STOCK PURCHASE AGREEMENT
Dated as of December 11, 1997
among
Each of the Selling Shareholders Signatory Hereto
and
BGP Acquisition, LLC
as the Purchaser
Sale of All of the Capital Stock of
BG Presents, Inc.
by the Selling Shareholders
to BGP Acquisition, LLC
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
December 11, 1997, is entered into by and among each of the shareholders of BG
Presents, Inc., a California corporation (the "COMPANY"), listed on the Selling
Shareholder Schedule attached hereto (each, a "SELLING SHAREHOLDER" and,
collectively, the "SELLING SHAREHOLDERS"), and BGP Acquisition, LLC, a Delaware
limited liability company (the "PURCHASER").
RECITALS
WHEREAS, the Selling Shareholders own, beneficially and of
record, all of the Company's issued and outstanding capital stock, of which
there are, as of the date of this Agreement, Nine Hundred Fifty-Seven Thousand
Eight Hundred Ninety-Four (957,894) shares of common stock (the "COMMON
STOCK") issued and outstanding;
WHEREAS, (i) the Purchaser=s sole member (and the holder of
all of its equity interests) is SFX Entertainment, Inc., a Delaware corporation
("SFX"), and a wholly owned subsidiary of SFX Broadcasting, Inc., a Delaware
corporation ("SFX BROADCASTING"), (ii) SFX Broadcasting intends to contribute
its operations relating to concert promotion and operation of venues to SFX and
(iii) it is contemplated that pursuant to a registration statement to be filed
with the Securities and Exchange Commission (the "REGISTRATION STATEMENT"), all
of the outstanding shares of common stock of SFX will be distributed to certain
holders of interests in SFX Broadcasting, upon the terms and conditions set
forth in the Registration Statement (the "SPINOFF EVENT"); and
WHEREAS, the Selling Shareholders desire to sell to the
Purchaser, and the Purchaser desires to purchase from the Selling Shareholders,
all of the issued and outstanding Common Stock of the Company, upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase and sale
contemplated hereby, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
TERMS OF AGREEMENT
ARTICLE I. DEFINITIONS
Section 1.1 Defined Terms. The following words and phrases
shall have the meanings specified in this ARTICLE I and shall apply to the
singular and plural forms:
Adjustment Statement: Has the meaning set forth in SECTION
2.3(D) hereof.
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Affiliate: With respect to any Person means any other Person
that: (i) directly, or indirectly, controls, is controlled by or is under
common control with, such Person; (ii) directly, or indirectly, beneficially
owns or holds five percent (5%) or more of the voting stock or partnership
interests of such Person; (iii) five percent (5%) or more of the voting stock
or partnership interests of which is directly or indirectly beneficially owned
or held by such Person; or (iv) if an individual, is a member of the household
or family (including siblings, parents, grandparents, children, grandchildren,
aunts, uncles and first or second cousins) of, or is currently or was formerly
married to or shared a household with, a member of the household or family of,
such Person; provided, that, Xxxxxxx X. Xxxxxx, Esq., shall not be deemed to be
an "AFFILIATE" of Fillmore Theatrical Services or the Liquor License Trust.
Affiliate Agreements: Has the meaning set forth in SECTION
3.15(A)(XIV) hereof.
Agreement: Has the meaning set forth in the preamble hereto.
Alternative Transaction: Has the meaning set forth in SECTION
5.6 hereof.
Alternative Transaction Proposal: Has the meaning set forth
in SECTION 5.6 hereof.
Archives: All posters, handbills, tickets, photographs,
slides, videos, audio tapes and other archival material subject to the Archives
Agreement, together with all posters, handbills, tickets, photographs, slides,
videos, audio tapes and other archival materials that have been produced or
obtained by the Company or its Affiliates subsequent to October 24, 1991.
Archives Agreement: Has the meaning set forth in SECTION 8.13
hereof.
Audited Balance Sheet: Has the meaning set forth in SECTION
2.3(D) hereof.
Base Price: Has the meaning set forth in SECTION 2.3(C)(I)
hereof.
Bona Fide Offer: Has the meaning set forth in SECTION 11.2
hereof.
Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in the States of New York or
California are authorized or obligated by law or executive order to be closed.
If the last day permitted for the giving of any notice or the performance of
any act required or permitted under this Agreement falls on a day which is not
a Business Day, the time for the giving of such notice or the performance of
such act will be extended to the next succeeding Business Day.
Cash Consideration: Has the meaning set forth in SECTION
2.3(B) hereof.
Client: Any Person party to or bound by a Contract with the
Company or any of its Affiliates.
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Closing: The closing of the purchase and sale of the Common
Stock hereunder.
Closing Date: Has the meaning set forth in SECTION 2.2
hereof.
Code: The Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
Common Stock: Has the meaning set forth in the recitals
hereto.
Company: Has the meaning set forth in the preamble hereto.
Company Assets: Has the meaning set forth in SECTION 11.1
hereof.
Company Business: The concert, live entertainment and related
businesses of the Company, including, without limitation, the public
assemblage, shoreline amphitheater and talent management business and the film,
video, audio, poster, photograph, still, negative and similar archives.
Company Subsidiaries: Has the meaning set forth in SECTION
3.2 hereof.
Consents: Has the meaning set forth in SECTION 3.4 hereof.
Contingent Obligations of any Person: Any Liabilities of such
Person directly or indirectly guaranteeing any Indebtedness, leases, dividends
or other Liabilities (each a "PRIMARY OBLIGATION") of any other Person (a
"PRIMARY OBLIGOR") in any manner, including, without limitation, any Liability
of the first Person (i) to pay or purchase, or advance or supply funds for the
payment or purchase of, any such primary obligation or any Property
constituting direct or indirect security or collateral therefor, (ii) to
advance or supply funds to keep-well, make-whole or maintain or increase the
net worth, working capital, earnings, solvency or other financial condition or
results of operations of any primary obligor, (iii) to purchase, sell or lease
(as lessor or lessee) Property, securities or services primarily for the
purpose of enabling the primary obligor to pay or perform any such primary
obligation, or of assuring the owner, creditor or obligee of any such primary
obligation of the ability of the primary obligor to pay or perform as and when
due such primary obligation or (iv) otherwise to assure or hold harmless the
owner, creditor or obligee of any such primary obligation against loss in
respect thereof, excluding the endorsement of negotiable instruments in the
ordinary course of business for deposit or collection.
Contracts: All written or oral contracts, agreements,
undertakings, indentures, notes, debentures, bonds, loans, instruments, leases,
mortgages, commitments or other binding arrangements.
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control: The possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Disputed Amount: Has the meaning set forth in SECTION 2.3(D)
hereof.
Effective Date: Means January 1, 1998.
Employment Agreements: Has the meaning set forth in SECTION
5.12 hereof.
Environmental Law: The federal Comprehensive Environmental
Response, Compensation and Liability Act, the federal Water Pollution Control
Act, the Safe Drinking Water Act, the federal Clean Water Act, the federal
Clean Air Act, the federal Resource Conservation and Recovery Act, the
Hazardous Materials Transportation Act, the federal Solid Waste Disposal Act,
the federal Toxic Substances Control Act, federal Insecticide and the Fungicide
and Rodenticide Act, and the Occupational Safety and Health Act, each as
amended, and all other environmental statutes enacted by any Governmental
Entity, and any executive orders, ordinances, rules or regulations promulgated
under any of the foregoing.
Equity Consideration: Has the meaning set forth in SECTION
2.3(C) hereof.
Excess Working Capital: Has the meaning set forth in SECTION
2.3(D) hereof.
Fillmore Theatrical Services: Fillmore Theatrical Services, a
California corporation.
ERISA: The Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
Financial Statements: Collectively, (i) the audited
consolidated balance sheets of the Company as of January 31, 1996 and 1997, and
the related statements of income, retained earnings, shareholders' equity and
cash flows of the Company for the periods then ended, including the related
notes and auditor's report thereon and (ii) the unaudited consolidated balance
sheet of the Company as of the end of the most recent fiscal quarter preceding
the date of this Agreement and the statements of income of the Company for the
period from February 1, 1997 through the end of such fiscal quarter.
GAAP: United States generally accepted accounting principles.
Governmental Entity: Any federal, state, local or foreign
government, political subdivision, legislature, court, agency, department,
bureau, commission or other governmental, quasi-governmental or regulatory
authority, body or instrumentality, including, without limitation, any industry
or other non-governmental self-regulatory organizations.
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Hazardous Material: Any material or substance which is deemed
a "hazardous waste", "hazardous material", "hazardous substance", "solid
waste", "industrial waste", "contaminant", "pollutant", "toxic waste" or "toxic
substance" under any Environmental Law.
Hold-Back: Has the meaning set forth in SECTION 2.3(D) hereof.
Indebtedness of any Person: All (i) Liabilities of such
Person for borrowed money, (ii) Liabilities of such Person evidenced by any
bonds, debentures, notes, acceptances or other similar instruments, (iii)
Liabilities of such Person for the deferred purchase price of any Properties or
services (other than trade accounts payable arising in the ordinary course of
business consistent with industry custom and past practice which are not
overdue more than 45 days), (iv) Liabilities of such Person under letters of
credit, acceptances or other similar facilities and, without duplication, all
drafts drawn thereunder, (v) Liabilities of a third party secured by any Lien
or Encumbrance on any assets or Property owned by such Person, whether or not
assumed by such Person, (vi) Liabilities of such Person under any lease of any
Property which is, or is required in conformity with GAAP, to be accounted for
as a capital lease, (vii) Liabilities of such Person to pay for goods or
services whether or not delivered or accepted (including, without limitation,
conditional sale, title retention, take-or-pay and similar obligations), (viii)
Liabilities of such Person in respect of interest rate or currency rate swap,
cap, collar, hedging, exchange or similar Contracts designed to protect against
fluctuations in interest or currency rates and (ix) Contingent Obligations of
such Person.
Indemnified Party: Has the meaning set forth in SECTION
9.2(D) hereof.
Indemnifying Party: Has the meaning set forth in SECTION 9.2(D) hereof.
Indemnified Tax Party: Has the meaning set forth in SECTION
10.9 hereof.
Indemnifying Tax Party: Has the meaning set forth in SECTION
10.9 hereof.
Indemnity Period: The period of survival of the respective
representations and warranties provided for in SECTION 9.1 hereof.
intangible assets: All write-ups, goodwill, Intellectual
Property, unamortized Liabilities, deferred assets and other intangible assets
and Properties of any kind whatsoever.
Intellectual Property: Has the meaning set forth in SECTION
3.18 hereof.
Interim Financial Statements: Has the meaning set forth in
SECTION 5.7 hereof.
IRS: The United States Internal Revenue Service.
Key Personnel: Means each of the Selling Shareholders.
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Knowledge: (i) With respect to any natural Person, the actual
knowledge of such Person after due inquiry or (ii) with respect to any
corporation, (a) the actual knowledge of the officers of such corporation after
due inquiry, which in the case of the Company shall also include the Selling
Shareholders, and (b) information contained in all written notices addressed to
such corporation or any of the Persons referred to in CLAUSE (II) of this
definition.
Liability: Has the meaning set forth in SECTION 3.9 hereof.
Lien or Encumbrance: Any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right, easement, servitude, transfer
limit, restriction or other encumbrance.
Liquor License Trust: The Liquor License Trust described in
SCHEDULE 3.13 attached hereto.
Long Term Debt: The items listed in CLAUSE (V) of SCHEDULE
3.15 attached hereto and reflected on the October 31, 1997 financial statements
of the Company (as updated through the December 31, 1997).
Loss: Has the meaning set forth in SECTION 9.2(D) hereof.
Material Adverse Effect: Any material adverse effect on (i)
the business, operations, assets, Properties, Liabilities, condition (financial
or otherwise), results of operations, prospective business opportunities, to
the actual Knowledge of the Selling Shareholders or Permits of the Company and
the Company Subsidiaries taken as a whole or (ii) the ability of the Selling
Shareholders to execute and deliver this Agreement, perform their obligations
hereunder, or consummate the transactions contemplated hereby.
Material Adverse Effect on the Purchaser: Any material
adverse effect on (i) the business, operations, assets, Properties,
Liabilities, condition (financial or otherwise), results of operations,
prospective business opportunities, to the actual Knowledge of the Selling
Shareholders or Permits of the Purchaser and its Subsidiaries, taken as a whole
or (ii) the ability of the Purchaser to execute and deliver this Agreement,
perform its obligations hereunder, or consummate the transactions contemplated
hereby.
Material Client: Has the meaning set forth in SECTION 3.26(A)
hereof.
Net Working Capital: As of a certain date, the Company's
cash, short term investments, accounts receivable (including third party costs
in connection with amphitheater developments in Seattle and Sacramento),
inventory, pre-paid expenses (including advances in connection with the Lord of
the Dance production) and other current assets less accounts payable, accrued
liabilities, advance ticket sales and other current liabilities.
Notice of Audit: Has the meaning set forth in SECTION 10.8
hereof.
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Option Agreement. Has the meaning set forth in SECTION
2.3(C)(II) hereof.
Permits: All licenses, certificates of authority, permits,
orders, consents, approvals, registrations, authorizations, qualifications and
filings under any federal, state, local or foreign laws or with any
Governmental Entities.
Person: Any individual, corporation, partnership, limited
liability company, limited liability partnership, firm, joint venture,
association, joint stock company, trust, unincorporated organization,
Governmental Entity or other entity or organization.
Plan: "Any employee benefit plan" (as that term is defined in
Section 3(3) of ERISA), as well as any other formal or informal plan,
arrangement or contract involving direct or indirect compensation, in which any
current or former officers, employees or independent contractors of the Company
has an interest, or to which the Company has any liability or under which the
Company has any present or future obligations or liability on behalf of their
respective current or former officers, employees or independent contractors or
their dependents or beneficiaries, including, but not limited to, each
retirement, pension, profit-sharing, thrift, savings, target benefit, employee
stock ownership, cash or deferred, multiple employer, multiemployer or other
similar plan or program, each other deferred or incentive compensation, bonus,
stock option, employee stock purchase, "phantom stock" or stock appreciation
right plan, each other program providing payment or reimbursement for or of
medical, dental or visual care, psychiatric counseling, or vacation, sick,
disability or severance pay and each other "fringe benefit" plan or
arrangement.
Pre-Closing Taxable Periods: All Taxable Periods ending on or
before the Pre-Effective Date and the portion ending on the Pre-Effective Date
of any Taxable Period that includes but does not end on the Pre-Effective Date.
Pre-Effective Date: Means the day before the Effective Date.
Preliminary Balance Sheet: Has the meaning set forth in
SECTION 2.3(D) hereof.
Prior Bidders: Has the meaning set forth in SECTION 5.6
hereof.
Properties: Real, personal, Intellectual or mixed property,
tangible or intangible, of any Person.
Purchase Price: Has the meaning set forth in SECTION 2.3(A)
hereof.
Purchaser: Has the meaning set forth in the preamble hereto.
Purchaser Representatives: Has the meaning set forth in
SECTION 5.2 hereof.
Registration Statement: Has the meaning set forth in the
recitals hereto.
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Reoffer: Has the meaning set forth in SECTION 11.2 hereof.
Restricted Period: Has the meaning set forth in SECTION 5.14
hereof.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
Selling Shareholder: Has the meaning set forth in the
preamble hereto.
SFX: Has the meaning set forth in the recitals hereto.
SFX Broadcasting: Has the meaning set forth in the recitals
hereto.
SFX Option: Has the meaning set forth in SECTION 2.3(C)(II)
hereof.
SFX Stock: Has the meaning set forth in SECTION 2.3(C)(I)
hereof.
Shareholder Representative: Has the meaning set forth in
SECTION 2.4 hereof.
Spinoff Event: Has the meaning set forth in the recitals
hereto.
Subscription Agreement: Has the meaning set forth in SECTION
2.3 (C)(I) hereof.
Subsidiary: With respect to any Person, any entity controlled
by such Person.
Tax and Taxes: All taxes (including, without limitation, all
income, profits, gains, gross receipts, net worth, premium, value added, ad
valorem, sales, use, excise, stamp, transfer, franchise, withholding, payroll,
employment, occupation, workers' compensation, disability, severance,
unemployment insurance, social security and property taxes), and all duties,
assessments, fees, levies, or similar charges of any kind whatsoever, together
with any interest, penalties, additional amounts and additions thereto,
required under any federal, state, local or foreign law or imposed by any
Governmental Entity, including all amounts imposed as a result of (i) being a
member of an affiliated or combined group, (ii) any tax sharing or allocation
agreement or arrangement, whether or not written, or (iii) being a transferee
of assets or a successor to any corporation, association, partnership, joint
venture or other entity.
Tax Return or Return: All returns, reports, elections,
estimates, declarations, information statements and other forms and documents
(including all schedules, exhibits, and other attachments thereto) relating to
any Taxes and required to be filed in respect of the Company or any of its
Affiliates under any federal, state, local or foreign law or with any
Governmental Entity.
Taxable Period: Any taxable year or any other period that is
treated as a taxable year (including any taxable period ending on the Closing
Date or beginning on the day immediately
8
following the Closing Date) with respect to which any Tax may be imposed under
any applicable statute, rule, or regulation.
Tax Reserve: Has the meaning set forth in SECTION 10.1(B)
hereof.
Third Party Claim: Has the meaning set forth in SECTION
9.2(D) hereof
Transaction Documents: This Agreement, the Employment
Agreements, the Subscription Agreement, the Option Agreement and each other
agreement or instrument entered into pursuant to any of the same.
WARN: The Worker Adjustment and Retraining Notification Act
of 1988, as amended.
ARTICLE II. PURCHASE AND SALE OF COMMON STOCK
Section 2.1 Purchase and Sale of Common Stock. Subject to the
terms, provisions and conditions of this Agreement, each Selling Shareholder
hereby agrees to grant, sell, assign and convey, to have and to hold forever,
to the Purchaser, or to such Person or Persons controlled by the Purchaser as
the Purchaser shall designate on the Closing Date, and the Purchaser agrees to
purchase and accept from each Selling Shareholder on the Closing Date, all
right, title and interest in and to the shares of Common Stock set forth
opposite the name of such Selling Shareholder on the Selling Shareholder
Schedule attached hereto.
Section 2.2 Closing. Subject to the satisfaction or waiver of
the conditions set forth in ARTICLES VII AND VIII hereof, the Closing shall
take place at the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, at 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. New York time on
January 29, 1998 (the "CLOSING DATE") or at such other time or place as may be
mutually agreed upon by a Shareholder Representative and the Purchaser. In the
event that the conditions set forth in ARTICLES VII AND VIII hereof have not
been satisfied or waived by January 29, 1998, (i) the Closing Date shall be
automatically extended for a period of two (2) weeks in order to satisfy such
condition and (ii) the parties hereto may otherwise agree in writing to
reschedule the Closing; provided, that, if a failure by the Purchaser to submit
an H-S-R filing by January 5, 1998, is the sole cause of a delay in the Closing
past January 29, 1998, the Purchaser shall pay interest on the Purchase Price
for each day after January 29, 1998 that the Closing is delayed, solely as a
result of such late filing, at a rate per annum equal to eight percent (8%).
Section 2.3 The Purchaser's Payment.
(a) The Purchase Price. On the Closing Date, the Purchaser
shall pay to the Selling Shareholders an aggregate amount equal to Sixty Eight
Million Two Hundred Fifty Thousand Dollars ($68,250,000) (as adjusted pursuant
to CLAUSE (D) below, the "PURCHASE PRICE"),
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in the manner set forth below in CLAUSES (B) AND (C), as consideration for the
purchase of all outstanding shares of Common Stock. On the Closing Date, each
Selling Shareholder shall deliver to the Purchaser (or to the Company pursuant
to SECTION 8.9 hereof), against payment of the Purchase Price, a certificate or
certificates representing all outstanding shares of Common Stock owned by such
Selling Shareholder, duly endorsed for transfer or accompanied by stock powers
duly executed, in each case in accordance with SECTION 8.9 hereof, together
with all necessary stock transfer stamps affixed thereto, which shall be valid
and effective to convey all right, title and interest in and to such shares of
Common Stock to the Purchaser, free and clear of any and all Liens or
Encumbrances.
(b) Cash Consideration Payable on Closing. On the Closing
Date, the Purchaser shall pay to the Selling Shareholders an aggregate amount
equal to (i) the Purchase Price, less (ii) the aggregate value of the Equity
Consideration paid pursuant to CLAUSE (C) below (the difference obtained from
subtracting the amounts determined pursuant to CLAUSES (II) from CLAUSE (I)
being referred to as the "CASH CONSIDERATION"), in immediately available funds.
(c) Equity Consideration Payable on Closing. On the Closing
Date, the Purchaser, in its sole and absolute discretion, may elect to
distribute to the Selling Stockholders, in lieu of the Cash Consideration:
(i) If the Spinoff Event has occurred as of the
Closing Date, up to an aggregate of Five Hundred Sixty-Two Thousand Six Hundred
Forty (562,640) shares of class A common stock of SFX (the "SFX STOCK") at a
valuation of Thirteen Dollars and Thirty-Three Cents ($13.33) per share of SFX
Stock (the "BASE PRICE") pursuant to a Subscription Agreement, substantially in
the form attached hereto as EXHIBIT A (the "SUBSCRIPTION AGREEMENT"). The
parties hereto agree that the Purchaser may not issue SFX Stock, in lieu of the
Cash Consideration, for an aggregate value in excess of Seven Million Five
Hundred Thousand Dollars ($7,500,000).
(ii) If the Spinoff Event has not occurred as of the
Closing Date, options to purchase up to an aggregate of Five Hundred Sixty-Two
Thousand Six Hundred Forty (562,640) shares of SFX Stock, pursuant to an Option
Agreement, substantially in the form attached hereto as EXHIBIT B (the "OPTION
AGREEMENT"). The parties hereto agree that, (i) for purposes of determining the
Cash Consideration portion of the Purchase Price, the aggregate value
attributable to the SFX Option shall be equivalent to the value attributable to
the shares of SFX Stock underlying such SFX Option based upon the Base Price
and (ii) the Purchaser may not grant SFX Options, in lieu of the Cash
Consideration, for an aggregate value, determined in accordance with CLAUSE (I)
above, in excess of Seven Million Five Hundred Thousand Dollars ($7,500,000).
(iii) As used herein, the issuance of the SFX Stock
or the grant of the SFX Option, as the case may be, shall be referred to as the
"EQUITY CONSIDERATION". In the event that the Purchaser elects to distribute
Equity Consideration to the Selling Shareholders, in lieu of the Cash
Consideration, the Selling Shareholder Schedule shall be amended prior to
Closing to reflect (i) the adjustment to the Cash Consideration required by
such distribution of Equity Consideration pursuant
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to SECTION 2.3(B) hereof and (ii) the allocation of the Cash Consideration and
the Equity Consideration to each Selling Shareholder; provided, that, in the
case of CLAUSE (II) hereof, the Shareholder Representatives shall determine
such allocation, in their sole and absolute discretion.
(d) Adjustments to the Purchase Price. On or before January
25, 1998 or any other mutually agreed upon date, the Selling Shareholders shall
prepare and deliver to the Purchaser (or such other Person as the Purchaser
shall direct in writing) a consolidated balance sheet of the Company (the
"PRELIMINARY BALANCE SHEET") as of the close of business on December 31, 1997,
which Preliminary Balance Sheet shall include, without limitation,
determination of (i) the Company's Long Term Debt and (ii) the Company's Net
Working Capital, in each case, together with analysis at a sufficient level of
detail for the Purchaser to review such determination based upon the format
used in the October 31, 1997 Financial Statements (and the line items set forth
therein). The Purchaser shall have until three (3) Business Days after the
delivery of the Preliminary Balance Sheet to review such statement and propose
any adjustments thereto, including, without limitation, with respect to the
amount of Long Term Debt and Net Working Capital. All adjustments proposed by
the Purchaser shall be set out in detail in a written statement delivered to
the Shareholder Representatives (an "ADJUSTMENT STATEMENT") and any adjustment
which affects the Purchase Price adjustment set forth in CLAUSE (I) OR (II)
below (the "DISPUTED AMOUNT"), shall be reflected as a reduction in the
Purchase Price in the form of a working capital hold-back (the "HOLD-BACK");
provided, that, notwithstanding any provision herein to the contrary, the
Hold-Back will not exceed One Million Dollars ($1,000,000). The Purchaser shall
retain Ernst & Young or another nationally recognized independent accounting
firm to audit the Preliminary Balance Sheet with respect to Long Term Debt and
Net Working Capital (the "AUDITED BALANCE SHEET") in accordance with GAAP
consistently applied and in accordance with the books and records of the
Company, which determination shall be (i) completed by February 15, 1998 and
(ii) final and binding on, and non-appealable by the Selling Shareholders and
the Purchaser; provided, that in the event that the Audited Balance Sheet is
not completed by February 15, 1998, the Preliminary Balance Sheet shall be
final and binding on, and non-appealable by the Selling Shareholders and the
Purchaser. If a portion or all of the Hold-Back is to be paid to the Selling
Shareholders, the Purchaser shall pay to the Selling Shareholders in cash such
amount, plus interest thereon from but not including the Closing Date to and
including the date on which payment is made at a rate per annum equal to eight
percent (8%).
(i) If the Company's Long Term Debt, as determined
based upon the amount shown on the Preliminary Balance Sheet or the Audited
Balance Sheet, as the case may be, is equal to or less than the Company's Net
Working Capital, as determined based upon the amount shown on the Preliminary
Balance Sheet or the Audited Balance Sheet, as the case may be, then the
Purchase Price shall be the amount stated in SECTION 2.3(A) hereof without
adjustment; provided, that, any such excess working capital reflected in the
Preliminary Balance Sheet or the Audited Balance Sheet, as the case may be (the
"EXCESS WORKING CAPITAL"), shall be applied as set forth in SECTION 10.4
hereof.
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(ii) If the Company's Long Term Debt, as determined
based upon the amount shown on the Preliminary Balance Sheet or the Audited
Balance Sheet, as the case may be, exceeds the Company's Net Working Capital,
as determined based upon the amount shown on the Preliminary Balance Sheet or
the Audited Balance Sheet, as the case may be, then the Cash Consideration
portion of the Purchase Price shall be reduced by an amount equal to the
aggregate amount by which such Long Term Debt exceeds such Net Working Capital.
(e) Distributions. Any payments or distributions required to
be made by the Purchaser pursuant to this SECTION 2.3 shall be made to the
Shareholder Representatives, as agent for the Selling Shareholders, and the
Shareholder Representatives shall be required to apportion the money to each
Selling Shareholder in the manner set forth on the Selling Shareholder
Schedule; provided, that, (i) the Purchaser shall give the Shareholder
Representatives notice of its election to distribute Equity Consideration in
lieu of Cash Consideration pursuant to SECTION 2.3(C) hereof not less than
fifteen (15) days prior to the Closing Date, (ii) other than as set forth on
the Selling Shareholder Schedule, as the same may be amended pursuant to
SECTION 2.3(C) hereof, the allocation of the Cash Consideration and the Equity
Consideration among the Selling Shareholders shall be made in proportion to
their holdings, unless otherwise determined by the Selling Representatives, in
their sole and absolute discretion, not less than ten (10) days prior to the
Closing and (iii) upon delivery by the Purchaser to the Shareholder
Representative of the Purchase Price, the Purchaser shall have no further
obligation to the Selling Shareholders with respect to the Purchase Price. Any
such payments of the Cash Consideration shall be paid by check to the order of
the Shareholder Representatives, as agent of the Selling Shareholders, unless,
at least five (5) Business Days prior to the date of any such payment, the
Shareholder Representatives shall have delivered to the Purchaser written
notice directing that such payment be made to a bank account designated in such
notice by the Shareholder Representatives, in which event any such payment
shall be made by wire transfer of immediately available funds to such bank
account. In the event that the Purchaser has not received proper payment
instructions from the Shareholder Representatives, or in the event that the
address or account information for the Shareholder Representatives is
inaccurate or incomplete and will not permit proper and timely disbursement of
funds by the Purchaser, the Purchaser shall be entitled, in lieu of making
direct payment to the Shareholder Representatives (and in full satisfaction of
its obligation to otherwise do so), to pay the amount due to each Selling
Shareholder directly to the Selling Shareholders, by wire transfer of
immediately available funds.
(f) Guarantee. If the Spinoff Event has not occurred as of
the Closing Date, subject to the terms and conditions set forth herein,
including, without limitation, ARTICLE VIII and SECTION 12.4 hereof, the
payment of the Purchase Price by the Purchaser shall be guaranteed by SFX.
Section 2.4 Shareholder Representative. To facilitate the
consummation of the transactions contemplated by this Agreement, from and after
the Closing, each of the Selling Shareholders (and their successors and
assigns) hereby irrevocably consent to the appointment of, and do hereby
appoint and empower, each of Xxxxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxxx, Xx.
(and each of them does hereby accept such appointment) as each such Selling
Shareholder's attorney-in-fact (with full power of substitution) for carrying
out the transactions contemplated
12
hereby and as the sole and exclusive representative (each, a "SHAREHOLDER
REPRESENTATIVE") of all of them (and their successors and assigns) to make all
decisions and determinations on behalf of all of them (and their successors and
assigns) that the Shareholder Representatives may deem necessary or appropriate
to accomplish the intent, and implement the provisions, of this Agreement,
including, without limitations, the execution of the Subscription Agreement or
the Option Agreement, as the case may be. Without limiting the generality of
the foregoing, the Shareholder Representatives shall have the power to agree to
any matters with respect to indemnification provided for hereunder. All
decisions of the Shareholder Representatives shall be final and binding on all
of the Selling Shareholders (and their successors and assigns). The Purchaser
(and its successors and assigns) shall be entitled to rely upon, without
independent investigation, any decision or action of a Shareholder
Representative and shall be fully protected in connection with any action or
inaction taken or omitted to be taken in reliance thereon. The Selling
Shareholders (and their permitted successors and assigns) may by the vote of
holders holding a majority of shares at any time and from time to time replace
the Shareholder Representatives and appoint another Selling Shareholder as a
Shareholder Representative. It is a condition to the appointment of any Person
as the Shareholder Representative hereunder that such Person confirms in
writing to the Purchaser that such Person has accepted such appointment as the
Shareholder Representative under the terms of this Article. If a Shareholder
Representative is replaced as provided for herein, the newly-appointed
Shareholder Representative shall notify the Purchaser in writing of such
Person's appointment and appropriate contact information, and the Purchaser
(and its successors and assigns) shall be entitled to rely upon, without
independent investigation, the identity of the Shareholder Representative as
set forth in such written notice. The Selling Shareholders agree, by their
execution of this Agreement, that the Shareholder Representatives, in their
capacity as such, shall not have any liability to any of the Selling
Shareholders for any acts or omissions of the Shareholder Representatives
taken, or omitted to be taken, in connection with performance of the duties of
the Shareholder Representatives described herein, and each Selling Shareholder
hereby waives and releases any claims against the Shareholder Representatives
in such capacity and shall not initiate any lawsuits or other court
proceedings, or take similar action, against the Shareholder Representatives,
in any case other than for acts or omissions involving wilful misconduct by the
Shareholder Representatives. The Selling Shareholders agree to indemnify,
defend and hold harmless the Shareholder Representatives from and against any
Losses based upon, arising out of or otherwise resulting from any action
undertaken pursuant to this Agreement by the Shareholder Representatives, other
than any Losses arising as a result of the gross negligence and malfeasance of
the Shareholder Representatives.
Section 2.5 Bonuses. The Purchaser acknowledges and agrees
that the Company will create a reserve for bonuses, other than bonuses in the
ordinary course of business discussed in SECTION 3.10(B)(III) hereof (i) to be
reflected in the Preliminary Balance Sheet or the Audited Balance Sheet, as the
case may be, in an aggregate amount not to exceed One Million Two Hundred
Eighty Thousand Dollars ($1,280,000) and (ii) not to be reflected in the
Preliminary Balance Sheet or the Audited Balance Sheet, as the case may be, in
an aggregate amount not to exceed One Hundred Fifty Thousand Dollars
($150,000).
13
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS
The Shareholders, severally and not jointly, make the
following representations and warranties to the Purchaser, on the date of this
Agreement and on the Closing Date. As used herein, the term "COMPANY" means the
Company and the Company Subsidiaries.
Section 3.1 Validity. The execution, delivery and performance
of this Agreement by each Selling Shareholder and the execution, delivery and
performance of each of the Transaction Documents to which the Company is a
party have been duly and validly authorized by the Selling Shareholders and all
necessary action, including without limitation any consent required by the
Articles of Incorporation and By-Laws. This Agreement constitutes the legally
valid and binding obligation of each Selling Shareholder, enforceable against
each Selling Shareholder in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
and equitable principles relating to or limiting creditors' rights generally
and by general principles of equity. Each of the Transaction Documents to which
the Company is a party will, when executed and delivered, constitute the
legally valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally and by general
principles of equity.
Section 3.2 Organization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the state of California, and has all requisite corporate power and
authority to own, lease and operate its assets and Properties and to conduct
its business as currently being conducted. The Company is duly qualified and in
good standing as a foreign corporation in all of the jurisdictions listed in
SCHEDULE 3.2(A) attached hereto, which jurisdictions are the only jurisdictions
in which both (i) the Company owns property, conducts business, has an office
or maintains a bank account, and (ii) the nature of its business or the
ownership of its Properties makes such qualification necessary, or, if not so
qualified and in good standing in any such jurisdiction, such failure, as of
the date hereof and the Closing Date, will not have a Material Adverse Effect.
The Company conducts business under no other names except as listed on SCHEDULE
3.2(B) attached hereto. The Company has no, direct or indirect ownership
interest in any Person other than the Persons listed on SCHEDULE 3.2(C)
attached hereto (collectively, the "COMPANY SUBSIDIARIES"). Other than as set
forth on SCHEDULE 3.2(C) attached hereto, the Company holds all of the
outstanding interests in each of the Company Subsidiaries. The Selling
Shareholders have heretofore delivered to the Purchaser true and complete
copies of the Articles of Incorporation and By-Laws and any other
organizational documents, in each case including all amendments thereto, of the
Company and the Company Subsidiaries.
Section 3.3 No Conflicts. Except as set forth in SCHEDULE 3.3
attached hereto, and assuming all Consents set forth in SCHEDULE 3.4 attached
hereto are obtained, made or given (as the case may be), the execution and
delivery by the Selling Shareholders of this Agreement, the performance by the
Selling Shareholders of their obligations hereunder, and the consummation of
the transactions contemplated hereby (including without limitation the
execution, delivery and
14
performance of each of the Transaction Documents to which the Company will be a
party and the transfer of all the Common Stock of the Company to the Purchaser
free and clear of any Liens or Encumbrances) do not and will not conflict with,
result in any breach or violation of, constitute a default under (or an event
which with the giving of notice or the lapse of time or both would constitute a
default under), give rise to any right of termination or acceleration of any
right or obligation of the Company under, or result in the creation or
imposition of any Lien or Encumbrance upon any assets or properties of the
Company by reason of the terms of, (i) the Articles of Incorporation and
By-Laws and any other organizational documents of the Company, (ii) any
Contract to which such Selling Shareholder or the Company is a party or by or
to which any of them or their respective assets or Properties (including,
without limitation, the Common Stock) may be bound or subject, (iii) any order,
writ, judgment, injunction, award, decree, law, statute, ordinance, rule or
regulation applicable to the Company or such Selling Shareholder or (iv) any
Permit of the Company; other than, in the case of CLAUSES (II), (III) AND (IV),
any conflict, breach, violation, default, termination or acceleration which
would not, individually or in the aggregate together with all such other
conflicts, breaches, violations, defaults, terminations and accelerations, have
a Material Adverse Effect or affect the ability of the Selling Shareholders to
consummate the transactions contemplated hereby.
Section 3.4 Consents and Approvals. Except as set forth in
SCHEDULE 3.4 attached hereto, no consent, approval, authorization, license or
order of, registration or filing with, or notice to, any Governmental Entity or
any other Person (collectively, "CONSENTS") is necessary to be obtained, made
or given by any Selling Shareholder or the Company in connection with the
execution and delivery by the Selling Shareholders of this Agreement, the
performance by the Selling Shareholders or the Company of their respective
obligations hereunder, the execution, delivery and performance of each of the
Transaction Documents to which the Company will be a party, or the consummation
of the transactions contemplated hereby or thereby.
Section 3.5 Capitalization of the Company; Title to the
Common Stock. The Common Stock listed on the Selling Shareholder Schedule
attached hereto constitutes all of the authorized, issued and outstanding
capital stock of the Company. All of the shares of Common Stock have been duly
authorized and validly issued, are fully paid and non-assessable, and are owned
beneficially and of record by the Selling Shareholders, free and clear of any
Lien or Encumbrance, except as provided in the next sentence. Upon delivery of
the Common Stock against full payment of the Purchase Price as herein provided,
the Purchaser will acquire good and marketable title to the Common Stock, free
and clear of any Liens or Encumbrances other than (a) those created by the
Purchaser and its Affiliates and (b) the requirements of federal and state
securities laws respecting restrictions on the subsequent transfer thereof.
After the consummation of the transactions contemplated herein, the Company
shall have Ten Million (10,000,000) shares of Common Stock authorized and Nine
Hundred Fifty-Seven Thousand Eight Hundred Ninety-Four (957,894) shares of
Common Stock issued and outstanding and owned by the Purchaser and no other
capital stock issued or outstanding.
15
Section 3.6 Options or Other Rights. Except for this
Agreement, (a) there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from the Selling Shareholders, the Company or any
Affiliate of either of the foregoing, any of the outstanding, authorized but
unissued, unauthorized or treasury shares of the capital stock or any other
equity security of the Company (or any interest therein), (b) there is no
outstanding security of any kind that has been issued by the Company or any
other Affiliate of the Company that is convertible into or exchangeable for the
capital stock of the Company (or any interest therein) and (c) there is no
outstanding Contract or other agreement of or binding upon the Selling
Shareholders, the Company or any other Affiliate of any of the foregoing to
purchase, redeem or otherwise acquire any outstanding shares of the capital
stock of the Company (or any interest therein). The Company has not issued any
securities in violation of any preemptive or similar rights.
Section 3.7 Corporate Minutes. The minute books of the
Company accurately reflect all actions taken at meetings, or by written consent
in lieu of meetings, of the shareholders, board of directors and all committees
of the board of directors of the Company, since the formation of the Company.
All actions taken by the Company since such date have been duly authorized, and
no such actions have been taken in breach or violation of the Articles of
Incorporation, By-laws or other organizational documents of the Company.
Section 3.8 Financial Statements. Within three (3) Business
Days after Ernst & Young furnishes the Financial Statements to the Company for
review and comment, true and complete copies of the Financial Statements will
be attached as SCHEDULE 3.8. The annual Financial Statements will have been
prepared in accordance with GAAP consistently applied throughout the periods
involved, will have been prepared in accordance with the books and records of
the Company, will have been audited by the independent certified public
accountants of the Company identified in the audit reports thereon, and present
fairly the financial position of the Company as of the respective dates thereof
and the results of operations of the Company for the respective periods then
ended. The quarterly or interim Financial Statements will have been prepared on
a basis consistent with the accounting principles and practices used in the
preparation of the annual Financial Statements, will have been prepared in
accordance with the books and records of the Company, and will present fairly
the financial position of the Company as of the respective dates thereof and
the results of operations of the Company for the respective periods indicated
therein (subject, in each case, to normal recurring year-end audit adjustments
and to absence of footnotes).
Section 3.9 No Undisclosed Liabilities. The Company has no
direct or indirect debt, obligation, loss, damages, deficiency or other
liability of any nature, whether absolute, accrued, contingent or otherwise
("LIABILITY"), other than (i) Liabilities that are fully and adequately
reflected (as to nature and amount) and reserved against in the balance sheet
included in the October 31, 1997 Financial Statements and (ii) those set forth
on SCHEDULE 3.9 attached hereto.
Section 3.10 Absence of Changes.
16
(a) Since February 1, 1997, except as set forth in SCHEDULE
3.10(A) attached hereto, there has been no material adverse change in the
business, operations, assets, properties, liabilities, condition (financial or
otherwise), results of operations, prospects or Permits of the Company.
(b) Except as set forth in SCHEDULE 3.10(B) attached hereto,
since February 1, 1997, the Company has operated its business only in the
ordinary course of business consistent with past practice, and the Company has
not directly or indirectly:
(i) amended its Articles of Incorporation and
By-Laws or other organizational documents, or merged with or into or
consolidated with any other Person, subdivided or in any way reclassified any
Common Stock or changed or agreed to change in any manner the rights of its
Common Stock or the character of its business;
(ii) issued or sold any Common Stock, or issued or
sold any options, warrants, calls or other rights of any kind to purchase or
otherwise receive, or issued or sold any securities or instruments convertible
into or exchangeable for, or entered into any Contract or commitment to issue
or sell, any Common Stock or other equity interest or any bonds, debentures,
notes, debt instruments, evidences of indebtedness or other securities of any
kind of the Company;
(iii) declared, paid or set aside any sum for any
distributions of any kind (whether in cash, property, any combination thereof
or otherwise) to its shareholders (other than compensation at levels previously
disclosed to the Purchaser, including, without limitation, bonuses in the
ordinary course of business not exceeding (i) Three Million Dollars
($3,000,000) to the Selling Shareholders and (ii) Three Hundred Fifty Thousand
Dollars ($350,000), together with those bonuses set forth on SCHEDULE 3.15(IV)
attached hereto, to other employees of the Company), or made any direct or
indirect redemption, retirement, purchase or other acquisition of any common
stock or other equity interests or any bonds, debentures, notes, debt
instruments, evidences of indebtedness or other securities of any kind of the
Company;
(iv) incurred any Indebtedness or entered into any
commitment to borrow money or any Contingent Obligation, or incurred or assumed
any Liability or series of related Liabilities in excess of Five Hundred
Thousand Dollars ($500,000);
(v) made any change in its accounting methods or
practices or made any change in depreciation or amortization policies or rates
adopted by it;
(vi) made any change in any material business
policies or practices relating to the Company, including, without limitation,
commission or fee structures and property management or maintenance activities;
or made any change in its billing or investment policies and practices or any
change in any other activity which (A) has had the effect of accelerating the
recording and billing of fees or accounts receivable or delaying the payment of
expenses or the establishment of reserves in connection with the business or
any material accounts of the Company,
17
or (B) has had the effect of altering, modifying or changing in any manner the
historical financial or accounting practices or policies of the Company,
including accruals of and reserves for Tax Liabilities;
(vii) suffered any damage, destruction, casualty or
loss, whether or not covered by insurance, affecting any of its Property, the
total amount of which was or could reasonably be expected to be greater than
Fifty Thousand Dollars ($50,000);
(viii) allowed the creation of any Lien or
Encumbrance on any tangible or intangible asset or Property, or any sale,
transfer, assignment, lease or abandonment of any interest in any tangible or
intangible asset or Property, other than sales, transfers, assignments and
leases in the ordinary course of business consistent with past practice;
(ix) entered into any Contract, commitment or
transaction (including, without limitation, any capital expenditure, capital
contribution, capital financing, or purchase, lease, acquisition, sale or
disposition of assets or Properties) which requires or could require payments
in excess of Five Hundred Thousand Dollars ($500,000) with respect to any
individual Contract, commitment or transaction or series of related Contracts,
commitments and transactions;
(x) terminated, failed to renew, received any
written notice (that was not subsequently withdrawn) to terminate or fail to
renew, amended, altered, modified, suffered the occurrence of any default
under, failed to perform any obligations, or waived or released any rights,
under any Contract, which action could have a Material Adverse Effect;
(xi) forgiven or permitted any cancellation of any
claim, debt or account receivable, other than cancellations in the ordinary
course of business consistent with past practice of any claim, debt or account
receivable in an amount below Fifty Thousand Dollars ($50,000);
(xii) made any payment, discharge or satisfaction of
any Liability in excess of Fifty Thousand Dollars ($50,000) before the same
became due in accordance with its terms, other than in the ordinary course of
business consistent with past practice and as reflected or reserved against in
the Financial Statements;
(xiii) accelerated the collection, or sale to any
other Person, of any of its receivables, or delayed the payment of any of its
payables, other than accelerations or delays in the ordinary course of business
consistent with past practice involving amounts below Fifty Thousand Dollars
($50,000);
(xiv) made any revaluation of any assets or
properties, or material write-down or write-off of the value of any assets or
properties (including, without limitation, any receivables), in an amount in
excess of Fifty Thousand Dollars ($50,000);
18
(xv) made any loan or advance to any Affiliate or
other Person which has not been fully reflected in the Financial Statements;
(xvi) made any acquisition of all or any substantial
part of the assets, Properties, securities or business of any other Person;
(xvii) except in the ordinary course of business
consistent with past practice, hired any new employees, consultants, agents or
other representatives or entered into any employment or consulting agreements
(other than those terminable without severance, without penalty and without
cause on not more than thirty (30) days' notice), or terminated, or made any
change in the employment terms or conditions of, any officers, directors,
employees, consultants, agents or other representatives;
(xviii) except in the ordinary course of business
consistent with past practice, increased or agreed to increase any salary,
wages, bonus, severance, compensation, pension or other benefits payable or to
become payable, or granted any severance or termination payments or benefits,
to any of its current or former officers, directors, employees, consultants,
agents or other representatives, or amended any Plan in any respect;
(xix) entered into any collective bargaining
agreement or any other Contract with any labor union or association
representing any employee, or been subjected to any strike, picket, work
stoppage, work slowdown, labor dispute or other labor trouble;
(xx) considered or adopted a plan of complete or
partial liquidation, dissolution, rehabilitation, restructuring,
recapitalization, redomestication or other reorganization; or
(xxi) entered into any Contract, commitment or
transaction to do any of the foregoing.
Section 3.11 Legal Proceedings. Except as set forth in
SCHEDULE 3.11 attached hereto, (i) there is no action, suit, claim or
proceeding pending or, to the Knowledge of any Selling Shareholder or the
Company, threatened (and, to the Knowledge of any Selling Shareholder or the
Company, there is no investigation pending or threatened) against or affecting
any Selling Shareholder or the Company by or before any court, other
Governmental Entity or arbitrator and (ii) there is no outstanding order, writ,
judgment, injunction, award or decree of any court, other Governmental Entity
or arbitrator against or affecting such Selling Shareholder, the Company or
their Affiliates. The Company has timely submitted any action, suit, claim or
proceeding disclosed in SCHEDULE 3.11 attached hereto to its current insurance
company and has paid any applicable deductible, or created a reserve for such
deductible on the Company=s books. Except as set forth in SCHEDULE 3.11
attached hereto, no action, suit, claim or proceeding has been initiated
against the Company pursuant to an indemnity provision in any Contract
disclosed in such Schedule.
19
`
Section 3.12 Compliance with Laws. The Company is in
compliance with (i) the terms of its Articles of Incorporation and By-Laws or
other organizational documents, (ii) subject to the qualifications contained in
SECTION 3.4, all laws, statutes, ordinances, rules, regulations or other legal
requirements, whether federal, state, local or foreign, (iii) all orders,
writs, judgments, injunctions, awards and decrees of any court, other
Governmental Entity or arbitrator and (iv) its Permits, except as set forth in
SCHEDULE 3.12 attached hereto and except in the case of CLAUSES (II) AND (III)
where the failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect or materially prohibit or otherwise adversely affect
the consummation of the transactions contemplated hereby. None of the Selling
Shareholders or the Company has received notice of any violation by the Company
of, or default by the Company under, its Articles of Incorporation and By-Laws
or other organizational documents, any law, statute, ordinance, rule,
regulation or other legal requirement, any order, writ, injunction, award or
decree of any court, other Governmental Entity or arbitrator, except for such
violations or defaults which would not, individually or in the aggregate, have
a Material Adverse Effect or materially prohibit or otherwise adversely affect
the consummation of the transactions contemplated hereby.
Section 3.13 Permits. Other than as set forth in SCHEDULE
3.13 attached hereto, the Company and/or its Key Personnel currently possess
all Permits necessary for the ownership of the assets and Properties of the
Company and the conduct of its business as presently conducted, except for such
Permits the absence of which would not have a Material Adverse Effect. SCHEDULE
3.13 attached hereto sets forth a true and complete list of all Permits or
applications for Permits of the Company and/or its personnel, including all
licenses and other Permits necessary to conduct its business. The Company has
heretofore delivered to the Purchaser true and complete copies of all such
Permits as currently in effect. All such Permits are valid and in full force
and effect, without any restriction which would materially and adversely impact
the use of the Permit for the purpose intended. There is no action, proceeding,
inquiry or investigation pending or, to the Knowledge of any Selling
Shareholder or the Company, threatened for the suspension, modification,
limitation, cancellation, revocation or non-renewal of any such Permit, and
none of the Selling Shareholders or the Company has Knowledge of any existing
fact or circumstance which (with or without notice or lapse of time or both) is
reasonably likely to result in the suspension, modification, limitation,
cancellation, revocation or non-renewal of any such Permit (or, with respect to
any pending application for a Permit, the refusal of any Governmental Entity to
issue any such Permit). The consummation of the transactions contemplated
hereby will not result in the suspension, modification, cancellation,
revocation or non-renewal of any such Permit. The Company is not and has not
engaged in any business in any jurisdiction in which it is not, and was not
then, duly authorized or qualified to transact such business. Except for
compliance with periodic renewal procedures, no approvals or authorizations are
required to permit the Company to continue conducting its business as presently
conducted, following the Closing; none of the Selling Shareholders or the
Company has been advised by any Person that any Permit will not in the ordinary
course be renewed upon its expiration or that the transactions contemplated
hereby will make it more difficult to renew or obtain any Permit.
20
Section 3.14 Regulatory Compliance. Except as set forth in
SCHEDULE 3.14 attached hereto, the Company has filed all reports, statements,
registrations, applications, filings or other documents and submissions
required to be filed with, or provided to, any Governmental Entity. Except as
set forth in SCHEDULE 3.14 attached hereto, all such reports, statements,
registrations, applications, filings, documents and submissions were in
compliance with all applicable laws, statutes, ordinances, rules or regulations
and were complete and correct in all material respects when filed, and no
material deficiencies have been asserted by any Governmental Entity with
respect thereto. Except as set forth in SCHEDULE 3.14 attached hereto, there is
no action, proceeding, dispute, controversy, inquiry or investigation pending
or, to the Knowledge of any Selling Shareholder or the Company, threatened by
any such Governmental Entity relating to the Company.
Section 3.15 Contracts.
(a) SCHEDULE 3.15 attached hereto contains a true and
complete list of all of the following Contracts, to which the Company is a
party or by or to which the Company or the assets or Properties of the Company
are or may be bound or subject, as each such Contract may have been amended,
modified or supplemented:
(i) all Contracts involving representation of
talent, concert venues or productions, in each case, whether in oral or written
form;
(ii) all brokerage, management, servicing or
consulting Contracts which accounted for Fifty Thousand Dollars ($50,000) or
more in commissions, fees and revenues earned in respect of the Company during
1996 or through October 30, 1997;
(iii) partnership or joint venture Contracts;
(iv) employment Contracts for employees with
Assistant Vice President status or greater or requiring compensation payments
in excess of Twenty Five Thousand Dollars ($25,000) in any fiscal year,
excluding offer letters which were not accepted by the recipients thereof;
(v) Contracts relating to the borrowing of money or
other Indebtedness, or the direct or indirect guaranty of any obligation for,
or Contract to service the repayment of, Indebtedness, or any other Contingent
Obligation, including, without limitation, any Contract relating to (A) the
maintenance of compensating balances, (B) any lines of credit, (C) the advance
of any funds to any other Person outside the ordinary course of business, (D)
the payment for property, products or services which are not conveyed,
delivered or rendered to any such party, (E) any obligation to keep-well,
make-whole or maintain or increase net worth, working capital, solvency,
earnings or other financial condition or results of operations of any Person or
perform similar requirements, or (F) the guaranty of any lease or other similar
periodic payments to be made by any such other Person;
21
(vi) all lease, sublease, rental or other Contracts
under which the Company is a lessor or lessee of any real Property;
(vii) lease, sublease, rental, licensing, use or
similar Contracts with respect to personal property used by the Company in the
conduct of its business, operations or affairs and providing for annual rental
or use payments in excess of Ten Thousand Dollars ($10,000);
(viii) Contracts for the purchase or sale of
materials, supplies or equipment (including, without limitation, computer
hardware and software), or the provision of services (including, without
limitation, data processing services), involving annual payments of more than
Ten Thousand Dollars ($10,000) or containing any escalation, renegotiation or
redetermination provisions, which Contracts are not terminable at will without
liability, premium or penalty;
(ix) Contracts for the purchase, acquisition, sale
or disposition of any assets or properties outside the ordinary course of
business or for the grant to any Person (including the Company) of any option
or preferential rights to purchase any assets or properties;
(x) Contracts relating to the future disposition or
acquisition of any investment or any interest in any Person, and all Contracts
for the purchase of any security outside the ordinary course of business;
(xi) Contracts relating to licensing, sub-licensing
or assigning any Intellectual Property rights;
(xii) employment and other Contracts, excluding
offer letters which were not accepted by the recipients thereof, with any
current or former officer, director, employee, consultant, agent or other
representative providing for compensation or other payments of Fifty Thousand
Dollars ($50,000) or more per annum during 1996 or subsequent thereto (the
name, position or capacity of each such Person and the expiration date of each
such Contract being accurately set forth in SCHEDULE 3.15 attached hereto);
(xiii) collective bargaining agreements and any
other Contracts with any labor union or association representing any employee;
(xiv) Contracts between or among (A) the Company, on
the one hand, and (B) such Selling Shareholder or any other Affiliates of the
Company (or any officer, director, employee, consultant, agent or
representative of any such other Affiliate), on the other hand ("AFFILIATE
AGREEMENTS");
(xv) Contracts under which the Company agrees to
indemnify any Person involving liability in excess of Twenty Five Thousand
Dollars ($25,000);
(xvi) any powers of attorney granted by the Company
to any Person;
22
(xvii) Contracts pursuant to which there is either a
current or future obligation or right of the Company to make payments in excess
of Five Hundred Thousand Dollars ($500,000) in any twelve-month period;
(xviii) Contracts providing for any payments to any
Person or for any other consequences upon any sale of any shares of Common
Stock or other direct or indirect change of control of the Company, including,
without limitation, the sale of the Common Stock hereunder or any interest in
the Company; or
(xix) any other material Contracts.
(b) The Company has heretofore delivered to the Purchaser
true and complete copies of all of the foregoing Contracts, other than with
respect to the Contracts relating to band, show and venue arrangements referred
to in SCHEDULE 3.15(B)(2) hereof, with respect to which, the Company has
provided the Purchaser with samples of agreements typical of such arrangements.
Each such Contract is valid and binding in accordance with its terms, and is in
full force and effect and enforceable against the other party or parties
thereto. The Company is not in default in any material respect with respect to
any such Contract, nor does any condition exist that with notice or lapse of
time or both would constitute a default thereunder. To the Knowledge of any
Selling Shareholder and the Company, no other party to any such Contract is in
default in any material respect with respect to any such Contract, nor does any
condition exist that with notice or lapse of time or both would constitute a
material default thereunder. Except as set forth in SCHEDULE 3.15 attached
hereto, no such Contract contains any provision providing that any such other
party thereto may terminate or cancel the same by reason of the transactions
contemplated by this Agreement, or any other provision which would be altered
or otherwise become applicable by reason of such transactions, and no party has
given notice of termination or cancellation of any such Contract or that it
intends to terminate or cancel any such Contract as a result of the
transactions contemplated hereby.
(c) Except as set forth in SCHEDULE 3.15 attached hereto,
there exists no material breach of a representation and warranty by the Company
set forth in a Contract (each of which was made as of the date specified in
such Contract) which gives rise to a remedy against the Company under such
Contract.
Section 3.16 Title to Assets. Except as disclosed in the
Financial Statements, the Company owns outright and has good and marketable fee
or leasehold title to all of its respective assets and Properties (including,
without limitation, those reflected in the most recent Financial Statements),
in each case free and clear of any Lien or Encumbrance except for (i) assets
and Properties which have been disposed of in the ordinary course of business
since October 31, 1997, (ii) lease obligations under Contracts set forth on
SCHEDULE 3.16 attached hereto entered into in the ordinary course of business,
and (iii) Liens or Encumbrances which in the aggregate are not substantial in
amount and which do not materially detract from the value of the assets or
Properties
23
subject thereto (as carried on the most recent applicable Financial Statements)
or interfere with the present use of such assets or Properties.
Section 3.17 Properties.
(a) SCHEDULE 3.17 attached hereto contains a true and
complete list (designating the relevant owners, lessors and lessees) of (i) all
real Property owned, leased or subleased by the Company and all buildings and
other structures located on such real Property (including leasehold
improvements) and (ii) all vehicles, equipment, furniture, fixtures and other
personal Property owned, leased, subleased or managed by any such Person which,
in the case of clause (ii) only, had an original cost in excess of Fifty
Thousand Dollars ($50,000).
(b) With respect to real Property owned by the Company, if
any, the Company has good and marketable title in fee simple absolute to each
such parcel of real Property and all buildings, structures and other
improvements thereon, in each case free and clear of all Liens. Except as set
forth in SCHEDULE 3.17 attached hereto, there are no leases, subleases,
tenancies, rights of first refusal or first offer, purchase options or rights
of occupancy affecting any such real Property. Complete and correct copies of
any title opinions, surveys and appraisals in the Company=s possession, and of
any policies of title insurance currently in force, with respect to any such
parcel of real Property have been delivered by the Company to the Purchaser.
(c) Except as set forth in SCHEDULE 3.17 attached hereto,
with respect to real Property leased by the Company or otherwise made available
to the Company for use, the Company has the right to quiet enjoyment of such
real Property for the full term of each such lease or similar agreement (and
any renewal option related thereto), and the leasehold or other interest of the
Company in such real Property is not subject or subordinate to any Lien (or if
subordinate, a non-disturbance agreement has been obtained by the Company from
the holder of the Lien). The Company is in compliance with all terms of each
such lease or similar agreement and to the Selling Shareholder's Knowledge, the
other party or parties thereto are not in default of its or their obligations
thereunder nor does any such party have the present right to terminate prior to
its scheduled expiration the term of any lease or similar agreement.
(d) Neither the whole nor any part of any real Property
owned, leased, used or occupied by the Company is subject to any pending suit
for condemnation or other taking by any public authority, and, to the Selling
Shareholder's Knowledge, no such condemnation or other taking is currently
threatened or contemplated. The Properties owned, leased or subleased by the
Company are sufficient to conduct the operations of the Company as currently
conducted, and such Properties are in sound operating condition and repair,
normal wear and tear excepted, including, without limitation, the "slurry
walls" referenced in the Shoreline Amphitheater Lease referenced in Item 2 of
SCHEDULE 3.17 attached hereto. There has not been any interruption of the
operations of the Company due to inadequate maintenance of any such Properties.
24
Section 3.18 Intellectual Property; Software. SCHEDULE 3.18
attached hereto contains, to each Selling Shareholder=s Knowledge, a true and
complete list of all trade names, trademarks, trade dress, domain names,
service marks, logos, copyrights, patents, and/or similar rights (including
registrations and applications to register or renew the registration of any of
the foregoing), trade secrets, inventions, know-how, specifically developed
computer software and other intellectual property rights or other proprietary
rights or confidential information ("INTELLECTUAL PROPERTY") owned or used by
the Company or material to the conduct of the Company's business, including
whether such Intellectual Property is owned or licensed by the Company. Except
as set forth in SCHEDULE 3.18 attached hereto, the Company owns, or is validly
licensed or otherwise has the right to use, on a royalty free basis, free and
clear of any Lien or Encumbrance, all Intellectual Property used in the conduct
of the Company's business. Other than as set forth in SCHEDULE 3.18 attached
hereto, neither any Selling Shareholder nor the Company has received notice
that, and none of the Selling Shareholders or the Company has Knowledge that,
(a) the Company is infringing or otherwise in conflict with the rights of any
other Person in respect of any Intellectual Property or (b) any Person is
infringing or otherwise in conflict with the Company's Intellectual Property.
To the Selling Shareholder=s Knowledge, all software programs owned or licensed
by the Company that are used in the operation of the Company are in good
working order and have performed their designed functions without material
disruption during the past six months.
Section 3.19 Investments. SCHEDULE 3.19 attached hereto
contains a true and complete list of all securities and other investments
(including, without limitation, short-term investments) owned by the Company as
of the end of the most recent fiscal quarter, ----------- including the date of
purchase, book value, market value and carrying value thereof on the books and
records of account of the Company as of such date. Except as set forth in
SCHEDULE 3.19 attached hereto, none of the securities and other investments
owned by the Company is in default in the payment of principal or interest or
dividends.
Section 3.20 Compensation. The Selling Shareholders have
previously provided to the Purchaser true and correct disclosures relating to
(i) the name and total compensation (payable by the Company) of each director,
officer and employee of the Company other than employees whose total
compensation did not exceed Thirty Thousand Dollars ($30,000) in 1996 and is
not expected to exceed such amount in 1997, (ii) all bonuses and other
incentive compensation received by such Persons since January 1, 1996, and any
accrual for such bonuses and incentive compensation, and (iii) all Contracts or
commitments by the Company or its Affiliates to increase the compensation or to
modify the conditions or terms of employment of its directors or officers or
employees whose total compensation exceeds (or, after giving effect thereto,
will exceed) Thirty Thousand Dollars ($30,000) per annum. Except as set forth
in such disclosure, none of the Selling Shareholders, directors or officers of
the Company, nor any relative of any such Persons, is directly or indirectly a
party to any Contract or arrangement with the Company providing for the
furnishing of services by, the purchase, acquisition, lease or rental of
property from, or otherwise requiring payments to any such Selling Shareholder,
director, officer or relative (other than for service in such capacity as a
director or officer).
Section 3.21 Employee Benefit Plans.
25
(a) SCHEDULE 3.21(A) attached hereto contains a true and
complete list of all Plans. To the extent required by applicable law or
regulation, each Plan has at all times been operated and administered in all
material respects in compliance with the applicable requirements of ERISA, the
Code and all other applicable laws, and the terms of such Plan. Other than as
set forth in Item 1 on SCHEDULE 3.21(A) attached hereto, each Plan that is
intended to be tax-qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS stating that it is so qualified
and, to the Knowledge of the Selling Shareholders and the Company, (i) there is
no reason that such tax-qualified status would be denied or revoked, whether
retroactively or prospectively and (ii) with respect to the matters identified
as Item 1 on SCHEDULE 3.21(A) attached hereto, to the Knowledge of the Selling
Shareholders there is no reason to believe that the applicable determination
letter will not be approved by the IRS.
(b) No actual or, to the Knowledge of the Selling
Shareholders, threatened disputes, lawsuits, claims (other than routine claims
for benefits), investigations, audits or complaints to, or by, any Person have
been filed or are pending with respect to the Plans or the Company in
connection with any Plan or the fiduciaries responsible for such Plans and, to
the Knowledge of the Selling Shareholders and the Company, no set of facts or
conditions exist which could be expected to subject the Company to any
Liability (other than routine claims for benefits). With respect to each Plan,
there has not occurred, and no person or entity is contractually bound to enter
into, any nonexempt "prohibited transaction" within the meaning of Section 4975
of the Code or Section 406 of ERISA.
(c) No Plan is or has been subject to the requirements of
Section 412 of the Code or Title IV of ERISA, and no liability under Title IV
of ERISA has been or is expected to be incurred by the Company, whether in
respect of the Plans or any other plan currently or formerly maintained by the
Company or any entity that is treated as a single employer with the Company
under Section 414 of the Code. Other than the Plan referenced in Item 2 of
Schedule 3.22 attached hereto, there are no Plans that are either
"multiemployer plans" as defined in Section 3(37) of ERISA or "multiple
employer plans" subject to the requirements of Section 413(c) of the Code.
There are no Plans that promise or provide health or life benefits to retirees
or former employees of the Company other than as required by Section 4980B of
the Code or Section 601 of ERISA. With respect to any multiemployer Plan, (i)
each of the Company and its Affiliates has satisfied all of its obligations
under such Plan, (ii) each of the Company and its Affiliates has taken all
actions required to be taken under such Plan, (iii) no action that either the
Company or its Affiliates has taken has resulted in any extraordinary or
unusual liability under such Plan, (iv) neither the Company nor its Affiliates
has received any notice of any assessment of liability under such Plan, other
than with respect to regular periodic employer contributions under such Plan,
(v) neither the Company nor its Affiliates has failed to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liabilities under Section 4201 of ERISA under such
Plan in an aggregate amount in excess of One Thousand Dollars ($1,000) and (vi)
neither the Company nor any of its Affiliates has incurred, or reasonably
expects to incur, any material liability
26
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA would result in such liability) under Section 4201 or 4243 of ERISA
with respect to such Plan.
(d) Except as set forth in SCHEDULE 3.21(D) attached hereto,
all contributions made or deemed to have been made to each Plan that is a
deferred compensation plan are presently, and have been during the years to
which they relate, fully deductible pursuant to Section 404 of the Code. Except
as set forth in SCHEDULE 3.21(D) attached hereto, all contributions to and
payments with respect to or under the Plans that are required to be made with
respect to periods ending on or before the Closing Date have been made or
accrued before the Closing Date in accordance with the appropriate plan
documents, insurance contracts or financial statement.
(e) With respect to each Plan, the Company has delivered to
Purchaser true and complete copies of the following documents: (1) current plan
documents, subsequent plan amendments, or any and all other documents that
establish or describe the existence of the plan, trust, arrangement, contract,
policy or commitment; (2) current summary plan descriptions and summaries of
material modifications; (3) the most recent tax qualified determination
letters, if any, received from or applications pending with the IRS; (4) the
three most recent Form 5500 Annual Reports, including related schedules and
audited financial statements and opinions of independent certified public
accountants; (5) with respect to each Section 401(k) Plan, nondiscrimination
testing results and the most recent annual and quarterly or monthly valuations;
(6) with respect to each Plan that is a pension plan, a copy of the most recent
actuarial valuation report or other statement of plan assets and liabilities.
(f) Except as set forth on SCHEDULE 3.21(F) attached hereto,
the consummation of the transactions contemplated by this Agreement will not
directly or indirectly (including together with a termination of employment)
entitle any current or former employee of the Company to severance or
termination pay or any similar payments nor accelerate the timing of any
payment or the vesting of any rights or increase the amount of any compensation
due any such employee. As a direct or indirect result of the consummation of
the transactions contemplated hereby, neither the Company nor the Purchaser
will be obligated to make a payment to an individual that would not be
deductible as a result of the application of Section 280G of the Code.
Section 3.22 Employee Relations. Except as set forth on
SCHEDULE 3.22 attached hereto, there are no collective bargaining or other
labor union contracts to which the Company is a party and which is applicable
to any Person employed by the Company. There is no pending or, to the Knowledge
of the Selling Shareholders and the Company, threatened union organizational
effort, material labor dispute, strike or work stoppage against the Company.
Neither the Company nor its representatives or employees has committed any
unfair labor practices in connection with the operation of the Company's
business, and there is no pending or, to the Knowledge of the Selling
Shareholders and the Company, threatened charge or complaint against the
Company by the National Labor Relations Board or any comparable state agency.
The Company is in compliance in all material respects with all applicable laws
respecting employment, employment practices, equal employment opportunity,
labor relations, wages, hours, safety, health
27
and terms and conditions of employment, including the Occupational Health and
Safety Act. The Company has not within the past twelve (12) months, experienced
a "plant closing" or "mass layoff" within the meaning of the WARN.
Section 3.23 Insurance. SCHEDULE 3.23 attached hereto
contains a true and complete list of all insurance policies (including the
insurers, types of coverage, expiration dates, annual premiums, coverage
limits, deductibles or self-insured or net retentions and other material terms
thereof, and the aggregate amounts paid thereunder and any pending or
outstanding claims thereunder in excess of Fifty Thousand Dollars ($50,000))
that insure the business, operations, officers, directors, employees, assets,
Properties or affairs of the Company, or are maintained for the benefit of the
Company, as an insured. All such insurance policies and Contracts are valid and
binding in accordance with their terms and will remain in full force and effect
at all times until the Closing. Neither the Company nor, to the Knowledge of
the Selling Shareholders and the Company, any other party to any such insurance
policy or Contract is in default with respect thereto, nor does any condition
exist that with notice or lapse of time or both would constitute such a default
by any party thereunder. Except as set forth on SCHEDULE 3.23 attached hereto,
no such insurance policy or Contract contains any provision providing that any
other party thereto may terminate or cancel the same by reason of the
transactions contemplated by this Agreement, or any other provision which would
be altered or otherwise become applicable by reason of such transactions, and
no party has given notice of cancellation or non-renewal of any such insurance
policy or Contract or that it intends to cancel or fail to renew any such
insurance policy or Contract as a result of the transactions contemplated
hereby. Neither the Company nor its Affiliates has failed to give any notice or
present any claim under any such insurance policy or Contract in due or timely
fashion or as required thereby in a manner which may jeopardize full recovery
thereunder. All such insurance policies and Contracts provide coverage in
amounts and upon terms that are reasonable and adequate for Persons having
similar businesses, operations, properties and locales as those of the Company.
The Company has never been denied coverage under any claim made nor has any
insurance company refused to provide insurance coverage to the Company.
Section 3.24 Environmental Matters. To the Knowledge of any
Selling Shareholder, there has not been any release, spill, emission, leaking,
deposit, disposal, discharge, dispersal or leaching into the environment of any
Hazardous Material at, in, on, under or from any real property leased, used or
managed by the Company or in connection with its business, that could,
individually or in the aggregate, have a Material Adverse Effect. No Hazardous
Materials are being stored or otherwise are present at, in, on or under any
real property owned, leased, used or managed by the Company or in connection
with its business where such activity is not in compliance with Environmental
Laws. The Company is in compliance, in all material respects, with all
Environmental Laws applicable to it. None of the Selling Shareholders, the
Company or any of their Affiliates has received notice of any violation by or
non-compliance with any of the same of, or default by any of the same under,
any Environmental Law, and none of the Selling Shareholders or the Company has
Knowledge of any existing facts or circumstances that are likely to result in
any such violation, non-compliance or default. There is no action or proceeding
pending or, to the Knowledge of the Selling Shareholders or the Company,
threatened against the Company or any of
28
their Affiliates that alleges or would allege any violation of or
non-compliance with any Environmental Law. SCHEDULE 3.24 attached hereto sets
forth a true and complete list of all properties with respect to which the
Company has exercised foreclosure rights.
Section 3.25 Accounts. SCHEDULE 3.25 attached hereto contains
a true and complete list of (i) the names and locations of all banks, trust
companies, securities brokers and other financial institutions at which the
Company has an account, deposit, lock box or safety deposit box for its own
benefit or maintains a banking, custodial, trading or other similar
relationship for its own benefit, (ii) each such account, deposit, box or
relationship and (iii) the name of every Person authorized to draw thereon or
having access thereto.
Section 3.26 Company Business. The Company conducts no
business other than the Company Business and services incidental thereto, and
all such business is, and has been since the formation of the Company,
conducted directly by the Company and not through any Affiliates. The Selling
Stockholders have provided to the Purchaser true and correct written
disclosures relating to (i) the name of each Client who or which accounted for,
or is expected to account for, Five Hundred Thousand Dollars ($500,000) or more
in commissions, fees or revenues earned in respect of the Company during 1996
or 1997 (each a "MATERIAL CLIENT"), (ii) a summary description of the
transactions with, and the services provided to, each Material Client by the
Company, (iii) the commission, fee or other payment structure applicable to
each Material Client and (iv) the total commissions, fees and revenues of the
Company attributable to each Material Client for the twelve months ended
December 31, 1996 and the six months ended June 30, 1997, listed both by dollar
amount and by percentage of gross revenues of the Company. The transfer of the
Common Stock by the Selling Shareholders to the Purchaser will result in the
transfer of all business, operations, assets, properties, liabilities,
condition (financial or otherwise), results of operations or Permits used in
connection with the Company Business to the Purchaser.
Section 3.27 Investment Company or Adviser. The Company is
not required to register as (i) an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, (ii) a "broker" or "dealer"
within the meaning of the Securities Exchange Act of 1934, as amended, or (iii)
an "investment adviser" within the meaning of the Investment Advisers Act of
1940, as amended.
Section 3.28 No Brokers. No broker, finder or investment
banker has been retained or engaged on behalf of the Selling Shareholders, the
Company or their Affiliates, or is entitled to any brokerage, finder's or other
fee, compensation or commission from any such Person in connection with the
transactions contemplated by this Agreement.
Section 3.29 Full Disclosure. All documents and papers
delivered by or on behalf of the Selling Shareholders, the Company or their
Affiliates in connection with this Agreement and the transactions contemplated
hereby were prepared and delivered in good faith by such Person and are
complete and authentic in all material respects. The Selling Shareholders, the
Company and their Affiliates have complied in good faith with all requests of
the Purchaser and its
29
representatives for documents, papers and information relating to the Company
in connection with the transactions contemplated hereby, and have not knowingly
withheld any document, paper or other information requested by the Purchaser or
any of its representatives in connection herewith. No representation or
warranty by the Selling Shareholders contained in this Agreement (including the
exhibits and schedules hereto and thereto) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements contained therein, in light of the
circumstances under which it was made, not false or misleading. Notwithstanding
any other provision herein to the contrary, the Selling Shareholders
acknowledge and agree that the representations and warranties set forth in this
SECTION 3.29 may be relied upon by the Purchaser and its affiliates in
connection with certain financing transactions contemplated by the Purchaser or
its affiliates.
Section 3.30 Powers of Attorney. Except as set forth in
SCHEDULE 3.30 attached hereto, there are no outstanding powers of attorney
granted by the Company to any other Person.
Section 3.31 Competency. Notwithstanding the appointment of
the Shareholder Representatives pursuant to SECTION 2.4 hereof, each of the
Selling Shareholders represents, with respect to itself and with respect to
each of the other Selling Shareholders, that each Selling Shareholder (i) is
competent to enter into this Agreement and to consummate the transactions
contemplated hereby and (ii) had separate legal counsel in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, with respect to the tax consequences to such Selling Shareholders
of entering into this Agreement and consummating the transactions contemplated
hereby.
Section 3.32 Prohibited Transactions. To the Selling
Shareholder=s Knowledge, neither the Company nor any artist engaged by the
Company has, at any time, directly or indirectly, given or offered to give any
consideration of any kind to any radio or television station or network, to any
employee thereof, or to any person, firm or corporation controlling or
influencing the station or network's programming for purposes of securing the
broadcast or promotion of any artist works hereunder.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby makes the following representations
and warranties to each Selling Shareholder, on the date of this Agreement and
on the Closing Date.
Section 4.1 Due Organization. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware with all requisite power and authority to
execute, deliver and perform this Agreement and to acquire the Common Stock as
contemplated herein.
30
Section 4.2 Authorization and Validity. The execution,
delivery and performance of this Agreement and the Transaction Documents by
each of the Purchaser and SFX have been duly and validly authorized by all
necessary action. This Agreement constitutes the legally valid and binding
obligation of the Purchaser and, with respect to SECTION 2.3(D) hereof, SFX,
enforceable against the Purchaser and, with respect to SECTION 2.3(D) hereof,
SFX, in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws and equitable
principles relating to or limiting creditors' rights generally and by general
principles of equity.
Section 4.3 Defaults. The execution and delivery of this
Agreement and the Transaction Documents by the Purchaser and the performance of
its obligations hereunder are not in violation or breach of, and do not
conflict with or constitute a default under, any law, rule or regulation of any
governmental authority or court or any of the terms or provisions of the
Purchaser's Certificate of Formation, Operating Agreement or any agreement,
license or other instrument, to which the Purchaser is a party.
Section 4.4 No Litigation. There are no actions, suits or
proceedings pending or, to the Knowledge of SFX or the Purchaser, threatened
against SFX or the Purchaser, for which service of process has been made on SFX
or the Purchaser, in any court or by or before any other governmental agency or
instrumentality that would, taken in the aggregate, materially adversely affect
the ability of SFX or the Purchaser to carry out the terms of this Agreement.
Section 4.5 No Consent Required. Except for the filings
referred to on SCHEDULE 4.5 attached hereto, no consent, approval,
authorization or order of any court or governmental agency is required for the
execution and delivery of this Agreement by the Purchaser, or SFX or for the
performance by the Purchaser, or SFX of its obligations hereunder or under the
Transactions Documents or, if required, such consent, approval, authorization
or order will have been obtained on or prior to the Closing Date.
Section 4.6 Transfer Restrictions. The Purchaser is acquiring
the Common Stock for its own account and not with a view to the distribution or
resale thereof in any transaction not exempt from the registration requirements
of the Securities Act and applicable state securities laws. The Purchaser
acknowledges that the Common Stock is subject to transfer restrictions imposed
by the Securities Act and state securities law. The Purchaser recognizes that
it will not be able to transfer the Common Stock unless it is registered under
the Securities Act or resold pursuant to an exemption under applicable
securities laws.
Section 4.7 No Brokers. No broker, finder or investment
banker has been retained or engaged on behalf of the Purchaser or its
Affiliates, or is entitled to any brokerage, finder's or other fee,
compensation or commission from any Person in connection with the transactions
contemplated by this Agreement.
31
Section 4.8 Full Disclosure. All documents and papers
delivered by or on behalf of the Purchaser or its Affiliates in connection with
this Agreement and the transactions contemplated hereby were prepared and
delivered in good faith by such Person and are complete and authentic in all
material respects. Other than with respect to the Registration Statement, a
copy of which will be provided to the Shareholder Representative within two (2)
Business Days after such Registration Statement has been publicly filed, the
Purchaser and its Affiliates have complied in good faith with all requests of
the Selling Shareholders and its representatives for documents, papers and
information relating to the Purchaser in connection with the transactions
contemplated hereby, and have not knowingly withheld any document, paper or
other information requested by the Selling Shareholders or any of its
representatives in connection herewith. No representation or warranty by the
Purchaser contained in this Agreement (including the exhibits and schedules
hereto and thereto) contains any untrue statement of material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which it was
made, not false or misleading.
Section 4.9 Capitalization. As of the Closing Date, SFX (i)
shall have net assets of not less than One Hundred Million Dollars
($100,000,000) and the Purchaser shall have provided the Shareholders
Representatives with satisfactory evidence that it can perform its obligations
under this Agreement and (ii) shall be qualified to do business in all
jurisdictions where such qualification is necessary in order to consummate this
transaction.
ARTICLE V. CERTAIN COVENANTS OF THE SELLING SHAREHOLDERS
Each Selling Shareholder covenants and agrees with the
Purchaser as follows, and shall take all action necessary to cause the Company
to comply with each of the following covenants and agreements which shall
survive the Closing as applicable:
Section 5.1 Conduct of Business.
(a) From the date hereof to and including the Closing Date,
the Company will, and the Selling Shareholders will use their best efforts to
cause the Company to, (i) conduct its operations in the ordinary course of
business consistent with past practice and use its best efforts to preserve
intact its business organization, goodwill and Permits, to keep available the
services of its officers and employees and to maintain existing relationships
with Clients, customers, accounts, agents, distributors, suppliers and others
having business dealings with the Company, (ii) maintain insurance coverages
and its books, records and accounts in the usual manner consistent with prior
practice, (iii) comply in all material respects with all laws, statutes,
ordinances, rules and regulations of Governmental Entities applicable to the
Company, (iv) maintain and keep its Properties and equipment in good repair,
working order and condition, normal wear and tear excepted, (v) maintain the
Intellectual Property and (vi) perform in all material respects its obligations
under all Contracts and commitments to which it is a party or by or to which it
is bound or subject.
32
(b) From the date hereof to and including the Closing Date,
the Company will not, and the Selling Shareholders will not permit the Company
to, directly or indirectly (i) amend or modify its Articles of Incorporation,
By-Laws or other organizational documents, (ii) authorize for issuance, issue,
sell, deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, call, commitments, subscriptions,
rights to purchase or otherwise) any Common Stock or any other direct or
indirect equity interest in the Company, or any bonds, debentures, notes, debt
instruments, evidences of indebtedness or other securities of any kind, (iii)
split, combine or reclassify any Common Stock, or declare, pay or set aside any
sum for any distribution (whether in cash, Common Stock or Property, any
combination thereof or otherwise) in respect of its Common Stock, or redeem,
purchase or otherwise acquire (or agree to redeem, purchase or otherwise
acquire) any Common Stock or any of its other securities, (iv) adopt a plan of
complete or partial liquidation, dissolution, rehabilitation, merger,
consolidation, restructuring, recapitalization, re-domestication or other
reorganization, (v) make any material change in any financial reporting, Tax or
accounting methods or practices, (vi) make any Tax election or settle or
compromise any federal, state, local or foreign income Tax liability either not
in accordance with past practice or which would have a Material Adverse Effect,
(vii) purchase or sell securities or other investments, or invest or reinvest
income and proceeds in respect thereof, other than in the ordinary course of
business consistent with past practice, (viii) other than as set forth in
SCHEDULE 5.1 attached hereto, accrued or paid any bonus to any employees
outside the ordinary course of business which in the aggregate exceeds One
Million Four Hundred Thirty Thousand Dollars ($1,430,000), (ix) incur any debt
that would constitute Long Term Debt; provided, that, with respect to CLAUSE
(IX) hereof, the Company may draw upon the Company=s existing Sanwa credit line
in the ordinary course of business, subject to the prior consent of the
Purchaser, which consent (a) will not be unreasonably withheld and (b) will be
provided within two (2) Business Days (and in the absence of any response
within such two (2) Business Day period, the Purchaser will be deemed to have
provided such consent) or, (x) without the prior written consent of the
Purchaser, take any of the other actions described in SECTION 3.10 hereof or
take any action, or omit to do any act, that individually or in the aggregate
would, or would be reasonably likely to, result in (A) any of the
representations and warranties set forth in ARTICLE III of this Agreement not
being true in all material respects (or, in the case of any such
representations or warranties which are qualified as to materiality, true in
all respects) or (B) any of the conditions set forth in ARTICLES VII AND VIII
not being satisfied or (C) any breach of any covenant or obligation hereunder
or (D) a Material Adverse Effect.
Section 5.2 Access to Information; Consultation;
Confidentiality. From the date hereof until the Closing Date, the Selling
Shareholders will, and will cause the Company to, (i) allow the Purchaser and
its officers, employees, counsel, accountants, consultants and other authorized
representatives ("PURCHASER REPRESENTATIVES") to have reasonable but complete
access to the books, records, Contracts, facilities, management and personnel
of the Company other than the provisions that have been expressly redacted,
(ii) furnish promptly to the Purchaser and the Purchaser Representatives all
information and documents concerning the Company as the Purchaser or the
Purchaser Representatives may reasonably request, and (iii) cause the
respective officers, employees and representatives of the Company and its
Affiliates to cooperate in good faith with the
33
Purchaser and the Purchaser Representatives in connection with all such access.
Information provided in the Schedules attached hereto shall, to the extent that
a specific cross-reference is provided, be deemed a disclosure in connection
with all related representations and warranties provided by the Selling
Shareholders. No investigation or review by the Purchaser or any of the
Purchaser Representatives shall affect or be deemed to modify any of the
representations, warranties, covenants or agreements of the Selling
Shareholders or the Company under this Agreement or otherwise; it being
understood that, notwithstanding any right of the Purchaser fully to
investigate the affairs of the Company, the Purchaser has the right to rely
fully upon the representations, warranties, covenants and agreements of the
Selling Shareholders contained in this Agreement.
Section 5.3 Cooperation and Reasonable Best Efforts. Subject
to the terms and conditions hereof, (a) the Selling Shareholders will cause the
Company and its Affiliates to cooperate with the Purchaser to permit the timely
consummation of the transactions contemplated by this Agreement and (b) the
Selling Shareholders will cause the Company and its Affiliates to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement in a timely manner.
Section 5.4 Consents and Approvals. As soon as reasonably
practicable after the execution of this Agreement, the Selling Shareholders
shall cause the Company and its Affiliates to obtain any necessary Consents of,
and make any filing with or give any notice to, any Governmental Entities and
other Persons as are required to be obtained, made or given by such party to
consummate the transactions contemplated by this Agreement. The parties hereto
shall cooperate with one another in exchanging such information and reasonable
assistance as may be required by any such Governmental Entity or as any other
party may request in connection with the foregoing.
Section 5.5 Notification of Certain Matters. The Selling
Shareholders and the Purchaser shall give prompt notice to the other of (a) the
occurrence or nonoccurrence of any event which would be reasonably likely to
cause any representation or warranty of the Selling Shareholders or the
Purchaser, respectively, contained in this Agreement to be untrue or inaccurate
in any material respect (or, in the case of any representation or warranty
which is qualified as to materiality, untrue or inaccurate in any respect) at
or prior to the Closing and (b) any material failure of any of the Selling
Shareholders or the Company, on the one hand, or the Purchaser, on the other
hand, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, provided, that, the delivery of any
notice pursuant to this SECTION 5.5 shall not cure such failure or limit or
otherwise affect the remedies available hereunder to the parties receiving such
notice. Any notice given pursuant to this SECTION 5.5 shall be written notice
with sufficient specificity to allow for identification and cure on the part of
the Selling Shareholders and shall be sent by facsimile or by overnight
delivery. Without limiting the generality of the foregoing, from the date
hereof through the Closing Date, the Selling Shareholders and the Purchaser
shall promptly notify the other of any action, suit, claim, proceeding or
investigation of the type required to be described in SCHEDULE 3.11 attached
hereto that is commenced or, to its or their Knowledge,
34
threatened, and of any request for additional information or documentary
materials by any Governmental Entity in connection with the transactions
contemplated hereby.
Section 5.6 No Solicitation. The Selling Shareholders, the
Company, their Affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions,
communications or negotiations, if any, with any Persons ("PRIOR BIDDERS"),
other than the Purchaser and the Purchaser Representatives, conducted
heretofore with respect to any direct or indirect acquisition of any material
portion of the assets or Properties of, or any of the Common Stock of or other
equity interest in, the Company, or any business combination with the Company
(whether by merger, consolidation or otherwise) or any other transaction
inconsistent with consummation of, or similar in whole or in part to, the
transactions contemplated herein (any of the foregoing, an "ALTERNATIVE
TRANSACTION"), and will not, directly or indirectly, solicit, encourage,
participate in or initiate discussions or negotiations with, or provide any
information or documents to, or cooperate in any way with, any Person (other
than the Purchaser and the Purchaser Representatives) concerning any
Alternative Transaction or consummate any such Alternative Transaction. In the
event that the Selling Shareholders or the Company receive any oral or written
proposal relating to an Alternative Transaction (an "ALTERNATIVE TRANSACTION
PROPOSAL"), or any inquiry is received by, any information is requested from,
or any discussions or negotiations are sought to be initiated or continued with
the Selling Shareholders or the Company in connection with an Alternative
Transaction or Alternative Transaction Proposal, the Selling Shareholders shall
(a) inform the Person making such Alternative Transaction
Proposal that the Selling Shareholders are required by contract to refrain from
discussing any Alternative Transaction,
(b) not make any other statement or engage in any other
discussions with such Person concerning any Alternative Transaction, and
(c) immediately notify the Purchaser of the Alternative
Transaction Proposal.
Section 5.7 Interim Financial Statements. From the date
hereof until the Closing Date, as soon as practicable after they become
available (and in any event within twenty five (25) Business Days after the end
of each fiscal quarter), the Selling Shareholders shall (or shall cause the
Company to) deliver to the Purchaser true and complete copies of (i) the
balance sheet of the Company as of the end of each fiscal quarter ending on or
after October 31, 1997, and the related statements of income of the Company for
such quarter, including in each case the notes (if any) and any auditor's
report thereon, and (ii) to the extent prepared, any and all other financial
statements of the Company covering any date or period during the period from
the date hereof to the Closing Date (the "INTERIM FINANCIAL STATEMENTS"). In
addition, during such period, if and when available, the Selling Shareholders
shall (or shall cause the Company to) deliver to the Purchaser true and
complete copies of any budgets, business plans and financial projections, or
modifications thereof, prepared by or on behalf of the Selling Shareholders,
the Company or their Affiliates relating to the Company. The Interim Financial
Statements will each be prepared on a basis consistent with the accounting
35
principles and practices used in the preparation of the annual Financial
Statements and in accordance with the books and records of the Company, and
will present fairly the combined financial condition of the Company as of the
respective dates thereof and the results of operations of the Company for the
respective periods then ended, subject to normal recurring year-end audit
adjustments.
Section 5.8 Insurance Coverage. The Selling Shareholders
will, and will cause the Company and its Affiliates to, cooperate with the
Purchaser, upon request, in obtaining, at the expense of the Company, continued
or replacement insurance coverage, effective as of the Closing Date, providing
coverage to the Company comparable to that provided by the policies and
Contracts listed on SCHEDULE 3.23 attached hereto. Without limiting the
generality of the foregoing, the Selling Shareholders will provide such
information, and cause the Company to complete and execute such applications,
as may be reasonably necessary to arrange for such continuation or replacement
insurance coverage.
Section 5.9 Inter-Affiliate Accounts; Affiliate Agreements.
Other than as set forth in SCHEDULE 5.9, the Selling Shareholders shall, and
shall cause the Company to, cause all accounts receivable or payable (whether
or not currently due or payable) between (i) the Company, on the one hand, and
(ii) the Selling Shareholders, or any of the directors, officers, employees or
relatives of any of the same, on the other hand, to be settled in full (without
any premium or penalty, and at values mutually agreed upon by the parties
hereto) at or prior to the Closing.
Section 5.10 Corporate Records. At or prior to the Closing,
the Selling Shareholders shall deliver to the Purchaser (or its designee) all
minute books, ledgers, books, canceled or unused stock certificates, seals,
records, files and Properties of the Company that are in the possession or
control of the Selling Shareholders or any of their other Affiliates.
Section 5.11 Instruments. Any monies, checks, drafts, money
orders, postal notes and other instruments received after the Closing by the
Selling Shareholders or any of their Affiliates (other than the Company) in
payment of any amounts due the Company shall, forthwith after receipt by the
Selling Shareholders or any of such Affiliates thereof, be transferred and
delivered by the Selling Shareholders and such Affiliates to the Company (or
other designee of the Purchaser), and any such instruments made payable to the
Selling Shareholders or any of such Affiliates when so delivered shall bear all
endorsements required to effectuate the transfer of the same to the Company (or
any such other designee).
Section 5.12 Employment Agreements. On or prior to the
Closing Date, each of the Key Personnel shall, and the Company shall cause any
other employees determined by the Purchaser and listed in SCHEDULE 5.12
attached hereto to, enter into employment contracts with the Purchaser in
substantially the form attached hereto as EXHIBIT C (the "EMPLOYMENT
AGREEMENT").
Section 5.13 BG Presents Name. From and after the Closing,
the Selling Shareholders shall not, and shall cause their Affiliates not to,
use the name "Xxxx Xxxxxx Presents" or "Fillmore"or any name containing a word
or expression similar thereto or derivative in whole or
36
in part therefrom, or use any Intellectual Property of any type which is
confusingly similar, in whole or in part, to such name or any Intellectual
Property owned or exclusively licensed by the Company, in each case, other than
with respect to the Company and its Affiliates.
Section 5.14 Non-Competition; Confidential Information. Each
Selling Shareholder that is not party to an Employment Agreement with the
Company on the Closing Date agrees that at all times during the period from the
Closing Date through the second anniversary of the Closing Date (the
"RESTRICTED PERIOD"), such Selling Shareholder shall not, directly or
indirectly (through one or more Affiliates or otherwise), (i) compete, directly
or indirectly, with the business conducted by the Company, (ii) solicit,
divert, employ or hire away (or attempt to solicit, divert, employ or hire
away), any employee, officer or agent of the Company or its Affiliates (which
for purposes of this SECTION 5.14 shall be deemed to include the Purchaser and
its Affiliates), (iii) solicit, divert, or appropriate to or for a competing
business, any Person that is a customer of the Company or its Affiliates, (iv)
appropriate to or for a competing business, any computer software, technology,
data, electronic or paper documentation and copies thereof (except and only to
the extent such software, technology or data are readily ascertainable or
available from public or published information or trade sources or was known by
such individual prior to his initial employment with the Company or its
Affiliates, (v) disclose or reveal to any Person (other than directors,
officers and authorized employees and representatives of the Company and its
Affiliates, any customer lists, trade secrets, documents or other information
relating to the business, operations or activities of the Company or its
Affiliates (except and only to the extent that such customer lists, trade
secrets or other information (a) are readily ascertainable from public or
published information or trade sources; (b) known to such individual prior to
his initial employment with the Company; or (c) upon advice of counsel, are
required to be disclosed in order to comply with applicable law or regulatory
authority, and such employee notifies the Purchaser prior to making such
disclosure), or (vi) use any such customer lists, trade secrets, documents or
information other than to the extent necessary or appropriate in the
performance of duties under the related employment agreement, if any (except
and only to the extent that such customer lists, trade secrets or other
information (a) are readily ascertainable from public or published information
or trade sources; (b) known to such individual prior to his initial employment
with the Company, or (c) upon advice of counsel, are required to be disclosed
in order to comply with applicable law or regulatory authority, and such
employee notifies the Purchaser prior to making such disclosure).
Section 5.15 Further Assurances. Each Selling Shareholder,
for himself or herself and his or her successors and assigns, hereby covenants
and agrees that, at the Purchaser's sole expense and without the assumption of
any additional liability therefor, upon the reasonable written request of the
Purchaser, such Selling Shareholder will execute and deliver to the Purchaser
and its successors and assigns such further instruments of sale, conveyance,
assignment and transfer, and take such other action in order more effectively
to sell, convey, grant, assign, transfer and deliver the Common Stock to the
Purchaser, and to assure and confirm to any other person the ownership of the
Common Stock by the Purchaser, and to permit the Purchaser to exercise any of
the rights or privileges intended to be conveyed, assigned, transferred and
delivered by such Selling Shareholder to the Purchaser pursuant to this
Agreement.
37
ARTICLE VI. COVENANTS OF THE PURCHASER
Purchaser covenants and agrees as follows:
Section 6.1 Cooperation and Reasonable Best Efforts. Subject
to the terms and conditions hereof, (a) the Purchaser will cooperate with the
Selling Shareholders and the Company to permit the timely consummation of the
transactions contemplated by this Agreement and (b) the Purchaser will use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement in a timely manner.
Section 6.2 Consents and Approvals. As soon as reasonably
practicable after the execution of this Agreement, the Purchaser will use
commercially reasonable efforts to obtain any necessary Consents of, and make
any filing with or give any notice to, any Governmental Entities and other
Persons as are required to be obtained, made or given by such party to
consummate the transactions contemplated by this Agreement. The parties hereto
shall cooperate with one another in exchanging such information and reasonable
assistance as may be required by any such Governmental Entity or as any other
party may request in connection with the foregoing.
ARTICLE VII. CONDITIONS OF THE SELLING SHAREHOLDERS TO CLOSE
The obligations of the Selling Shareholders to sell and
transfer their Common Stock at the Closing shall be subject to the satisfaction
or waiver of the following conditions at or prior to the Closing.
Section 7.1 Representations, Warranties and Covenants. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct, as of the date of this Agreement and (except for any
such representations and warranties which are made as of and relate solely to a
particular date) as of the Closing Date with the same force and effect as
though made on and as of the Closing Date, except for such failures that do not
in the aggregate have a Material Adverse Effect on the Purchaser. The Purchaser
shall have performed and complied in all material respects with all covenants
and agreements required to be performed or complied with by the Purchaser
hereunder on or prior to the Closing Date.
Section 7.2 Consents. All Consents required to be obtained by
the Purchaser in connection with the consummation of the transactions
contemplated hereby shall have been duly obtained, made or given and shall be
in full force and effect.
Section 7.3 No Litigation or Illegality. No action, suit,
claim, proceeding or investigation by any Governmental Entity or other Person
shall be pending which questions the
38
validity or legality of the transactions contemplated hereby or which could
reasonably be expected to have a material adverse effect on the ability of the
Purchaser to execute and deliver this Agreement, perform its obligations
hereunder or consummate the transactions contemplated hereby. No injunction,
order, decree or judgment shall have been issued by any Governmental Entity and
be in effect, and no statute, rule or regulation shall have been enacted or
promulgated by any Governmental Entity and be in effect, which in each case
restrains, modifies or prohibits the consummation of the transactions
contemplated hereby or is reasonably likely to have a material adverse effect
on the ability of the Purchaser to execute and deliver this Agreement, perform
its obligations hereunder or consummate the transactions contemplated hereby.
Section 7.4 Certificates. The Purchaser shall have delivered
to the Selling Shareholders a certificate dated the Closing Date, signed by
officers of the Purchaser, certifying as to the satisfaction of the conditions
set forth in SECTION 7.1 relating to representations, warranties, covenants and
agreements of the Purchaser. In addition, the Purchaser shall have furnished
the Shareholder Representatives with such other certificates and closing
documents as the Shareholder Representatives may reasonably request and as are
customary for transactions such as those contemplated hereby, including a
complete copy of the Certificate of Formation and Operating Agreement of the
Purchaser with a certification of authenticity by the Secretary of the
Purchaser.
Section 7.5 Agreements. The Purchaser (or its designee) shall
have duly executed and delivered this Agreement and each of the Transaction
Documents; and the Purchaser shall have caused the Company, or the Company
shall otherwise have entered into, the Employment Agreements in accordance with
SECTION 5.12.
Section 7.6 Receipt of Purchase Price . The Shareholder
Representative shall have received the Purchase Price as contemplated by
SECTION 2.3(A) hereof.
Section 7.7 Opinion of Counsel to the Purchaser. The Selling
Shareholders shall have received the opinion, dated the Closing Date, of (i)
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel of Purchaser, and (ii) Xxxxx
XxXxxxxx, securities counsel to the Purchaser, in form reasonably acceptable to
each such counsel and to counsel for the Selling Shareholders.
Section 7.8 Base Price. The Selling Shareholders shall have
received documentation reasonably satisfactory to the Selling Shareholder that
the Base Price valuation of Thirteen Dollars and Thirty-Three Cents ($13.33) is
the lowest price used by Xxxxxx F.X. Sillerman in his personal acquisition of
the SFX Stock and the Class B Common Stock of SFX.
Section 7.9 HSR. The applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 shall have expired or been
terminated.
ARTICLE VIII. CONDITIONS OF THE PURCHASER TO CLOSE
39
The obligation of the Purchaser to purchase the Common Stock
at the Closing shall be subject to the satisfaction or waiver of the following
conditions at or prior to the Closing.
Section 8.1 Representations, Warranties and Covenants. The
representations and warranties of the Selling Shareholders contained or
incorporated by reference in this Agreement shall be true and correct, as of
the date of this Agreement and (except for any such representations and
warranties which are made as of and relate solely to a particular date) as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date, except for such failures that do not in the aggregate have a
Material Adverse Effect. Each of the Selling Shareholders and the Company shall
have performed and complied in all material respects with all covenants and
agreements required to be performed or complied with by such parties hereunder
on or prior to the Closing Date.
Section 8.2 Consents. All Consents required to be obtained by
the Selling Shareholders or the Company in connection with the consummation of
the transactions contemplated hereby shall have been duly obtained, made or
given in a form and substance reasonably satisfactory to the Purchaser and
shall be in full force and effect, without the imposition upon the Purchaser or
the Company of any material condition, restriction or required undertaking.
(a) The Company shall have received each of the consents
referred to in SCHEDULE 3.15 attached hereto, unless the failure to obtain such
consent would have a Material Adverse Effect on the Company.
(b) The Company shall have received any consent of Sanwa Bank
necessary in order to consummate the transactions contemplated hereby.
Section 8.3 No Litigation or Illegality. No action, suit,
claim, proceeding or investigation by any Governmental Entity or other Person
shall be pending which questions the validity or legality of the transactions
contemplated hereby or which could reasonably be expected to have a Material
Adverse Effect. No injunction, order, decree or judgment shall have been issued
by any Governmental Entity and be in effect, and no statute, rule or regulation
shall have been enacted or promulgated by any Governmental Entity and be in
effect, which in each case restrains, modifies or prohibits the consummation of
the transactions contemplated hereby or is reasonably likely to have a Material
Adverse Effect.
Section 8.4 No Material Adverse Change. Other than as set
forth on the Schedules attached hereto, there shall have been no material
adverse change in the business, operations, assets, Properties, Liabilities,
condition (financial or otherwise), results of operations, prospective business
opportunities, to the actual Knowledge of the Selling Shareholders, or Permits
of the Company since October 31, 1997.
Section 8.5 Opinion of Counsel to the Selling Shareholders
and the Company. The Purchaser shall have received the opinion, dated the
Closing Date, of Greene, Radovsky,
40
Xxxxxxx & Share, counsel to the Selling Shareholders and the Company, in form
reasonably acceptable to such counsel and to counsel for the Purchaser, which
opinion shall provide (i) that such opinion may be relied upon by counsel to
SFX and its affiliates, bank counsel, if any, and underwriter counsel, if any,
in connection with any financing contemplated by SFX and its affiliates and
(ii) that counsel for the Selling Shareholders shall agree to render an
opinion, in form reasonably acceptable to counsel for the Purchaser, directly
to SFX or any third party financier relating to such proposed financing.
Section 8.6 Certificates. The Selling Shareholders and the
Company shall have delivered to the Purchaser a certificate dated the Closing
Date, signed by each of the Selling Shareholders, certifying as to the
satisfaction of the conditions set forth in ARTICLE III relating to the
representations, warranties, covenants and agreements of the Selling
Shareholders. In addition, the Selling Shareholders and the Company shall have
furnished the Purchaser with such other certificates and closing documents as
the Purchaser may reasonably request and as are customary for transactions such
as those contemplated hereby, including a complete copy of the Certificate of
Incorporation and By-Laws of the Company with a certification of authenticity
by the Secretary of the Company.
Section 8.7 Agreements. The Selling Shareholders shall have
duly executed and delivered this Agreement; each of the Key Personnel shall
have duly executed and delivered an Employment Agreement in accordance with
SECTION 5.12; and the Company shall have duly executed and delivered the
Transaction Documents.
Section 8.8 Transfer Taxes. Pursuant to SECTION 10.13 hereof,
the Selling Shareholders shall have paid, or caused to be paid or made
arrangements to pay on or before the appropriate filing date (including
extensions to file), all transfer and other Taxes required to be paid in
connection with the sale and delivery to the Purchaser of the respective Common
Stock owned by each Selling Shareholder, and shall have caused all appropriate
stock transfer Tax stamps to be affixed to the certificate or certificates
representing the Common Stock so sold and delivered.
Section 8.9 Delivery of Stock Certificates. Each Selling
Shareholder shall have delivered to the Purchaser a certificate or certificates
representing all outstanding shares of Common Stock owned by such Selling
Shareholder, duly endorsed in blank for transfer or accompanied by stock powers
duly executed in blank, together with all necessary stock transfer stamps
affixed thereto, which shall be valid and effective to convey all right, title
and interest in and to such shares of Common Stock to the Purchaser, free and
clear of any and all Liens or Encumbrances. In the alternative, (i) each
Selling Shareholder shall have delivered to the Company a certificate or
certificates representing all outstanding shares of Common Stock owned by such
Selling Shareholder, duly endorsed to the Company for transfer or accompanied
by stock powers duly executed in favor of the Company, together with all
necessary stock transfer stamps affixed thereto, which shall be valid and
effective to convey all right, title and interest in and to such shares of
Common Stock to the Company, free and clear of any and all Liens or
Encumbrances and (ii) the Company shall issue to the Purchaser a single stock
certificate representing the aggregate shares of
41
Common Stock transferred by the Selling Shareholders, together with all
necessary stock transfer stamps affixed thereto, which shall be valid and
effective to convey all right, title and interest in and to such shares of
Common Stock to the Purchaser, free and clear of any and all Liens or
Encumbrances.
Section 8.10 Releases. Satisfaction or mutual termination of
all obligations between any Selling Shareholder and the Company (excluding the
Employment Agreements and the items disclosed in SCHEDULE 3.15(XII)(B) and (C)
attached hereto); general unconditional releases by each Selling Shareholder of
the Company from any and all Liabilities (known or unknown); and evidence of
the release of all security interests in any Company Property held by any party
except Purchaser and it Affiliates.
Section 8.11 Subsidiaries. Other than as set forth below, the
Company shall have acquired all of the ownership interests held by any Person
other than the Company in any Company Subsidiary. ------------
(a) The arrangements set forth in the Fillmore Theatrical
Services documents shall have been modified to the satisfaction of the
Purchaser, which modification may include, without limitation, the purchase of
the interest in Fillmore Theatrical Services which are held by Xxxxxxx X.
Xxxxxx, Inc. for an aggregate amount equal to Six Thousand Dollars ($6,000),
which purchase shall be consummated if at all on or prior to the Closing Date.
(b) The arrangements set forth in the Liquor License Trust
shall have been modified to the satisfaction of the Purchaser, which
modifications may include, without limitation, the replacement of Xxxxxxx X.
Xxxxxx, Esq. as trustee of the Liquor License Trust.
Section 8.12 Waivers. Each of the Selling Shareholders will
have provided the Company with written waivers of such Selling Shareholders
rights under any shareholder or other agreement entered into with other
shareholders or with the Company.
Section 8.13 Archives. The Selling Shareholders acknowledge
and agree that, other than the excluded archive materials, described in
SCHEDULE 3.15(IX) hereof, the posters, handbills, tickets, photographs, slides,
videos, audio tapes and other archival materials referenced in that certain
Agreement Regarding Archives dated January 2, 1995, between Xxxx Xxxxxx
Enterprises, Inc., a California corporation, and certain beneficiaries of the
Estate of Xxxxxxx Xxxxxx (the "ARCHIVES AGREEMENT"), are assets of the Company
to be transferred to the Purchaser and, in connection therewith, (i) each of
the Selling Shareholders will have provided an assignment to the Purchaser of
any rights of such Selling Shareholders set forth in the Archives Agreement,
including, without limitation, the right to "Amatch" offers and (ii) the
Company shall have clean title to the Archives free and clear of any and all
Liens or Encumbrances.
Section 8.14 HSR. The applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 shall have expired or been
terminated.
42
Section 8.15 Terminations.
(a) The Buy-Sell Agreement referenced in SCHEDULE 3.3
attached hereto shall have been terminated.
(b) The BGP Partnership formed in connection with the
Buy-Sell Agreement shall have been dissolved.
(c) Any current employment agreement of any Selling
Shareholder shall have been terminated.
(d) The references to Xxxxx Xxxxxxx and Xxxxxx Xxxxxxxxx set
forth in the Xxxx Xxxxxx Resort Corporation Agreement referenced in item (viii)
of SCHEDULE 3.15 attached hereto shall have been deleted.
Section 8.16 Due Diligence. Subsequent to the date hereof and
prior to the Closing, the Purchaser shall have been allowed full access to the
books and records of the Company and shall have been provided with copies of
all documents requested (without any deletion or redaction) by the Purchaser.
Section 8.17 Leases.
(a) A written lease shall be entered into in connection with
the Fillmore Auditorium referenced in item (viii) of SCHEDULE 3.10(B) attached
hereto.
(b) A written lease shall be entered into in connection with
the Xxxxxxxx Theater referenced in item (ix) of SCHEDULE 3.10(B) attached
hereto.
Section 8.18 Name and Likeness. Each Selling Shareholder
hereby assigns and transfers to the Company any and all of such Selling
Shareholder's rights, title and interest in and to the "name" (as such
ownership right is used in Section 990 of the California Civil Code) "Xxxx
Xxxxxx", in connection with the use of such name in the business of the Company
and its Affiliates, including, without limitation, with respect to the business
of concert promotions, venue ownership and production, record production,
artist management, restaurant/club operation, theatrical presentations (other
than with respect to the name of any show), side shows and the exploitation of
the Archives. It is understood that this Agreement does not alter the rights of
the natural sons of Xxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxxxx X. Xxxxxx-Xxxx, to
use their father's name in situations not described in the preceding sentence.
ARTICLE IX. INDEMNIFICATION
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Section 9.1 Survival. The representations and warranties of
the parties contained in this Agreement, or in any Schedule or Exhibit hereto
or any certificate delivered pursuant hereto, shall survive until the first
anniversary of the Closing Date; provided, that, the representations and
warranties contained in ARTICLE X shall survive for the applicable statute of
limitations periods. No claim for indemnification for breach of a
representation or warranty may be asserted after the expiration of the
Indemnity Period; provided, that, the written assertion of any claim by a party
against the other hereunder with respect to the breach or alleged breach of any
representation or warranty (or a series of facts which would support such
breach) shall extend the Indemnity Period with respect to such claim through
the date such claim is conclusively resolved. No investigation by either party
shall relieve the other party from any liability for any misrepresentation or
breach of warranty made by such other party in this Agreement, or in any
Schedule or Exhibit hereto or any certificate delivered pursuant hereto. With
respect to any matters covered by the indemnity provisions set forth in this
ARTICLE IX, the indemnification provisions set forth herein shall be the sole
remedy available to any party hereunder with respect to such matter, other than
any claim of fraud or intentional misrepresentation in connection with this
Agreement; provided, that, notwithstanding any other provision herein to the
contrary, each party acknowledges and agrees that each party shall be entitled
to a decree of specific performance or any other appropriate equitable remedy
to enforce the terms and conditions of this Agreement prior to the Closing
Date.
Section 9.2 Indemnification.
(a) The Selling Shareholders hereby severally agree to
indemnify, defend and hold harmless the Purchaser (and its directors, officers,
employees, Affiliates, successors and assigns) from and against any losses,
Liabilities, damages, expenses, claims, fines, penalties, interest, costs of
investigation, assessments, judgments, actions, proceedings and suits of
whatever kind and nature and all costs and expenses relating thereto
(including, without limitation, in-house and outside attorneys' fees and
expenses) incurred in connection with the investigation or defense thereof or
in asserting rights hereunder (collectively, "LOSSES"), based upon, arising out
of or otherwise resulting from (i) any inaccuracy in any representation or
breach of any warranty of the Selling Shareholders contained in this Agreement
or in any Exhibit, Schedule or certificate delivered pursuant hereto, (ii) the
breach or nonfulfillment of any covenant (including, without limitation, the
covenant set forth in SECTION 5.16), agreement or other obligation of the
Selling Shareholders under this Agreement (other than the Employment
Agreements) which breach or nonfulfillment remains uncured for thirty (30) days
after the date of written notice of the breach or nonfulfillment or (iii) any
liabilities referenced in Items 1 and 2 of SCHEDULE 3.9 attached hereto.
Notwithstanding anything herein to the contrary, in the event the Closing is
consummated, the Selling Shareholders hereby irrevocably and unconditionally
waive and agree never to assert or exercise any rights of contribution against
the Company in respect of their indemnification obligations or any Liabilities
for breach of any representation, warranty, covenant, agreement or obligation
concerning pre-Closing matters hereunder other than with respect to any right
of indemnification set forth in the By-laws of the Company or its Subsidiaries.
44
(b) The Purchaser hereby agrees to indemnify, defend and hold
harmless the Selling Shareholders (and their successors and assigns) from and
against any Losses based upon, arising out of or otherwise resulting from (i)
any inaccuracy in any representation or breach of any warranty of the Purchaser
contained in this Agreement or in any schedule or certificate delivered
pursuant hereto or thereto or (ii) the breach or nonfulfillment of any
covenant, agreement or other obligation of the Purchaser under this Agreement
(other than the Employment Agreements).
(c) Other than with respect to the payment of the Purchase
Price by the Purchaser, but notwithstanding any other obligation herein, the
Purchaser, on the one hand, and the Selling Shareholders, on the other hand,
shall be entitled to indemnification under this SECTION 9.2 only if the
aggregate amount of Losses suffered by Purchaser, on the one hand, or the
Selling Shareholders, on the other hand, exceeds Three Hundred Twenty Five
Thousand Dollars ($325,000), in which event the Purchaser or the Selling
Shareholders, as the case may be, shall be entitled to indemnification
hereunder for the sum of (i) One Hundred Thirty Seven Thousand Five Hundred
Dollars ($137,500) plus (ii) the amount by which the aggregate amount of Losses
exceeds Three Hundred Twenty Five Thousand Dollars ($325,000); up to, and
including (i) in the case of the Selling Shareholders, an amount equal to the
payments, at any time, received by the Selling Shareholders (or to which the
Selling Shareholders are at any later date otherwise entitled), severally, from
the Purchaser pursuant to ARTICLE II hereof and (ii) in the case of the
Purchaser, an amount equal to the payments, at any time, made by the Purchaser
to the Selling Shareholders, in the aggregate, pursuant to ARTICLE II hereof;
provided, that, the limitation set forth in this CLAUSE (C) shall not apply to
any claim of fraud or intentional misrepresentation in connection with this
Agreement or any claim with respect to the matters set forth in SECTIONS 3.5 OR
3.6.
(d) Promptly after the receipt by any party hereto of notice
of any third party claim or the commencement of any third party action, suit or
proceeding subject to indemnification hereunder (a "THIRD PARTY CLAIM"), such
party (the "INDEMNIFIED PARTY") will, if a claim in respect thereto is to be
made against any party obligated to provide indemnification hereunder (the
"INDEMNIFYING PARTY"), give such Indemnifying Party reasonable written notice
of such Third Party Claim; provided, that, the failure to provide such notice
will not relieve the Indemnifying Party of any of its or his obligations, or
impair the right of the Indemnified Party to indemnification, pursuant to this
SECTION 9.2 unless, and only to the extent that, such failure materially
prejudices the Indemnifying Party's opportunity to defend or compromise the
Third Party Claim. Such Indemnifying Party shall have the right, at its or his
option, to defend at its or his own expense and by its or his own counsel any
Third Party Claim, provided that (i) the Indemnifying Party acknowledges in
writing (at the time such Indemnifying Party elects to assume such defense) its
or his obligation under this SECTION 9.2 to indemnify the Indemnified Party
with respect to such Third Party Claim, (ii) such counsel is reasonably
satisfactory to the Indemnified Party, (iii) the Indemnified Party is kept
fully informed of all developments, and is furnished with copies of all
documents and papers, related thereto and is given the right to participate in
the defense and investigation thereof as provided below, and (iv) such counsel
proceeds with diligence and in good faith with respect thereto. If any
Indemnifying Party shall undertake to defend any Third Party Claim, such
Indemnifying Party shall notify the Indemnified Party of its or his intention
to do so
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promptly (and in any event no later than twenty (20) days) after receipt of
notice of the Third Party Claim, and the Indemnified Party agrees to cooperate
in good faith with the Indemnifying Party and its counsel in the defense of
such Third Party Claim. Notwithstanding the foregoing, the Indemnified Party
shall have the right to participate in the defense and investigation of any
Third Party Claim with its own counsel at its or his own expense, except that
the Indemnifying Party shall bear the expense of such separate counsel if (A)
in the view of counsel to the Indemnified Party reasonably acceptable to the
Indemnifying Party, use of counsel of the Indemnifying Party's choice would be
expected to give rise to a conflict of interest, (B) there are or may be legal
defenses available to the Indemnified Party that are different from or
additional to those available to the Indemnifying Party, (C) the Indemnifying
Party shall not have employed counsel to represent the Indemnified Party within
a reasonable time after notice of the Third Party Claim is given to the
Indemnifying Party or notice that the Indemnifying Party intends to assume the
defense of the Third Party Claim is given to the Indemnified Party or (D) the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the expense of the Indemnifying Party. The Indemnifying Party shall
not settle any Third Party Claim without the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld; provided, that, an
Indemnified Party shall not be required to consent to any settlement involving
the imposition of equitable remedies; and, provided, further, that, in no
circumstances shall the Indemnifying Party consent to the entry of a judgment
with respect to any Third Party Claim or enter into any settlement which does
not include a provision whereby the plaintiff or claimant in such matter
releases the Indemnified Party from all Liability with respect thereto.
Section 9.3 Tax Indemnification. Notwithstanding anything in
this ARTICLE IX to the contrary, the rights and obligations of the parties with
respect to the breach of representations, warranties, covenants, and agreements
set forth in ARTICLE X (concerning Tax Matters) and the indemnification for
Taxes shall be governed by the provisions of ARTICLE X and not by this ARTICLE
IX unless otherwise stated in a specific Section of this Agreement.
ARTICLE X. TAX MATTERS
Section 10.1 Representations and Warranties. The Selling
Shareholders hereby represent and warrant to the Purchaser as follows:
(a) All Tax Returns required to be filed on or before the
Closing Date have been or will be timely filed. All such Tax Returns (i) were
or will be prepared in the manner required by applicable law, (ii) are or will
be true, correct and complete and (iii) accurately reflect or will so reflect
the liability for applicable Taxes. All Taxes shown to be payable on such Tax
Returns, and all assessments of Tax made with respect to such Tax Returns, have
been paid or will be fully paid when due. No adjustment relating to such Tax
Returns has been proposed formally or informally by any taxing authority and,
to the Knowledge of the Company, no basis exists for any such adjustment.
46
(b) The Company has paid, caused to be paid, or has accrued
or provided a sufficient reserve, including deferred Tax liabilities (the "TAX
RESERVE"), on the Financial Statements for the payment of, all Taxes of the
Company, whether to taxing authorities or to other persons or entities, with
respect to all Pre-Closing Taxable Periods.
(c) The Company has withheld or will withhold from its
employees, customers, and other payees (and timely paid to the appropriate
government entity) all amounts required by the Tax withholding provisions of
applicable federal, state, local, and foreign laws (including, without
limitation, income, social security, and employment Tax withholding for all
types of compensation, and withholding on payments to non-United States
persons) for all Pre-Closing Taxable Periods.
(d) Except as set forth on SCHEDULE 3.11 attached hereto,
there are no claims or investigations by the IRS or any other taxing authority
pending or threatened, to the Knowledge of the Selling Shareholders, against
the Company for any past due Taxes; there has been no waiver granted or
requested of any applicable statute of limitations or extension of the time for
the assessment of any Tax for which the Company or the Selling Shareholders
could be liable under any provision of federal, state, local, or foreign law;
there are no outstanding requests for information made by a taxing authority to
the Company or the Selling Shareholders; and there are no outstanding requests
by the Company or the Selling Shareholders to a taxing authority for a ruling,
determination, permission, consent, or similar item. No closing agreement (as
defined in Section 7121 of the Code) or any similar provision of any state,
local, or foreign law has been entered into by or with respect to the Company
or the Selling Shareholders.
(e) Except for liens for real and personal property taxes
that are not yet due and payable, there are no Liens or Encumbrances for any
Tax upon the Common Stock or upon any asset of the Company.
(f) Except as provided on SCHEDULE 3.30 attached hereto, no
power of attorney that is currently in force has been granted to any person
with respect to any matter relating to Taxes that could affect the Company.
(g) None of the Selling Shareholders is a foreign person
within the meaning of Section 1.1445-2(b) of the Treasury Regulations, and no
amount of Tax is otherwise required to be withheld pursuant to any provision of
law as a result of any of the transactions contemplated by this Agreement.
(h) Except as set forth in SCHEDULE 10.1(H) attached hereto,
the Company does not have any item of income, gain, loss, or deduction
reportable in a Taxable Period ending after the date hereof but attributable to
a transaction (e.g., an installment sale, a deferred inter- company
transaction, or a section 481 adjustment) that occurred in a Taxable Period or
portion thereof ending on or before the date hereof.
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Section 10.2 Filing of Tax Returns and Payment of the Tax.
(a) The Selling Shareholders shall cause the Company to
timely file or cause to be timely filed all Tax Returns that are required to be
filed (with extensions) on or before the Closing Date. All such Tax Returns
shall be prepared in a manner consistent with past practice, except as required
by applicable law or with the consent of the Purchaser. The Company shall
timely pay or cause to be timely paid all Tax reported, or required to be
reported, on such Tax Returns. The Purchaser shall prepare and file, or cause
the Company to prepare and file, all Tax Returns other than those required to
be filed by the Selling Shareholders pursuant to this SECTION 10.2(A).
(b) The Selling Shareholders shall cooperate fully with the
Purchaser and the Company, as and to the extent reasonably requested by the
Purchaser or the Company, in connection with the filing of Tax Returns that
they are required to file pursuant to the last sentence of SECTION 10.2(A)
hereof and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such Tax Return, audit, litigation or other proceeding.
Section 10.3 Apportionment. Except as otherwise required by
applicable law, for any Taxable Period that begins on or before and ends after
the Effective Date, for purposes of apportioning a Tax to the portion of such
Taxable Period that ends on the Effective Date, (i) the parties shall treat the
Pre-Effective Date as the last day of such Taxable Period and (ii) the Tax for
the Taxable Period that is allocable to the portion of the Taxable Period
ending on the Pre-Effective Date shall be (A), in the case of a Tax that is not
based on income or gross receipts, the total Tax for the Taxable Period
multiplied by a fraction, the numerator of which is the number of days in the
Taxable Period ending on the Pre-Effective Date and the denominator of which is
the total number of days in such Taxable Period, and (B) in the case of a Tax
that is based on income or gross receipts, the Tax that would be due with
respect to the period ending on the Pre-Effective Date, based on actual
operations of the Company during such period as shown on its permanent books
and records.
Section 10.4 Indemnification by the Selling Shareholders.
Subject to the limitations contained in CLAUSE (E) hereof and SECTION 9.2(D)
hereof, and in the event the aggregate amount of tax liability suffered by the
Purchaser (as set forth below) exceeds Excess Working Capital (or in the case
of the liabilities described in Items 2 and 7 of SCHEDULE 3.11, exceeds the sum
of Excess Working Capital plus One Hundred Thousand Dollars ($100,000)), the
Selling Shareholders hereby agree, severally, to indemnify, defend, and hold
the Purchaser and the Company (and their respective officers, directors,
employees, affiliates, successors and assigns) harmless from and against (other
than with respect to such excess working capital amount):
(a) any and all Taxes incurred by the Purchaser or the
Company in connection with or arising from any inaccuracy, breach, or
nonfulfillment of any representation,
48
warranty, covenant, or agreement of such Selling Shareholder contained in or
made pursuant to this ARTICLE X;
(b) any and all unpaid federal, state, local, or foreign
Taxes imposed on the Company, directly or indirectly, including any penalties
and interest in respect thereof, pursuant to any guaranty, indemnification or
similar agreement made on or before the Closing Date relating to the sharing of
liability for, or payment of, Taxes;
(c) any and all Taxes imposed pursuant to Section 1441 of the
Code (concerning withholding of Tax on nonresident aliens) or Subchapter A,
Chapter 24, of the Code (concerning withholding from wages) with respect to any
payment made by the Purchaser or the Company to the Selling Shareholder
pursuant to this Agreement; and
(d) any cost or expense (including, without limitation,
reasonable attorneys' and accountants' fees) incurred by the Purchaser, the
Company, or any of their successors or assigns in connection with any Tax
described in this SECTION 10.4.
(e) Notwithstanding any provision herein to the contrary, (i)
the aggregate amount to be paid by any Selling Shareholder to the Company
pursuant to SECTION 9.2(A) and this SECTION 10.4 shall not exceed an amount
equal to the payments, at any time, received by the Selling Shareholders (or to
which the Selling Shareholders are at any later date otherwise entitled)
severally, from the Purchaser pursuant to ARTICLE I hereof and (ii) with
respect to the potential liabilities referenced in item 2 and item 7 of
SCHEDULE 3.11 attached hereto, the Selling Shareholders severally shall
indemnify the Purchaser for any amount of tax liability suffered by the
Purchaser in excess of the sum of (i) One Hundred Thousand Dollars ($100,000),
and (ii) Excess Working Capital.
Section 10.5 Tax Adjustments. The amount of any Tax or other
amount for which indemnification is provided under SECTION 9.2, 10.4 OR 10.5
hereof shall be (i) increased to take account of any Tax incurred by the
Indemnified Party arising from the receipt or right to receive the indemnity
payments hereunder (increased by any Tax incurred with respect to such
increased amount) and (ii) reduced to take into account (A) any reduction of
Tax realized by the Indemnified Party arising from the incurrence or payment of
the amount for which indemnification is provided and (B) insurance proceeds
received, if any, by the Indemnified Party in connection with such Tax.
Section 10.6 Access to Information. From the date hereof, the
Selling Shareholders shall, and shall cause the Company to, make available to
the Purchaser and its Representatives, and the Purchaser shall cause to be made
available to the Company and its Representatives: (a) all Tax Returns and all
documents and records in connection with the preparation thereof for Taxable
Periods ending on or before the Pre-Effective Date and any examination reports
and statements of deficiencies assessed against, proposed to be assessed
against, or agreed to by the Company for such Taxable periods; and (b) any Tax
sharing or allocation agreement or arrangement involving the Company at any
time during the ten-year period ending on
49
the date hereof and a true and complete description of any such unwritten or
informal agreement or arrangement.
Section 10.7 Books and Records. The Purchaser shall retain or
cause the Company to retain all books and records pertinent to the Company for
each Taxable Period or portion thereof ending on or prior to the Pre-Effective
Date until the expiration of the applicable statute of limitations (giving
effect to any and all extensions and waivers) and to abide by or cause
compliance with all record retention agreements entered into by or on behalf of
the Company with any taxing authority.
Section 10.8 Notice of Audit. If any party to this Agreement
receives any written notice from any taxing authority proposing an adjustment
to any Tax for which any other party hereto may be obligated to indemnify under
this Agreement, such party shall give prompt written notice thereof to the
other that describes such proposed adjustment in reasonable detail ("NOTICE OF
AUDIT"), and shall indicate the amount (estimated, if necessary) of the Tax and
other items described in SECTION 10.1 OR 10.2 hereof that may be suffered by
the Purchaser, the Company, or the Selling Shareholders, as the case may be.
The failure to give a Notice of Audit pursuant to this SECTION 10.9, however,
shall not reduce the obligations of a party hereunder unless, and to the extent
that, such failure prejudices the rights of the other party to contest such
Tax.
Section 10.9 Tax Contest. The party from whom indemnification
is sought pursuant to this ARTICLE X (the "INDEMNIFYING TAX PARTY") and its
duly appointed Representatives shall have the sole right to defend, negotiate,
resolve, settle or contest any claim for Tax made by a taxing authority with
respect to which the Indemnifying Tax Party has indemnified the person seeking
indemnification under this ARTICLE X (the "INDEMNIFIED TAX PARTY"); provided,
that (i) the contest of such claim can be pursued on a basis separate from and
without implication for any other Tax items or portions of Tax Returns of the
Indemnified Tax Party or its Affiliates not relating to the indemnified Tax;
(ii) the Indemnifying Tax Party shall, upon the request of the Indemnified Tax
Party, acknowledge in writing its liability to the Indemnified Tax Party for
the contested Tax and any additional interest, penalties, or expenses arising
as a result of such contest; and (iii) the Indemnifying Tax Party shall not
initiate any claim, settle any issue, file any amended Tax Return, take or
advocate any position or otherwise take any action that could adversely affect
the Indemnified Tax Party or any of its Affiliates (including, but not limited
to, the imposition of income Tax deficiencies, the reductions of asset basis,
or cost adjustments, the lengthening of any amortization or depreciation
period, the denial of amortization or depreciation deductions, or the reduction
of loss or credit carry-forwards), without the written consent of the
Indemnified Tax Party, which consent shall not be unreasonably withheld; and
provided, further, that, the Indemnified Tax Party may, at its own expense,
participate in the defense, negotiation, resolution, settlement or contest of
such claim, and employ counsel of its choice for purposes of such
participation. If the Indemnifying Tax Party does not assume the defense of a
claim for the Tax made by a taxing authority with respect to which the
Indemnifying Tax Party has indemnified the Indemnified Tax Party under this
ARTICLE X (or which the Indemnifying Tax Party has not acknowledged its
liability to the Indemnified Tax Party), the Indemnified Tax Party may defend
the same at the reasonable
50
expense of the Indemnifying Tax Party in such manner as it may deem appropriate
including, but not limited to, settling such audit or proceeding with the
consent of the Indemnifying Tax Party, which consent shall not be unreasonably
withheld. All costs and expenses reasonably incurred by the Indemnified Tax
Party in connection with such defense (including, without limitation,
reasonable attorney' and accountants' fees) shall be reimbursed by the
Indemnifying Tax Party.
Section 10.10 Transfer Taxes. The Company shall bear the cost
of any documentary, stamp, transfer, or similar transfer tax payable with
respect to the transfer of the Common Stock to the Purchaser.
Section 10.11 Miscellaneous. All representations and
warranties contained in this ARTICLE X with respect to any Tax shall survive
the Closing and shall terminate and expire thereafter on the later to occur of
(i) the lapse of the applicable statute of limitations with respect to the
assessment of such Tax (including any extensions thereof) and (ii) sixty (60)
days after the final administrative or judicial determination thereof, and no
claim may be asserted thereafter with the exception of claims arising out of
any fact, circumstance, action, or proceeding to which the party asserting such
claim shall have given notice to the other parties to this Agreement prior to
the termination of such period of the reasonable belief that a Tax or other
item described in SECTION 10.1 OR SECTION 10.2 hereof will subsequently arise
therefrom.
(a) For purposes of this ARTICLE X, all Taxes shall be
determined without regard to the carry-back of any net operating loss, capital
loss, general business credit, or other tax attribute incurred on or after the
Effective Date.
(b) Any indemnification payment made to the Selling
Shareholders, the Purchaser, or the Company pursuant to any provision of this
Agreement shall be treated for Tax purposes as an adjustment to the
consideration for the purchase of the Common Stock unless otherwise required by
applicable law.
ARTICLE XI. RIGHT OF FIRST REFUSAL
11.1 Restriction on Sale of Company. The Purchaser shall not,
for a period of three (3) years following the Closing Date, sell all, or
substantially all, of the assets of the Company, as of the date hereof (the
"COMPANY ASSETS"), whether pursuant to an asset sale or a sale of the Common
Stock of the Company, as the case may be, whether for consideration or
otherwise, except in accordance with the provisions set forth herein; provided,
that, the provisions of this ARTICLE XI shall not be applicable to a transfer
of Company Assets between the Purchaser and an Affiliate of the Purchaser.
11.2 Bona Fide Offer. Upon receipt by the Purchaser of a bona
fide offer in writing from a third party (a "BONA FIDE OFFER") to purchase the
Company Assets, which the Purchaser wishes to accept, the Purchaser shall
promptly offer in writing (the "REOFFER") to sell such
51
Company Assets to the Selling Shareholders, upon terms and conditions which are
no less favorable to the Selling Shareholders than those contained in the Bona
Fide Offer and shall attach a copy of the Bona Fide Offer to the Reoffer. The
Reoffer may be accepted by the Selling Shareholders by written notice to the
Purchaser within ten (10) Business Days next following the Selling
Shareholders's receipt of such Reoffer. Acceptance of the Reoffer may only be
for all of the Company Assets to which the Bona Fide Offer relates.
11.3 Sale to the Selling Shareholders. The aggregate purchase
price to be paid for the Company Assets purchased in accordance with the terms
and provisions of this ARTICLE XI by the Selling Shareholders shall be paid in
cash equal to the cash value of the aggregate purchase price set forth in the
Bona Fide Offer. The Selling Shareholders shall provide the Purchaser with
satisfactory evidence of financing sufficient to purchase the Company Assets
within thirty (30) days after the Reoffer is accepted pursuant to SECTION 11.2
above. The purchase price for the Company Assets shall be payable by the
Selling Shareholders within sixty (60) days after the Reoffer is accepted
pursuant to SECTION 11.2 above. In any case, at the closing of the sale to the
Selling Shareholders, the Purchaser shall deliver to the Selling Shareholders,
against payment therefor, certificates or instruments representing the Company
Assets being purchased, duly endorsed for transfer to the Selling Shareholders.
The Selling Shareholders shall cooperate with and facilitate any such
transaction. In the event such closing has not occurred within the thirty (30)
day period described above, the Reoffer shall be deemed to have expired without
such Reoffer being accepted in full.
11.4 Sale to Third Parties. Upon the expiration of the
Reoffer without such Reoffer being accepted in full in accordance herewith, the
Purchaser shall be free to accept the Bona Fide Offer. Notwithstanding any
other provision herein to the contrary, the terms and conditions set forth in
this ARTICLE XI shall be applicable only to the first Bona Fide Offer which is
Reoffered to the Selling Shareholders and, whether or not such Reoffer has been
accepted or terminated, shall not be applicable to any future sales by the
Purchaser of Company Assets.
ARTICLE XII. MISCELLANEOUS PROVISIONS
Section 12.1 Costs, Expenses and Taxes. Each Selling
Shareholder will pay all federal, state, county, local and foreign Taxes which
may be payable by reason of the sale of such Selling Shareholder's respective
Common Stock. All other costs and expenses in connection with the preparation,
execution, delivery, filing, recording, and administration of this Agreement,
including, without limitation, the reasonable fees and expenses of counsel to
each such party and other reasonable costs and expenses incurred in connection
with the transfer and delivery of the Common Stock shall be paid by the party
incurring such costs and expenses. Further, the Selling Shareholders, on the
one hand, and the Purchaser on the other hand, agree to pay all reasonable
costs and expenses, if any, in connection with any enforcement of this
Agreement in which the other party prevails, including without limitation
reasonable fees and expenses of counsel. For purposes of this
52
Agreement "prevails" shall mean that party which is the substantially
prevailing party and for which any judgment obtained is final.
Section 12.2 Notices. All notices, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given, if delivered in person or by courier or by facsimile
transmission or mailed by certified or registered mail, postage prepaid to the
address for notice set forth on the Address for Notices Schedule attached
hereto. Any party may, by written notice to the other, change the address to
which notices to such party are to be delivered or mailed.
Section 12.3 Press Releases. No party hereto shall issue any
press releases or make any public announcements of any of the transactions
contemplated by this Agreement except as may be mutually agreed to in writing
by the Selling Shareholders and the Purchaser, except that each party will in
any event have the right to issue any such release or statement upon advice of
its counsel that such issuance is required in order to comply with applicable
law or stock exchange rules so long as such party determines in good faith that
it is necessary to do so and uses its reasonable best efforts to agree with the
other party upon the content of the proposed disclosure in advance.
Section 12.4 Termination.
(a) This Agreement may be terminated and the transactions
contemplated hereby abandoned (i) by the mutual written consent of the
Purchaser and all of the Selling Shareholders; (ii) by the Purchaser or the
Selling Shareholders at any time after the Closing Date (or such later date as
shall have been agreed to in writing by them) if for any reason the Closing
shall not have occurred on or prior to such date; provided, that, the right to
terminate under this SECTION 12.4 shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
cause of, or resulted in, the failure of the Closing to occur on or prior to
such date; (iii) by the Purchaser if there has been a material
misrepresentation or material breach on the part of any Selling Shareholder in
the representations, warranties or covenants of such Selling Shareholder set
forth herein, or if there has been any material failure on the part of any
Selling Shareholder to comply with its obligations hereunder, (iv) by the
Selling Shareholders if there has been a material misrepresentation or material
breach on the part of the Purchaser in the representations, warranties or
covenants of the Purchaser set forth herein, or if there has been any material
failure on the part of the Purchaser to comply with its obligations hereunder,
or (v) by the Purchaser or the Selling Shareholders if any court of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and non-appealable, in the case of each of clauses (ii) through (iv),
subject to a period of 30 days to cure such defect. Any action permitted to be
taken by the Selling Shareholders pursuant to this SECTION 12.4 shall be made
by the Shareholder Representatives.
(b) If this Agreement is terminated and the transactions
contemplated by this Agreement are abandoned pursuant to Section 12.4(a)(i),
(a)(ii) or (a)(v), this Agreement shall
53
become void and of no further force and effect and no party hereto shall have
any liability or obligation to the other party hereto hereunder, except that
the obligations of the parties pursuant to SECTION 12.3 (Press Releases),
SECTION 12.5 (Protection of Confidential Information), (Miscellaneous
Provisions), SECTION 9.2 (Indemnification) and SECTIONS 12.5, 12.6, 12.7, 12.8,
12.9, 12.12, 12.13 AND 12.14 shall survive any such termination.
Section 12.5 Protection of Confidential Information. Each
Selling Shareholder and the Purchaser and its Affiliates shall keep
confidential and shall not divulge to any party, without the prior written
consent of the other parties hereto, any of the terms of this Agreement,
including without limitation, the Purchase Price paid or to be paid by the
Purchaser, unless any such information or documents (a) is or becomes generally
available to the public (other than as a result of a disclosure by such party
or any of its or his Representatives), (b) was already known by or available on
a non-confidential basis to such party prior to being furnished hereunder, (c)
is or becomes available to such party from a third party not bound by any
contractual obligation to keep such information confidential or (d) upon advice
of counsel, is required to be disclosed in order to comply with applicable law
or regulatory authority; provided, that, the disclosing party shall use
reasonable good faith efforts to notify the party who furnished such
information and documents, and attempt to obtain the reasonable approval of the
latter party, prior to such disclosure. Notwithstanding anything herein to the
contrary, the Purchaser and the Purchaser Representatives shall be entitled to
disclose and furnish any and all information and documents provided pursuant to
this SECTION 12.5 to prospective lenders, equity investors and financing
sources, to the extent requested by such lenders, equity investors and
financing sources for the purpose of evaluating the transactions contemplated
hereby and the Company or to the extent otherwise necessary for the Purchaser
to obtain the financing necessary for it to consummate the transactions
contemplated hereby (provided that any such lenders, equity investors and
financing sources agree to keep any such information and documents furnished to
them confidential). In the event of the termination of this Agreement in
accordance with its terms, the Purchaser will, upon request of the Selling
Shareholders, promptly deliver to the Company all written information and
documents provided under this SECTION 12.5 in the possession of the Purchaser,
or any personnel thereof or anyone else to whom the information has been given,
including all copies, reproductions, summaries, analysis and extracts thereof
or based thereon.
Section 12.6 Entire Agreement. Other than that certain
Confidentiality Agreement, dated as of June 4, 1997, between SFX and the
Company, this Agreement, including the Exhibits and Schedules hereto, contains
the entire agreement of the parties with respect to the subject matters hereof,
and supersedes all prior agreements between them, whether oral or written, of
any nature whatsoever with respect to the subject matter hereof.
Section 12.7 Severability Clause. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be
54
ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law that
prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any Person of the economic benefit intended to be conferred by
this Agreement, the parties shall negotiate, in good-faith, to develop a
structure, the economic effect of which is as close as possible to the economic
effect of this Agreement, without regard to such invalidity.
Section 12.8 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
Section 12.9 Choice of Law
(a) Governing Law; Consent to Forum. This Agreement has been
executed and delivered at and shall be deemed to have been made in New York.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to the conflict of
laws rules therein. The parties hereto hereby consent and agree that the New
York State Supreme Court located in the County of New York or the United States
District Court for the Southern District of New York or the Superior Court of
the City and County of San Francisco, shall have exclusive jurisdiction to hear
and determine any claims or disputes between the parties hereto pertaining to
this Agreement or to any matter arising out of or related to this Agreement.
The parties hereto expressly submit and consent in advance to such jurisdiction
in any action or suit commenced in any such court, and hereby waive any
objection which it may have based upon lack of personal jurisdiction, improper
venue or forum non conveniens and hereby consent to the granting for such legal
or equitable relief as is deemed appropriate by such court. Nothing in this
Agreement shall be deemed or operate to affect the right of either party to
serve legal process in any other manner permitted by law, or to preclude the
enforcement by either party of any judgment or order obtained in such forum or
the taking of any action under this Agreement to enforce same in any other
appropriate forum or jurisdiction. The prevailing party in any such action or
suit shall be entitled to recover reasonable costs and expenses (including
attorneys fees and expenses) incurred by it in connection with such
proceedings.
(b) Waiver of Trial by Jury. Each party hereto waives the
right to trial by jury in any action, suit, proceeding or counterclaim of any
kind arising out of or related to this Agreement. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
Section 12.10 Limitation on Liability. Each party hereto
waives any right to any consequential, exemplary or special damages (i.e., any
damages other than actual out-of-pocket Losses).
55
Section 12.11 Further Agreements. The Purchaser and the
Selling Shareholders agree to execute and deliver to the other such additional
documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement.
Section 12.12 Successors and Assigns; Assignment. This
Agreement shall bind and inure to the benefit of and be enforceable by the
Selling Shareholders and the Purchaser and the respective successors and
assigns of the Selling Shareholders and the Purchaser. This Agreement shall not
be assigned, pledged or hypothecated by any of the Selling Shareholders to a
third party without the prior written consent of the Purchaser.
Section 12.13 Amendment; Waivers. This Agreement may be
amended from time to time only by written agreement of the parties. No term or
provisions of this Agreement may be waived or modified unless such waiver or
modification is in writing and signed by the ------------------ party against
whom such waiver or modification is sought to be enforced. No failure on the
part of the Purchaser to exercise and no delay in exercising, any right, power,
or remedy under any this Agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right under this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The
remedies provided in this Agreement are cumulative and not exclusive of any
remedies provided by law.
Section 12.14 General Interpretive Principles. For purposes
of this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the headings in this Agreement are for convenience only
and are not intended to influence its interpretation.
(b) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(c) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(d) references herein to "Articles", "Sections",
"Subsections", "Paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement;
(e) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(f) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision; and
56
(g) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 12.15 Reproduction of Documents. This Agreement and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.16 Advice from Independent Counsel. The parties
hereto understand that this Agreement is a legally binding agreement that
affects such party's rights. Each party represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and
legal significance of this Agreement and that it is satisfied with its legal
counsel and the advice received from it.
Section 12.17 No Agency; No Company; No Joint Venture. None
of the Purchaser nor the Selling Shareholders is the agent or representative of
the other, and nothing in this Agreement shall be construed to make any of the
Purchaser nor the Selling Shareholder liable to any third party for services
performed by such third party or for debts or claims accruing to such third
party against any of the Purchaser or the Selling Shareholders. Nothing
contained herein nor the acts of the parties hereto shall be construed to
create a partnership, agency or joint venture between (i) the Purchaser and
(ii) the Selling Shareholders.
Section 12.18 Judicial Interpretation. Should any provision
of this Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against any Person by reason of
the rule of construction that a document is to be construed more strictly
against the Person who itself or through its agent prepared the same.
Section 12.19 Good Faith. The parties hereto shall implement
the terms and provisions of this Agreement in good faith in accordance with
applicable law.
57
IN WITNESS WHEREOF, each of the Selling Shareholders and
the Purchaser have caused their names to be signed hereto as of the day and
year first above written.
BGP ACQUISITION, LLC
By: /s/ Xxxxxx F.X. Sillerman
---------------------------
Name: Xxxxxx F.X. Sillerman
Title:
THE UNDERSIGNED, has caused its name to be signed hereto
as of the day and year first above written solely for the purpose of
undertaking the obligations set forth in SECTION 2.3(F) hereof.
SFX ENTERTAINMENT, INC.
By: /s/ Xxxxxx F.X. Sillerman
--------------------------
Name: Xxxxxx F.X. Sillerman
Title: Executive Chairman
58
XXXXXXXX X. XXXXXXX REVOCABLE TRUST
By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Trustee
/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxxx
------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxx Xxxx
------------------------------------------
Xxxx Xxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxxx
59
/s/ Xxxxxxxx X. Xxxxxxxx, Xx.
------------------------------------------
Xxxxxxxx X. Xxxxxxxx, Xx.
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Xxxxxx X. Xxxxx
60
/s/ Xxx X. Xxxxx
------------------------------------------
Xxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxxxxx Welkom
------------------------------------------
Xxxxxxx Welkom
TRUST F/B/O XXXXXXXXX X. XXXXXX-XXXX U/W/O
XXXXXXX XXXXXX
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Trustee
XXXXX XXXXXX 1996 IRREVOCABLE TRUST DATED
MARCH 14, 1996
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Trustee
61
