has provided to Purchaser correct and
complete copies of: (i) all documents embodying each Seller Employee
Plan and each Employment Agreement including (without limitation) all
amendments thereto and all related trust documents, administrative
service agreements, group annuity contracts, group insurance
contracts, and policies pertaining to fiduciary liability insurance
covering the fiduciaries for each Seller Employee Plan; (ii) the most
recent annual actuarial valuations, if any, prepared for each Seller
Employee Plan; (iii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA or the Code in connection with
each Seller Employee Plan; (iv) if a Seller Employee Plan is funded,
the most recent annual and periodic accounting of such Seller
Employee Plan assets; (v) the most recent summary plan description
together with the summaries of material modifications thereto, if
any, required under ERISA with respect to each Seller Employee Plan;
(vi) all IRS determination, opinion, notification and advisory
letters, and all applications and correspondence to or from the IRS
or the DOL with respect to any such application or letter; (vii) all
written communications material to any Employee or Employees relating
to any Seller Employee Plan and any proposed Seller Employee Plans,
in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of
payments or vesting schedules or other events which would result in
any material liability to Seller; (viii) all correspondence to or
from any Governmental Authority relating to any Seller Employee Plan;
(ix) all COBRA forms and related notices (or such forms and notices
as required under comparable Law); (x) the three (3) most recent plan
years discrimination tests for each Seller Employee Plan; and (xi)
all registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with
each Seller Employee Plan; provided, however, that with respect to
any
23
Multiemployer Plan the Seller shall provide such documents described
in (vi) through (xi) only to the extent previously provided to
Seller.
(d) Employee Plan Compliance. Except as set forth on
Schedule 4.17(d), (i) Seller and its ERISA Affiliates have performed
all obligations required to be performed by them under, are not in
default or violation of, and have no Seller's Knowledge of any
default or violation by any other party to each Seller Employee Plan,
and each Seller Employee Plan has been established, maintained,
operated, administered and funded at all times in accordance with its
terms and in compliance with all applicable Laws, including but not
limited to ERISA and the Code, except to the extent that any
operational error may be corrected in accordance with a program
established by the IRS; (ii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 4975 of the Code or Section
408 of ERISA (or any administrative class exemption issued
thereunder), has occurred with respect to any Seller Employee Plan;
(iii) no Seller, ERISA Affiliate or fiduciary has engaged in any
transaction or acted or failed to act in a manner that violates the
fiduciary requirements of ERISA or any other applicable Law with
respect to any Seller Employee Plan; (iv) there are no actions, suits
or claims pending, or, to Seller's Knowledge, threatened or
reasonably anticipated (other than routine claims for benefits)
against, or with respect to, any Seller Employee Plan (other than a
Multiemployer Plan) or against the assets of any Seller Employee Plan
(other than a Multiemployer Plan); (v) each Seller Employee Plan
(other than any stock option plan) can be amended, terminated or
otherwise discontinued at any time at or after the Closing, without
material liability to Purchaser, Seller or any of their Affiliates
(other than ordinary administration expenses); (vi) there are no
audits, inquiries or proceedings pending or, to the knowledge of
Seller or any of its Affiliates, threatened by the IRS or DOL with
respect to any Seller Employee Plan; and (vii) no Seller or ERISA
Affiliate has incurred, and to Seller's Knowledge there exists no
condition or set of circumstances in connection with which Purchaser,
any Seller or any ERISA Affiliate could incur, directly or
indirectly, any material liability or expense (except for routine
contributions and benefit payments) under ERISA, the Code or any
other applicable Law, or pursuant to any indemnification or similar
agreement, with respect to any Seller Employee Plan, except with
respect to clauses (iii) or (iv).
(e) Qualification. Each Seller Employee Plan (other than a
Multiemployer Plan) that is intended to be qualified under Section
401(a) of the Code is so qualified and its related trust is, and at
all times since inception has been, exempt from taxation under
Section 501(a) of the Code, and to the best of Seller's knowledge,
each Seller Employee Plan that is a Multiemployer Plan that is
intended to be qualified under Section 401(a) of the Code is so
qualified and its related trust is, and at all times since inception
has been, exempt from taxation under Section 501(a) of the Code. Each
such Seller Employee Plan (other than a Multiemployer Plan) either
(i) is the subject of an unrevoked favorable determination letter
from the IRS with respect to such Seller Employee Plan's qualified
status under the Code, or (ii) has remaining a period of time under
the Code or applicable Treasury regulations or IRS pronouncements in
which to apply to the IRS for such a letter and to make any
amendments necessary to obtain such a letter from the IRS. No fact
exists or is reasonably expected by Seller or any of its Affiliates
or ERISA Affiliates to arise, that could adversely affect the
qualification or exemption of any such Seller Employee Plan (other
than a Multiemployer Plan) or its related trust, and, with respect to
24
any Seller Employee Plan that is a Multiemployer Plan, to the
knowledge of the Seller no such fact exists.
(f) Pension Plan. Except for the National Basketball
Association Players' Pension Plan, the NBA GM Pension Plan, and the
National Basketball Association Pension Plan for Coaches, Assistant
Coaches and Trainers, neither Seller nor any of its ERISA Affiliates
has ever maintained, sponsored, participated in or contributed to (or
been obligated to contribute to) any Multiemployer Plan, any multiple
employer plan (within the meaning of Section 4063 or 4064 of ERISA or
Section 413 (c) of the Code), any employee benefit plan, fund,
program or arrangement that is subject to Title IV of ERISA, Section
302 of ERISA or Section 412 of the Code, or any multiple employer
welfare arrangements (as defined under Section 3(40) of ERISA). The
Pension Benefit Guaranty Corporation has not instituted proceedings,
and has not notified Seller or any of its ERISA Affiliates or Title
IV Plan sponsored, maintained or contributed to by Seller or any of
its ERISA Affiliates at any time during the last seven (7) years that
it intends to institute proceedings to terminate such Title IV Plan.
There has been no (nor will there be any as a result of the
Transaction) (i) "reportable event" within the meaning of ERISA
Section 4043 or the regulations thereunder, for which the notice
requirement is not waived by the regulations thereunder, or (ii)
event that may cause Seller or any ERISA Affiliate to incur liability
or have a Lien imposed on its assets under Title IV of ERISA. Seller
and each of its ERISA Affiliates has timely made all contributions
that each of them has been required to make by operation of law or by
contract to each Multiemployer Plan in which any of them participates
(or to which any of them is obligated to contribute). Neither Seller
nor any of its ERISA Affiliates has incurred within the last seven
(7) years a complete or partial withdrawal, within the meaning of
Section 4203 or 4205 of ERISA, from any Multiemployer Plan. There
has been no decline in contributions by Seller or any of its ERISA
Affiliates to any Multiemployer Plan that, if continued, could
reasonably be expected to result in a complete or partial withdrawal,
within the meaning of Section 4203 or 4205 of ERISA, from such
Multiemployer Plan in the future. To Seller's Knowledge, no
Multiemployer Plan in which Seller or any of its ERISA Affiliates
participates (or to which Seller or any of its ERISA Affiliates makes
or is obligated to make contributions) is in reorganization status,
within the meaning of Section 4241 of ERISA, or insolvent, within the
meaning of Section 4245 of ERISA. Neither Seller nor any of its
ERISA Affiliates has been notified by any Multiemployer Plan that
such plan intends to terminate or has been terminated under Section
4041A of ERISA.
(g) No Post-Employment Obligations. Except as set forth in
Schedule 4.17(g), no Seller Employee Plan provides, or reflects or
represents any liability to provide any welfare benefits (within the
meaning of Section 3(1) of ERISA), including without limitation,
health benefits to (or with respect to) any person for any reason,
except as may be required by COBRA or other applicable statute, and
Seller has never represented, promised or contracted (whether in oral
or written form) to any Employee (either individually or to Employees
as a group) or any other person that such Employee(s) or other person
would be provided with any welfare benefits following termination of
employment, except to the extent required by statute. Seller shall
be solely responsible for any such post-employment obligations,
including, without limitation, as may be required by COBRA.
25
(h) Health Care Compliance. Neither Seller nor any of its
ERISA Affiliates has, in any material respect, violated any of the
health care continuation requirements of COBRA, the requirements of
FMLA, the requirements of the Health Insurance Portability and
Accountability Act of 1996, or any amendment to each such act, or any
similar provisions of state law applicable to its Employees.
(i) Effect of Transaction.
(i) Except as set forth on Schedule 4.17(i) or as
required by Section 7.3, the execution of this Agreement and
the consummation of the Transaction will not (either alone or
upon the occurrence of any additional or subsequent events)
constitute an event under any Seller Employee Plan, Employment
Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any
Employee.
(ii) Except as set forth on Schedule 4.17(i), no payment
or benefit that will or may be made by Seller or any of its
Affiliates with respect to any Employee will be characterized
as a "parachute payment," within the meaning of Section
280G(b)(2) of the Code.
(j) Employment Matters. Except as set forth on Schedule
4.17(j), Seller: (i) is in compliance in all material respects with
all applicable foreign, federal, state and local Laws respecting
employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees; (ii)
has withheld and reported all amounts required by Law or by agreement
to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages
or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust or
other fund governed by or maintained by or on behalf of any
Governmental Authority, with respect to unemployment compensation
benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). There are no
pending, threatened or reasonably anticipated claims or actions
against Seller under any worker's compensation policy or long-term
disability policy.
(k) International Employee Plan. Seller does not now, nor
has it ever had the obligation to, maintain, establish, sponsor,
participate in, or contribute to any International Employee Plan.
4.18 Environmental Liabilities. Seller is not aware of any fact or
circumstance relating to the Celtics Basketball Businesses or the Acquired
Assets which could result in any violation of any Environmental Laws that
could reasonably be expected to result in a Material Adverse Effect.
4.19 Fees. Neither Seller nor any of its Affiliates has any
liability or obligation to pay any fees or commissions to any broker or
finder with respect to the Transaction.
26
4.20 Complete Copies Of Materials. Seller has delivered or made
available true and complete copies of each document (or summaries of same)
that has been requested by Purchaser or its counsel.
4.21 Approval. The general partner of Seller has (a) approved this
Agreement, the Ancillary Agreements, and the Transaction, (b) determined
that the Transaction is in the best interests of Seller and is on terms
that are fair to Seller and its partners, and (c) proposed the Transaction
to the limited partner of Seller. The limited partner of Seller has
approved the Transaction in accordance with Section 7.03(b)(ii) of the
Amended and Restated Agreement of Limited Partnership of Celtics
Basketball, L.P. dated as of June 29, 1998. Other than the approvals
described in this Section 4.21, no other approval of the partners of Seller
or any of its Affiliates is required to consummate the Transaction.
4.22 Full Disclosure. No representation or warranty in this
Section 4 or in any Schedule, or in any certificate or other instrument
required to be delivered by Seller under this Agreement, when taken as a
whole, contains any untrue statement of a material fact, or omits to state
a material fact necessary to make the statement herein or therein, in light
of the circumstances in which they were made, not misleading. Seller has
delivered to Purchaser true, correct and complete copies of all documents,
including all amendments, supplements and modifications thereof or waivers
currently in effect thereunder, described in the Schedules to this
Agreement.
4.23 Insurance. Schedule 4.23 set forth a list (specifying the
insurer and describing the aggregate limit, if any, of the insurer's
liability thereunder) of all policies or binders of fire, liability,
worker's compensation, vehicular and other insurance held by or on behalf
of Seller on the Effective Date in connection with the Celtics Basketball
Businesses. Such policies and binders are valid and binding in accordance
with their terms, are in full force and effect, and insure against risks
and liabilities to an extent and in a manner customary in the industries in
which the Seller operates. Except for claims set forth on Schedule 4.23,
there are no outstanding unpaid claims under any such policy or binder that
are not covered by insurance, and Seller has not received any notice of
cancellation or non-renewal of any such policy or binder.
4.24 National Basketball Association. Seller's rights of
membership are valid and in full force and effect and in compliance with
NBA Documents and all applicable rules, regulations, directives and similar
requirements of the NBA. Seller is not subject to any restrictions by the
NBA of a type not imposed on other members generally and on all other NBA
teams generally. To Seller's Knowledge, Seller has not received any notice
of any matter from the NBA or any other Person that could cause its NBA
membership to be adversely affected.
4.25 No Other Representations and Warranties.
(a) Except for the representations and warranties contained
in this Section 4, the parties acknowledge that Seller does not make
any express or implied representation or warranty with respect to
Seller, the Acquired Assets or the Celtics Basketball Businesses or
otherwise or with respect to any other information provided to
Purchaser. Neither Seller nor any other Person will have or be
subject to any liability or indemnification obligation to Purchaser
or
27
any other Person to the extent resulting from the distribution to
Purchaser, or Purchaser's use of, any information related to Seller
or the Celtics Basketball Businesses.
(b) In connection with Purchaser's investigation of the
business of Seller, Purchaser may have received or may receive from
or on behalf of Seller certain projections or forward-looking
statements, including projected statements of operating revenues and
income from operations. Purchaser acknowledges that there are
uncertainties inherent in attempting to make such estimates,
projections and other forecasts and plans, and Purchaser is taking
full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and other forecasts and plans
so furnished to it (including the reasonableness of the assumptions
underlying such estimates, projections and forecasts). Accordingly,
Seller makes no representation or warranty with respect to such
estimates, projections, forward-looking statements and other
forecasts and plans (including the reasonableness of the assumptions
underlying such estimates, projections and other forecasts and
plans).
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a material
inducement to Seller to enter into this Agreement and consummate the
Transaction, Purchaser hereby represents and warrants to Seller that the
statements contained in this Section 5 are true and correct as of Effective
Date and will be true and correct as of the Closing Date (as though made at
the Closing ); provided that the representations and warranties made as of
a specified date will be true and correct as of such date.
5.1 Organization, Qualification, And Limited Liability Company
Power. Purchaser is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
Purchaser is duly authorized to conduct business and is in good standing
under the laws of each other jurisdiction where such qualification is
required and in which the failure to so qualify is reasonably likely to
have a material adverse effect on Purchaser. Purchaser has all requisite
limited liability company power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
5.2 Authorization. Purchaser has full power and authority to
execute and deliver this Agreement and all agreements and instruments
delivered pursuant hereto and to consummate the Transaction and to perform
its respective obligations hereunder and thereunder and no other
proceedings on the part of Purchaser is necessary to authorize the
execution, delivery and performance of this Agreement and the Ancillary
Agreements to which Purchaser is a party. This Agreement and the Ancillary
Agreements to which Purchaser is a party and the Transaction have been
approved by Purchaser's Managing Member. This Agreement and the Ancillary
Agreements to which Purchaser is a party constitute the valid and legally
binding obligations of Purchaser, enforceable against Purchaser in
accordance with their respective terms and conditions.
5.3 No Conflicts. Except as set forth on Schedule 5.3, neither the
execution and the delivery of this Agreement by Purchaser nor the
consummation of the Transaction will (a) violate any Law to which Purchaser
is subject, (b) violate or conflict with any provision of the certificate
of formation or limited liability company agreement of Purchaser, or (c)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice or consent under, any
28
arrangement to which Purchaser is a party or by which it is bound or to
which any of its assets are subject (or result in the imposition of any
Lien upon its assets).
5.4 Consents. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Authority
or any Third Party, including a party to any agreement with Purchaser, is
required by or with respect to Purchaser in connection with the execution
and delivery of this Agreement or the consummation of the Transaction,
except for (a) NBA Approvals, and (b) those consents, waivers, approvals,
orders, authorizations, registrations, declarations, and filings set forth
on Schedule 5.3.
5.5 Fees. Purchaser has no liability or obligation to pay any fees
or commissions to any broker, finder, agent or attorney, with respect to
the Transaction.
5.6 Sufficient Funds. Purchaser affirms that it is not a condition
to Closing or any of its other obligations under this Agreement that
Purchaser obtain financing for, or in relation to, any of the Transactions.
5.7 No Other Representations and Warranties. Except for the
representations and warranties contained in this Section 5, the Parties
acknowledge that Purchaser does not make any express or implied
representation or warranty with respect to Purchaser or otherwise or with
respect to any other information provided to Seller. Neither Purchaser nor
any other Person will have or be subject to any liability or
indemnification obligation to Seller or any other Seller to the extent
resulting from the distribution to Seller, or Seller's use of, any
information related to Purchaser.
SECTION 6. PRE-CLOSING COVENANTS
With respect to the period between the Effective Date and the earlier
of the termination of this Agreement and the Closing, the Parties agree as
follows:
6.1 Operation of the Celtics Basketball Businesses. Seller agrees
to carry on the Celtics Basketball Businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted,
to pay debts and Taxes when due, to pay or perform other obligations when
due, to collect accounts receivable and other amounts due in the ordinary
course consistent with past practices, maintain all existing insurance
coverage, and, to the extent consistent with such businesses, use
commercially reasonable efforts consistent with past practice and policies
to preserve intact the present business organization, preserve the Acquired
Assets, keep available the services of the present officers and key
employees (including, without limitation, players and coaching personnel)
and, except as this Agreement shall otherwise require, preserve its
relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it, all with the goal
of preserving unimpaired its goodwill and ongoing businesses at the
Closing. Seller and Purchaser agree that nothing contained herein shall be
deemed to limit Seller's right to make, pay or declare any dividend or
distribution to its Affiliates or return any capital to any partner on and
after the Effective Date. Seller shall promptly notify Purchaser of any
event, occurrence or emergency not in the ordinary course of its business,
and any material event involving Seller, its Affiliates or the Celtics
Basketball Businesses or which would interfere with Seller's performance of
its obligations under this
29
Agreement. Except (i) as expressly contemplated by this Agreement, (ii) as
may be required by the NBA, or (iii) as may be required by law or any
Governmental Authority, Seller shall not, without the prior written consent
of Purchaser:
(a) Enter into any material commitment, agreement or
transaction not in the ordinary course of business;
(b) Other than in the ordinary course of business, (i) sell
or enter into any material license agreement with respect to Seller's
intellectual property with any Person or (ii) buy or enter into any
material license agreement with respect to the intellectual property
of any Person;
(c) (i) other than in the ordinary course of business, amend
or otherwise modify in any material respect (or agree to do so), or
(ii) violate the terms of, any of the Assumed Contracts, NBA
Documents or Assumed Leases;
(d) Commence any material litigation;
(e) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which relate to and
are material, individually or in the aggregate, to the Celtics
Basketball Businesses;
(f) Sell, lease, license or otherwise dispose of any of (or
any interest in) the Acquired Assets, except in the ordinary course
of business or as specifically contemplated by Section 2.1;
(g) Other than Permitted Liens or purchase money security
interests for office equipment, or similar type assets, or such Liens
as may arise under the Credit Facility, which will be released or
terminated prior to Closing, subject any of the Acquired Assets to
any Lien;
(h) Grant any loans to others or purchase debt securities of
others or amend the terms of any outstanding loan agreement except
for advances to employees for travel and business expenses in the
ordinary course of business, consistent with past practices;
(i) Grant any severance or termination pay to any employee of
the Celtics Basketball Businesses for which Purchaser will be
obligated on or after the Closing;
(j) Adopt or materially amend any Seller Employee Plan or
other employee benefit plan, except as may be required by law or any
Governmental Authority;
(k) Revalue any assets used in, held for use in, intended to
be used in, necessary to or relating to the Celtics Basketball
Businesses, including without limitation writing down the value of
inventory or writing off notes or accounts receivable other than as
may be required by GAAP;
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(l) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of operating liabilities of the type
reflected or reserved against in the Audited Financials (or the notes
thereto) or defer the payment of any liability or obligation of
Seller or the Celtics Basketball Businesses (all of which shall be
paid in the ordinary course of business consistent with past practice
and the forecasts previously provided to Purchaser);
(m) Except for the borrowings which constitute Excluded
Liabilities, incur any indebtedness other than trade payables in the
ordinary course of business consistent with past practices;
(n) Other than in the ordinary course of business, (i) enter
into or materially amend any employment contract (including, without
limitation, any contract with any player, coaching or management
personnel), (ii) pay or agree to pay any special bonus or special
remuneration to any officer or employee for which Purchaser will be
obligated on or after the Closing, (iii) increase the salaries or
wage rates of any employees, (iv) terminate employees or encourage
employees to resign, or (v) otherwise sell, trade or assign any
player contract or any rights to any player (whether or not such
player is currently a party to any contract with the Boston Celtics)
(except such actions that are required to be taken in accordance with
the NBA Documents);
(o) Amend or otherwise modify in any material respect (or
agree to do so) the terms of its relationships with any of its
Affiliates which would impose any obligation on Purchaser;
(p) Accelerate the collection of any accounts receivable or
the terms for payment of any other amounts forecasted to be owed to
Seller in the forecasts previously provided to Purchaser, the
collection of which shall continue to be handled in the ordinary
course consistent with past practice and such forecasts; or
(q) Take, or agree in writing or otherwise to take, any of
the actions described in Sections 6.1 (a) through (p) above, or any
other action that would prevent Seller from performing or cause
Seller not to perform its covenants hereunder.
6.2 Access to Information. Each of Seller and Purchaser will permit
the other Party and its Representatives to have access at all reasonable
times, and in a manner so as not to interfere with its normal business
operations, to its business and operations. Neither such access, inspection
and furnishing of information to any Party and its Representatives, nor any
investigation by any Party and its Representatives, shall in any way
diminish or otherwise affect such Party's right to rely on any
representation or warranty made by the other Parties hereunder.
6.3 Notice of Developments. Each of Seller and Purchaser shall give
prompt notice to the other Party of (a) the occurrence or non-occurrence of
any event, the occurrence or non-occurrence of which is likely to cause any
representation or warranty, of such Party giving notice, contained in this
Agreement to be untrue or inaccurate at or prior to the Closing and (b) any
failure of such Party giving notice to comply with or satisfy any covenant,
condition or
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agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 6.3 shall
not limit or otherwise affect any remedies available to the Party receiving
such notice. No disclosure by Purchaser or Seller pursuant to this Section
6.3, however, shall be deemed to amend or supplement the Schedules to this
Agreement or prevent or cure any misrepresentations, breach of warranty or
breach of covenant without the written consent of the Party receiving such
notice.
6.4 No Solicitation.
(a) Seller shall, and shall cause its Representatives to,
immediately cease and cause to be terminated any such contacts or
negotiations with any Person other than Purchaser relating to any
Acquisition Proposal. Seller shall not (nor shall it permit its
Representatives to) directly or indirectly take any of the following
actions with any Person other than Purchaser and its designees: (i)
solicit, initiate or encourage any proposals or offers from, or
conduct discussions with or engage in negotiations with, any Person
relating to any possible Acquisition Proposal, (ii) provide
information with respect to the Celtics Basketball Businesses or the
Acquired Assets to any Person, other than Purchaser, relating to, or
otherwise cooperate with, facilitate or encourage any effort or
attempt by any such Person with regard to, any possible Acquisition
Proposal, (iii) enter into a contract or agreement (whether oral or
written) with any Person, other than Purchaser, providing for an
Acquisition Proposal, or (iv) make or authorize any statement,
recommendation or solicitation in support of any possible Acquisition
Proposal involving any Person other than by Purchaser; provided,
however, that nothing contained in this Agreement shall prevent
Seller from, prior to the Closing, engaging in any discussions or
negotiations with, or providing any non-public information to, any
Person in response to an unsolicited written bona fide Acquisition
Proposal by any such Person, if and only to the extent that (x) the
Board of Directors of Seller's general partner, after consultation
with independent counsel, determines in good faith that such
Acquisition Proposal would constitute a Superior Proposal (as
hereinafter defined) and that the failure to furnish such
information, or engage in such discussions or negotiations, would
result in a breach by such Board of Directors of its fiduciary duties
under applicable law, and (y) Seller has complied with its
obligations in this Section 6.4(a), including those set forth in the
next sentence. If Seller or any of its Representatives receives,
prior to the Closing or the termination of this Agreement, any
Superior Proposal, Seller shall (a) promptly notify Purchaser thereof
and provide Purchaser with the details thereof including the identity
of the Person or Persons making such offer or proposal, and will keep
Purchaser fully informed of the status and details of any such offer
of proposal, and (b) prior to providing any information or data to
any Person in connection with an Acquisition Proposal by any such
Person, the Board of Directors of Seller's general partner receives
from such Person an executed confidentiality agreement with
provisions no less favorable to such Person than the confidentiality
agreement previously entered into between Purchaser and Seller in
connection with their consideration of the Transaction. Seller and
Purchaser acknowledge that this Section 6.4 was a significant
inducement for Purchaser to enter into this Agreement and the absence
of such provision would have resulted in either a material reduction
in the Purchase Price to be paid to Seller or a failure to induce
Purchaser to enter into this Agreement.
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(b) As used in this Agreement, "Acquisition Proposal" shall
mean a proposal or offer for a merger, consolidation or other
business combination involving an acquisition of the Celtics
Basketball Businesses or any material portion of the Acquired Assets.
(c) For purposes of this Agreement, "Superior Proposal" means
a bona fide Acquisition Proposal made by a Third Party that the Board
of Directors of Seller's general partner determines in its good faith
judgment to be more favorable to Seller and its Affiliates than the
Transaction (based on the written opinion, with only customary
qualifications, of an independent financial advisor that the value of
the consideration to Seller provided in such proposal exceeds the
value of the consideration to Seller provided for in the Transaction)
and for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Board of Directors of
Seller's general partner (based on the written advice of Seller's
independent financial advisor) is reasonably capable of being
obtained by such Third Party.
6.5 Regulatory Filings. As promptly as practicable following the
Effective Date, Seller and Purchaser (a) shall make, or cause to be made,
all filings and submissions under Laws applicable to them, or to their
Affiliates, as may be required for it to consummate the Transaction; (b)
shall use their commercially reasonable efforts to obtain, or cause to be
obtained, all authorizations, consents and waivers from all Persons and
Governmental Authorities necessary to be obtained by them, or any of their
Affiliates, in order for them so to consummate the Transaction; (c) shall
respond to any requests for information or documentation within the time
period set forth in any such request; and (d) shall use their commercially
reasonable efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order for them to fulfill their
respective obligations hereunder. Seller shall use its commercially
reasonable efforts to assist Purchaser in obtaining all consents required
under the Assumed Contracts, Assumed Leases and NBA Documents as a result
of this Agreement and the Transaction.
6.6 NBA Documents and Approvals. Seller shall promptly following
the Effective Date obtain and deliver to Purchaser copies of all NBA
Documents that have not been delivered as of the Effective Time. As
promptly as practicable following the delivery to Purchaser of all such NBA
Documents, Purchaser and Seller shall complete and file any and all
necessary applications required by the NBA to obtain the NBA Approvals in
connection herewith. Purchaser shall directly pay all fees owed to the NBA
relating to any applications filed with the NBA relating to the Transaction
(the "NBA Filing Fees"), or in the event Seller pays any such Filing Fee,
Purchaser shall reimburse Seller in a timely manner.
6.7 Reasonable Efforts. Each of the Parties will use their
commercially reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective
the Transaction (including satisfaction, but not waiver, of the closing
conditions set forth in Section 8 below).
6.8 Notices and Consents. Seller will give any notices to Third
Parties and will use its reasonable best efforts to obtain any Third-Party
consents that are required in connection with the matters identified in
Schedules 4.3 and 4.4(a) or otherwise required in connection with the
Transaction so as to preserve all material rights of or benefits to Seller.
Each of the Parties will give any notices to, make any filings with, and
use its commercially reasonable best efforts to
33
obtain any authorizations, consents, and approvals of Governments
Authorities in connection with the matters identified in Schedules 4.3 and
4.4(a) or as otherwise required in connection with the Transaction.
6.9 Compliance with Contracts and Applicable Law. From the
Effective Date through the Closing Date, Seller shall comply in all
material respects with all conditions and requirements set forth in (a) all
applicable NBA Documents, Assumed Contracts, Assumed Leases, and Permits,
(b) its organization documents, (c) applicable Law, and (d) this Agreement
and the Ancillary Agreements, except, in the case of clauses (a) and (c),
as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.10 Affiliate Contracts. If any Affiliate of Seller holds rights
or other interests in any Assumed Contract, Assumed Lease, NBA Document,
Permit or other agreement that is related to the operation of the Celtics
Basketball Businesses, Seller shall cause such Affiliate to transfer and
assign such rights and interests to Seller prior to the Closing.
6.11 Public Statements. The Parties shall consult with each other
prior to issuing any public announcement, statement or other disclosure
with respect to this Agreement, the Ancillary Agreements or the Transaction
and shall not issue any such press release or make any such public
announcement or other disclosure prior to such consultation and agreement,
except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or
make such public announcement or other disclosure shall use its reasonable
best efforts to consult in good faith with the other party before issuing
any such press release or making any such public announcement or
disclosure.
SECTION 7. OTHER AGREEMENTS AND COVENANTS.
7.1 Confidentiality. Each of the Parties hereby agrees to keep
such information or knowledge obtained in any due diligence or other
investigation pursuant to the negotiation and execution of this Agreement
or the effectuation of the Transaction, confidential; provided, however,
that the foregoing shall not apply to information or knowledge which (a) a
Party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other Party, (b) is generally known to the public
and did not become so known through any violation of law, (c) became known
to the public through no fault of such Party, (d) is later lawfully
acquired by such Party from other sources, (e) is required to be disclosed
by order of court or Government Authority with subpoena powers or (f) which
is disclosed in the course of any litigation between the Parties. This
provision supercedes and replaces any and all prior confidentiality
agreements between the Parties, or between or among any of them or their
Affiliates.
7.2 Additional Documents and Further Assurances. Each Party, at
the request of the other Party, shall execute and deliver such other
instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
Transaction. Seller commits to pay, in the ordinary course of business, all
debts, trade payables, taxes, and employee and other expenses related to
the Celtics Basketball Businesses for all periods prior to the Closing
Date.
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7.3 Retained Employees; Benefits.
(a) Retained Employees.
(i) Purchaser and Seller shall use their commercially
reasonable best efforts to cause each of the persons employed
by Seller in relation to any of the Celtics Basketball
Businesses on the Closing Date and whose employment is not
governed by the Collective Bargaining Agreement all of whom are
listed on Schedule 7.3 (such listed employees, the "Scheduled
Employees") to (A) in the case of each Scheduled Employee who
is a party to an Employment Agreement with Seller, to agree to
have his or her Employment Agreement assumed by Purchaser and
to further agree that such Employment Agreement shall not be
deemed to have terminated as a result of the Transaction, and
(B) in the case of each Scheduled Employee who is an at-will
employee, to agree to become an at-will employee of the
Purchaser on terms that are substantially similar in the
aggregate as those in effect for each such employee prior to
Closing. Purchaser agrees to hire each of the Scheduled
Employees on terms consistent with (i)(A) and (i)(B) above.
Each such Scheduled Employee who so becomes an employee of
Purchaser shall be referred to hereafter as a "Retained
Employee." Retained Employees shall be eligible to participate
in Purchaser 's benefit programs to the extent consistent with
Purchaser's standard human resource policies in effect from
time to time. Purchaser will grant full credit under such
programs for prior service with the Seller for purposes of
eligibility and vesting; provided, however, (A) Purchaser
receives adequate records from Seller reflecting Retained
Employees' service; and, (B) such service crediting shall be
consistent with Purchaser's policies, the applicable plan or
program, and the providers and carriers of each such program
agree to credit such service upon request of Purchaser; and (C)
no such service crediting for any purpose shall result in
duplicate benefits or funding. With respect to the calendar
year during which the Closing Date occurs, Buyer will (A) waive
all limitations as to preexisting conditions exclusions and
credit service with the Seller for any waiting periods with
respect to participation and coverage requirements applicable
to the Retained Employees under any medical, dental, vision,
prescription drug, and life insurance benefit plans that such
employees may be eligible to participate in after the Closing
Date, other than limitations or waiting periods that are
already in effect with respect to such employees and that have
not been satisfied as of the Closing Date under any welfare
plan maintained for the Retained Employees immediately prior to
the Closing Date, and (B) provide each Retained Employee with
credit for any co-payments and deductibles paid with respect to
the current plan year prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to
participate in after the Closing Date.
(ii) All Employment Agreements and all written contracts
between Seller and each Boston Celtics player or governing
Seller's employment of each Boston Celtics player shall be
included in the Assumed Contracts; provided,
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however, that any Employment Agreement to be assigned in
accordance with this Section 7.3(a), as to which requisite
consents have not been delivered, shall be excluded from the
Assumed Contracts.
(b) Cooperation. Purchaser and Seller shall cooperate both
before and after the Closing Date in exchanging information including
pertinent employment records, benefit information, salary and
compensation records, and other data and in taking other action
respecting the transfer of employees. Promptly following the
Effective Date, Seller shall work with Purchaser to determine an
orderly and effective transition of benefit arrangements for all
employees of Seller who shall become employees of Purchaser.
(c) Multiemployer Plans. With respect to each Multiemployer
Plan contributed to by Seller, the Purchaser shall have an obligation
to continue contributions to such Plan in accordance with the
applicable Collective Bargaining Agreement. For a period of five (5)
plan years commencing with the first plan year beginning after the
Closing Date, the Purchaser shall provide to each Multiemployer Plan
a bond issued by a corporate surety company that is an acceptable
surety for purposes of section 412 of ERISA, or an amount held in
escrow by a bank or similar financial institution satisfactory to
such Plan, in an amount equal to the greater of (i) the average
annual contribution required to be made by the Seller with respect to
the operations under the Plan for the three (3) plan years preceding
the plan year in which the Closing Date occurs, or (ii) the annual
contribution that the Seller was required to make with respect to the
operations under the Plan for the last plan year before the plan year
in which the Closing Date occurs, which bond or escrow shall be paid
to the Plan if the Purchaser withdraws from the Plan, or fails to
make a contribution to the Plan when due, at any time during the
first five (5) plan years beginning after the Closing Date.
Notwithstanding the foregoing, such bond or escrow requirement shall
not apply with respect to a Multiemployer Plan if Purchaser obtains a
waiver of such requirement from such Multiemployer Plan. In the
event Purchaser decides to apply for such a waiver, Seller shall
provide to Purchaser such information as is reasonably requested by
Purchaser and shall otherwise reasonably cooperate with Purchaser in
connection therewith. If the Purchaser withdraws in a complete
withdrawal, or a partial withdrawal with respect to operations,
during such first five (5) plan years, the Seller is secondarily
liable for any withdrawal liability it would have had to the Plan
with respect to the operations (but for section 4204 of ERISA) if the
liability of the Purchaser with respect to the Plan is not paid.
(d) COBRA and Disability. Seller will remain responsible for
all benefits payable to employees or former employees of Seller or
any ERISA Affiliate who, as of the close of business on the day
immediately preceding the Closing Date, were determined to be
disabled in accordance with the applicable provisions of Seller's
short-term or long-term disability program or who were receiving
workers' compensation on such date. Seller shall be responsible for
providing any employee or former employee of Seller whose "qualifying
event," within the meaning of Section 4980B(f)(3) of the Code, occurs
on or prior to Closing Date, including, without limitation,
qualifying events which occur as a result of the Transaction (and
such employee's "qualified beneficiaries" within the meaning of
Section 4980B(g)(1) of the Code) with continuation of group health
coverage required by Section 4980B of the Code under the terms of the
applicable group health plans maintained by Seller to the extent
required by Law.
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7.4 Reasonable Cooperation of Seller. Seller shall cooperate with
Purchaser to the extent reasonable with Purchaser 's efforts to obtain any
required approvals or consents from the NBA; provided, however, that this
Section 7.4 shall not obligate Seller to incur any additional expense or
liability.
7.5 Boston Celtics Name. Except as set forth on Schedule 7.5,
immediately on and after the Closing, Seller and its Affiliates shall cease
to use the Boston Celtics Name for any purpose or in any manner whatsoever.
On the Closing Date, Seller shall execute and deliver to the appropriate
Governmental Authorities, or other appropriate Persons, certificates or
other instruments or documents as Purchaser may reasonably request in order
to change the names of Seller and those Affiliates of Seller whose name
incorporates the Boston Celtics Name.
7.6 Books and Records. Seller shall deliver to Purchaser at the
Closing all of Seller's business records, books and other data relating to
the assets, business and operations of the Celtics Basketball Businesses,
to the extent the same constitute part of the Acquired Assets. If Seller
is unable to deliver all of its records, books and data, Seller shall
retain that portion of the records, books and data not so delivered, and
make provision for such delivery in a reasonable manner following the
Closing. For a period of five (5) years following the Closing Date, no
Party shall destroy any business records, books or data in its possession
without first giving notice to the other Party of its intention to destroy
such records, books or data. Each Party shall afford the other reasonable
access to such records, books and data upon request.
7.7 Transition Arrangements. Seller will provide to Purchaser for
a period following the Closing Date (the "Transition Period") any
transitional assistance with respect to the Celtics Basketball Businesses
as may be reasonably required by Purchaser and agreed to by Seller ("Seller
Services"), and Purchaser will provide to Seller for the Transition Period
any transitional assistance with respect to the Excluded Assets and
Seller's operations as may be reasonably required by Seller and agreed to
by Purchaser ("Purchaser Services").
SECTION 8. CONDITIONS.
8.1 Conditions to the Obligations of Purchaser. The obligation of
Purchaser to consummate this Agreement and the Transaction shall be subject
to the fulfillment by Seller to Purchaser's reasonable satisfaction or
waiver (only in writing signed by Purchaser), prior to or at the Closing,
of the following conditions:
(a) Representations; Warranties; Covenants. (i) There shall
exist no breach of the representations and warranties of Seller
contained in Section 4 which individually or in the aggregate results
in a Material Adverse Effect; and (ii) Seller shall, on or before the
Closing, have performed in all material respects, all of its
obligations hereunder which by the terms hereof are to be performed
on or before the Closing.
(b) No Actions. There shall not be in effect any injunction,
judgment, order, decree, ruling or charge that prohibits
consummation of any of the transactions contemplated by this
Agreement.
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(c) No Material Change. There shall have been no occurrence,
event or change after the Effective Date which has or is reasonably
likely to have a Material Adverse Effect.
(d) Officer's Certificate. Seller shall have delivered to
Purchaser a certificate of an officer of the general partner of the
Seller dated as of the Closing Date to the effect that the statements
set forth in paragraph (a) and (b) above in this Section 8.1 are true
and correct.
(e) Instruments of Transfer. Seller shall have delivered to
Purchaser good and sufficient instruments of transfer transferring to
Purchaser all of Seller's right, title and interest in the Acquired
Assets, including, without limitation, a general xxxx of sale and
assignment and assumption agreements, sufficient to convey to
Purchaser good title to the Acquired Assets and to effect Purchaser's
assumption of the Assumed Obligations, and such instruments of
transfer (i) shall be in the form which is usual and customary for
transferring the type of property involved under the Laws of the
jurisdiction applicable to such transfers, (ii) shall effectively
vest in Purchaser good title to all of Seller's right, title and
interest in the Acquired Assets free and clear of all Liens, except
for Permitted Liens, and to effect Purchaser's assumption of the
Assumed Obligations, and (iii) where applicable, shall be accompanied
by evidence of the discharge of all Liens against the Acquired
Assets.
(f) Opinion of Counsel. On the Closing Date, Purchaser shall
have received from Xxxxxxxx Xxxxxxx & Xxxxxx LLP, counsel for Seller,
an opinion as of said date, in form and substance reasonably
satisfactory to Purchaser and its counsel.
(g) Consents. Except with respect to those authorizations,
waivers and consents the failure of which to obtain would not,
individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect, Seller shall deliver all
authorizations, waivers and consents required by such Assumed
Contracts, Assumed Leases and NBA Documents to effect the transfer of
such Assumed Contracts, Assumed Leases and rights under the NBA
Documents to Purchaser, in form and substance reasonably satisfactory
to Purchaser, and no such authorizations, waivers and consents shall
impose any unduly burdensome conditions or requirements on Purchaser.
(h) Organizational Documents. Seller shall have executed and
delivered each of the following:
(i) a copy, certified by the general partner of Seller,
of resolutions authorizing the execution and delivery of this
Agreement and instruments attached hereto as exhibits hereto
and thereto, and the consummation of this Transaction;
(ii) a certificate of the general partner of Seller
certifying the certificate of limited partnership and limited
partnership agreement of Seller and the authority of the
officers of Seller executing this Agreement; and
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(iii) such other instruments of sale, transfer,
conveyance, assignment or assumption as Purchaser may
reasonably request in connection with the Transaction.
(i) NBA Approvals. Purchaser and Seller shall have received
any and all required NBA Approvals on customary terms and conditions.
8.2 Conditions to Obligations of Seller. The obligation of Seller
to consummate this Agreement and the Transaction shall be subject to the
fulfillment by Purchaser to Seller's reasonable satisfaction or waiver
(only in a writing signed by Seller), prior to or at the Closing, of the
following conditions:
(a) Representations; Warranties; Covenants. (i) There shall
exist no breach of the representations and warranties of Purchaser
contained in Section 5 which individually or in the aggregate results
in a material adverse effect on Purchaser's ability to consummate the
Transaction; and (ii) Purchaser shall, on or before the Closing, have
performed in all material respect, all of its obligations hereunder
which by the terms hereof are to be performed on or before the
Closing.
(b) No Actions. There shall not be in effect any injunction,
judgment, order, decree, ruling or charge that prohibits
consummation of any of the transactions contemplated by this
Agreement.
(c) Officer's Certificate. Purchaser shall have delivered to
Seller a certificate of its Managing Member dated as of the Closing
Date to the effect that the statements set forth in paragraph (a) and
(b) (inclusive) above in this Section 8.2 are true and correct.
(d) Organizational Documents. Purchaser shall have executed
and delivered:
(i) a copy, certified by its Managing Member, of
resolutions authorizing the execution and delivery of this
Agreement and instruments attached hereto as exhibits hereto
and thereto, and the consummation of this Transaction;
(ii) a certificate of its Managing Member certifying its
certificate of formation and limited liability company
agreement and the authority of its officers executing this
Agreement; and
(iii) such other instruments of sale, transfer,
conveyance, assignment or assumption as Seller may reasonably
request in connection with the Transaction.
(e) NBA Approvals. Purchaser and Seller shall have received
any and all required NBA Approvals on customary terms and conditions.
(f) Purchase Price. (i) Purchaser shall have delivered, and
Seller shall have received, the Cash Consideration, and (ii)
Purchaser shall have assumed all of the Assumed Obligations.
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SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
9.1 Non-Survival of Representations, Warranties and Agreements.
Except as otherwise provided in this Section 9.1, the representations,
warranties and agreements of each party shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of
any other Party, any Person controlling such Party or any of their officers
or directors, whether prior to or after the Effective Date. The
representations, warranties and agreements in this Agreement shall
terminate at Closing or upon the termination of this Agreement pursuant to
Section 10, as the case may be, except that the agreements set forth in
Sections 10.2 and 11.1 shall survive termination indefinitely and Sections
2.4 and 2.5 shall survive until payment thereunder shall have been made.
9.2 Collection of Assets. Subsequent to the Closing, Purchaser
shall have the right and authority to collect all receivables and other
items transferred and assigned to it by Seller hereunder, and Seller agrees
that it will promptly transfer or deliver to Purchaser from time to time,
any cash or other property that Seller may receive with respect to any
receivables of any character or any other item included in the Acquired
Assets.
SECTION 10. TERMINATION OF AGREEMENT.
10.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) in writing by mutual consent of Seller and Purchaser;
(b) by written notice from either Seller or Purchaser to the
other Party if the Transaction shall not have been consummated on or
before November 30, 2002, unless such date is extended by Purchaser
pursuant to Section 3, in which case on or before such date (as
extended, the "Termination Date") (unless the failure to consummate
the Transaction by such date shall be due to the action or failure to
act of the Party seeking to terminate this Agreement);
(c) by written notice from Seller to Purchaser in the event
of a material breach by Purchaser of any of the Purchaser's
covenants, agreements, representations or warranties under this
Agreement which breach shall continue and shall not have been cured
by the earlier of (A) thirty (30) days after receipt by Purchaser of
a notice from Seller of such breach or (B) the Termination Date;
(d) by written notice from Purchaser to Seller in the event
of a material breach by Seller of any of Seller's covenants,
agreements, representations or warranties under this Agreement, which
breach shall continue and shall not have been cured by the earlier of
(A) thirty (30) days after receipt by Seller of a notice from
Purchaser of such breach or (B) the Termination Date;
(e) by written notice from Purchaser to Seller if any event
having a Material Adverse Effect shall have occurred after the
Effective Date; and
(f) by Seller, if the Board of Directors of Seller's general
partner shall have determined to pursue an Acquisition Proposal after
determining, pursuant to Section 6.4(c), that
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such Acquisition Proposal constitutes a Superior Proposal, and Seller
gives Purchaser at least three (3) Business Days prior notice of its
intention to effect such termination pursuant to this subsection (f),
and Seller makes the payment required pursuant to Section 11.1(b).
(g) This Agreement shall automatically terminate at midnight
on the Termination Date.
10.2 Effect of Termination. In the event of termination of this
Agreement pursuant to this Section 10, this Agreement shall become void and
of no further force or effect and there shall be no liability or obligation
on the part of either Party, except for liabilities or obligations under
this Section 10.2, and Section 11.1, which shall survive such termination,
and except that in the event of a termination of this Agreement pursuant to
circumstances in which Purchaser shall be obligated to pay liquidated
damages as provided in Section 2.5, the obligation of Purchaser under
Section 2.5 shall survive until payment thereunder has been made. In the
event of a termination of this Agreement pursuant to Section 10.1(d) which
is based upon a breach which is or is reasonably likely to have a Material
Adverse Effect, Purchaser shall be entitled to recover damages from Seller.
SECTION 11. MISCELLANEOUS.
11.1 Fees and Expenses.
(a) Each of Purchaser and Seller will bear its own expenses in
connection with the negotiation and the consummation of the
Transaction, except as otherwise provided in Section 2.6 and Section
6.6.
(b) If this Agreement is terminated by Seller pursuant to
Section 10.1(f), or if Seller otherwise fails to consummate this
Agreement and the Transaction by the Termination Date solely as a
result of the Board of Directors of Seller's general partner
consideration of a Superior Proposal in accordance with Section 6.4,
then within one (1) Business Day after such termination or failure to
consummate, Seller shall (i) execute a Joint Written Direction (as
defined in the Escrow Agreement) to instruct the Escrow Agent to
release the Escrow Amount to Purchaser, and (ii) pay to Purchaser a
termination fee (the "Termination Fee") equal to Eighteen Million
U.S. Dollars ($18,000,000).
11.2 Governing Law. This Agreement shall be construed under and
governed by the internal Laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
11.3 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have been given if delivered or sent by facsimile transmission, upon
receipt, or if sent by registered or certified mail, upon the sooner of the
date on which receipt is acknowledged or the expiration of three (3) days
after deposit in United States post office facilities properly addressed
with postage prepaid. All notices to a Party will be sent to the addresses
set forth below or to such other address or Person as such Party may
designate by notice to the other Party:
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TO PURCHASER:
LAKE CARNEGIE, LLC
c/o Game Plan LLC
000 Xxxxxxx Xxxxxx
Mail Code: MA DE 10008E
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Procter LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Floor, P.C.
Fax: (000) 000-0000
TO SELLER:
CELTICS BASKETBALL LIMITED PARTNERSHIP
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Any notice given hereunder may be given on behalf of any Party by his
counsel or other authorized representatives.
11.4 Entire Agreement. This Agreement, including the Schedules and
Exhibits referred to herein, and the Ancillary Agreements contain the
entire agreement of the Parties with respect to the Transaction, and
supersede all previous written or oral negotiations, commitments and
writings.
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11.5 Assignability; Binding Effect. This Agreement shall be
assignable by Purchaser to an entity to be formed in which Purchaser or its
affiliates shall hold a general partnership or similar interest provided
that, until Closing, Purchaser agrees to remain jointly and severally
liable for all of its obligations and undertakings pursuant to this
Agreement. This Agreement may not be assigned by Seller without the prior
written consent of Purchaser. This Agreement shall be binding upon and
enforceable by, and shall inure to the benefit of, the Parties and their
respective successors and permitted assigns.
11.6 Execution in Counterparts. For the convenience of the Parties
and to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same document.
11.7 Amendments. This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be
waived, except by a writing duly and validly executed by each Party, or in
the case of a waiver, the Party waiving compliance; provided, however, that
notwithstanding the foregoing, Seller hereby consents to any amendment to
this Agreement that may be necessary to effectuate the assignment
contemplated by the first sentence of Section 11.5. No delay on the part
of any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any Party
of any such right, power or privilege, nor any single or partial exercise
of any such right, power or privilege preclude any further exercise thereof
or the exercise of any other such right, power or privilege.
11.8 Severability of Provisions.
(a) If any provision or any portion of any provision of this
Agreement shall be held invalid or unenforceable, the remaining
portion of such provision and the remaining provisions of this
Agreement shall not be affected thereby.
(b) If the application of any provision or any portion of any
provision of this Agreement to any Person or circumstance shall be
held invalid or unenforceable, the applicable of such provision or
portion of such provision to Persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be
affected thereby.
11.9 Injunctive Relief. The Parties agree that it would be
difficult to measure damages which might result from a breach of this
Agreement by Seller and that money damages alone would be an inadequate
remedy for such a breach. Accordingly, if there is a breach or proposed
breach of any provision of this Agreement by Seller, Purchaser shall be
entitled, in addition to any other remedies which it may have, to an
injunction or other appropriate equitable relief to restrain such breach
without having to show or prove actual damage to Purchaser.
11.10 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Third Party.
11.11 No Joint Venture. Nothing in this Agreement creates or is
intended to create an association, trust, partnership, joint venture or
other entity or similar legal relationship between the Parties, or impose a
trust, partnership, or fiduciary duty, obligation, or liability on or with
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respect to the Parties. Except as expressly provided herein, neither Party
is or shall act as or be the agent or representative of the other Party.
11.12 Good Faith Covenant. The Parties agree that their actions
and dealings with each other shall be subject to an express covenant of
good faith and fair dealing.
[Signature Page Follows]
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IN WITNESS WHEREOF the Parties have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
LAKE CARNEGIE, LLC
By: BOSTON BASKETBALL PARTNERS, LLC, its Managing Member
By: /s/ Xxxxxxxx Xxxxxxxxx
________________________
Name: Xxxxxxxx Xxxxxxxxx
Title: Managing Member
CELTICS BASKETBALL, L.P.
By: BOSTON CELTICS CORPORATION, its General Partner
By: /s/ Xxxx X. Xxxxxx
________________________
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board
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