EXHIBIT 10.33
EXECUTION COPY
ARTISTdirect RECORDS, L.L.C.
UNIT
PURCHASE AGREEMENT
October __, 2001
ARTISTdirect RECORDS, L.L.C.
UNIT
PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT (this "AGREEMENT") is made as of the
___ day of October, 2001, by and among ARTISTdirect Records, L.L.C., a Delaware
limited liability company (the "COMPANY"), ARTISTdirect Recordings, Inc., a
Delaware corporation ("ADR"), Radar Records Holdings, LLC, a Delaware limited
liability company ("FIELDCO" and, together with ADR, the "FOUNDERS" and each a
"FOUNDER"), BMG Music, a New York general partnership (the "PURCHASER" or
"BMG"), and ARTISTdirect, Inc., a Delaware corporation ("ADI"), Xxxxxxxxx X.
Field ("FIELD").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 Sale and Issuance of Units. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase at the Closing,
and ADR agrees to sell, assign and transfer to the Purchaser, at the Closing,
that number of the Company's Membership Units (collectively, the "UNITS") set
forth opposite the Purchaser's name on Exhibit A hereto at a purchase price of
$0.50 per Unit (the "PURCHASE PRICE") and for an aggregate purchase price of
$250,000.
1.2 Closing; Delivery. The purchase and sale of the Units will
take place at the offices of Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 10:00 A.M., on November 16, 2001, or
at such other time and place as the Company and ADR mutually agree upon orally
or in writing (which time and place are designated as the "CLOSING"). At the
Closing, and in order to give effect to the sale, assignment and transfer
contemplated hereby, Purchaser will pay the Purchase Price to ADR by wire
transfer of immediately available funds and ADR will cause the Company, and the
Company hereby agrees, to (a) record the transfer and sale of the Units from ADR
to the Purchaser in its books and records, by, among other actions, adding the
Purchaser to the Company's Schedule of Members attached to the Company's
Operating Agreement (defined below), and (b) admit the Purchaser as a Member of
the Company in accordance with the terms and conditions set forth in the
Company's Operating Agreement, dated as of May 31, 2001 (the "OPERATING
AGREEMENT"), by and among ADR, FieldCo and the Company, as amended as
contemplated hereby and otherwise from time to time.
1.3 Advance. At Closing, the Purchaser will make an Advance
(as such term is defined in the Loan Agreement and the Operating Agreement) to
the Company in the amount of $4,750,000, by wire transfer of immediately
available funds, pursuant to the terms of the Loan Agreement (as defined below),
as amended as contemplated hereby and otherwise from time to time.
2. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY. Each of the
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Company, ADR and ADI hereby, jointly and severally, represents and warrants that
as of the date of this Agreement:
2.1 Organization, Good Standing and Qualification. The Company
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite limited
liability company power and authority to (i) own and operate its property and
assets and to carry on its business as now conducted and as presently proposed
to be conducted, and (ii) to execute, deliver and perform its obligations under
this Agreement and the other documents, to be executed and delivered upon the
date hereof or at the Closing, as the case may be, in connection with the
transactions contemplated hereby (collectively, the "TRANSACTION DOCUMENTS"), to
which it is a party, which documents and agreements include, without limitation,
the Amendment to the Operating Agreement (as hereinafter defined), the Amendment
to the Loan Agreement (as hereinafter defined) and the BMG Note (as hereinafter
defined). The Company is duly qualified and is authorized to transact business
and is in good standing as a foreign limited liability company in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have, either in a single case or in all cases taken together, a material adverse
effect on its business, results of operations or properties.
2.2 Capitalization. Exhibit B accurately sets forth the total
number of Units of the Company issued and outstanding as of the Closing and
accurately sets forth the ownership of all such issued and outstanding Units. At
Closing, all of the issued and outstanding Units will have been duly authorized,
validly issued, fully-paid and nonassessable and issued in compliance with all
applicable federal and state securities laws. Except as set forth in the
Operating Agreement, there are not outstanding any options, warrants, rights
(including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements orally or in writing for the purchase or
acquisition from or by the Company of any Units.
2.3 Subsidiaries. The Company does not own or control,
directly or indirectly, any interest in any other corporation, association,
partnership, limited liability company or other business entity. The Company is
not a participant in any joint venture, partnership or similar arrangement.
2.4 Authorization. Each of the Transaction Documents will,
upon execution and delivery thereof by a duly authorized officer of the Company,
be duly executed and delivered by the Company. All requisite action on the part
of each of the Company, its officers, directors, stockholders or Members
necessary for the authorization, execution and delivery of the Transaction
Documents, to which it is a party, and the performance of all obligations of the
Company, hereunder and thereunder, has been taken or will be taken prior to the
Closing, and the Transaction Documents, when executed and delivered by the
Company, will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.5 Securities. Each of the Units being sold, assigned and
transferred by ADR to the Purchaser hereunder has been duly authorized and
validly issued, and is fully-paid and nonassessable and is owned of record and
beneficially by ADR.
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2.6 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's, ADI's or ADR's knowledge, threatened
against the Company or that questions the validity of the Transaction Documents,
or the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby and thereby. The Company is not a party to, or
subject to the provisions of, any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation that the Company intends to initiate.
2.7 Compliance with Other Instruments and Laws. The Company is
not in violation or default of (a) any statute, rule or regulation that could
reasonably be expected to have, either in one case or in all cases taken
together, a materially adverse effect on the Company's business, results of
operations or properties, if decided adversely to the Company, (b) any provision
of the Operating Agreement, or of any note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or agreement
to which it is a party or by which it is bound, including the Loan and Security
Agreement, dated as of May 31, 2001 (the "LOAN AGREEMENT"), by and between ADR
and the Company, and agreed to and accepted by FieldCo, as the same may have
been amended from time to time, or (c) any order, writ, injunction or decree of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that
specifically names the Company. There exists no condition, event or act which
after notice, lapse of time, or both, would constitute a default by the Company
under any of the foregoing. To the best of the Company's, ADR's or ADI's
knowledge, no third party is in default under any agreement, contract or other
instrument, document, or agreement to which the Company is a party.
2.8 Effect of Transactions. The execution, delivery and
performance of the Transaction Documents, and compliance with the provisions
hereof and thereof by the Company, does not and will not, with or without the
passage of time or the giving of notice or both, (a) violate any provision of
law, statute, rule or regulation or any ruling, writ, injunction, order,
judgment or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign to which the Company is subject or by which it is affected,
or (b) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or, except as contemplated by the
Loan Agreement, result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company under any note,
indenture, mortgage, lease, agreement, contract, purchase order or other
instrument, document or agreement (including, without limitation, the Operating
Agreement, as amended on the date hereof) to which the Company is a party.
2.9 Contracts. Exhibit C sets forth each "artist agreement"
and any other material agreement (whether written or oral; it being understood
and agreed that, in the case of any such oral agreement, such Exhibit C, sets
forth and true and complete description of the material terms thereof) to which
the Company is a party. True and complete copies of each agreement set forth on
Exhibit C, as the same as may have been amended to date, have been delivered to
the Purchaser prior to the date hereof. Each material agreement, including all
"artist agreements", described above is a legal, valid and binding contract, in
full force and effect, and the Company is not in material default and has not
materially failed to perform any obligation under any such agreement and, to the
Company's, ADI's and ADR's knowledge, no other party
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to such agreements are in material default or have materially failed to perform
any obligation under any such agreement.
2.10 Advances. As of the date hereof, ADR has made to the
Company in cash in immediately available funds $4,000,000 in Advances of which
$0, of principal or interest, have been repaid by the Company as of the date
hereof and, accordingly, all of which remain outstanding as principal under the
Loan Agreement.
3. REPRESENTATIONS AND WARRANTIES OF ADI AND ADR. Each of ADI and
ADR hereby, jointly and severally, represents and warrants that as of the date
of this Agreement:
3.1 Organization, Good Standing and Qualification. ADR is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. ADR has all requisite corporate power and authority to
(i) own and operate its property and assets and to carry on its business as now
conducted and as presently proposed to be conducted, and (ii) to execute,
deliver and perform its obligations under the Transaction Documents to which it
is a party, to be executed and delivered upon the date hereof or at the Closing,
as the case may be. ADR is duly qualified and is authorized to transact business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to so qualify could reasonably be expected to have, either in one
case or in all cases taken together, a material adverse effect on its business
or properties.
3.2 Authorization. Each of the Transaction Documents, to which
ADR is a party, will, upon the execution and delivery thereof by a duly
authorized officer of ADR, be duly executed and delivered by ADR. All requisite
action on the part of each of ADR and its officers, directors or stockholders
necessary for the authorization, execution and delivery of each Transaction
Document to which it is a party, and the performance of all obligations of ADR
hereunder and thereunder, has been taken or will be taken prior to the Closing,
and each Transaction Document when executed and delivered by ADR, if it is a
party thereto, will constitute valid and legally binding obligations of ADR
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
3.3 Title. ADR has good, clear and marketable title to the
Units being sold hereunder and, other than pursuant to the terms of this
Agreement, has not transferred, conveyed or assigned any interest or right of
participation of any kind in any of the Units owned by it. The Units being sold,
assigned and transferred by ADR to the Purchaser hereunder, when delivered in
accordance with the terms of this Agreement, will be, and all other Units owned
by ADR as shown on Exhibit B are, free of all liens, claims, options security
interests and other encumbrances and will be free of all restrictions on
transfer other than restrictions on transfer under the Operating Agreement and
under applicable state and federal securities laws.
3.4 Litigation. There is no action, suit, proceeding or
investigation pending or, to ADR's or ADI's knowledge, threatened against ADR,
or that questions the validity of any Transaction Document, or the right of ADR
to enter into such agreements, or to consummate the transactions contemplated
hereby or thereby. ADR is not a party to, nor subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation that ADR
intends to initiate.
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3.5 Compliance with Other Instruments and Laws. ADR is not in
violation or default of (a) any statute, law, rule or regulation that could
reasonably be expected to have, either in one case or in all cases taken
together, a materially adverse effect on ADR's business, results of operations
or properties if decided adversely to ADR, (b) any provision of its certificate
of incorporation or bylaws, or of any note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or agreement
to which it is a party or by which it is bound, including the Loan Agreement or
(c) any order, writ, injunction or decree of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that specifically names ADR. There exists
no condition, event or act which after notice, lapse of time, or both, would
constitute a default by ADR under any of the foregoing. To the best of the ADR's
and ADI's knowledge, no third party is in default under any agreement, contract
or other instrument, document, or agreement to which ADR is a party.
3.6 Effect of Transactions. The execution, delivery and
performance of the Transaction Documents, sale of the Units, and compliance with
the provisions hereof and thereof by ADR do not and will not, with or without
the passage of time or the giving of notice or both, (a) violate any provision
of law, statute, rule or regulation or any ruling, writ, injunction, order,
judgment or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign to which ADR is subject or by which it is affected, or (b)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of ADR under its charter or by-laws or under any note, indenture,
mortgage, lease, agreement, contract, purchase order or other instrument,
document or agreement (including, without limitation, the Operating Agreement,
as amended on the date hereof) to which ADR is a party.
3.7 Operating Agreement Representations. All of the
representations and warranties made by ADI or ADR to the other Members of the
Company under the Operating Agreement are true and correct as of the date
hereof, are hereby made by ADR and ADI to BMG and, accordingly, are incorporated
by reference for purposes of this Section 3.7.
3.8 Investments. ADR owns no stock, shares, partnership
interests, membership interests participations in any profit-sharing agreement
or arrangement, options, warrants, bonds, debentures, notes or other evidences
of indebtedness, or any other interests, or any right to subscribe to, purchase
or acquire any of the foregoing in any entity other than the Company, and ADR is
not a participant in any joint venture or similar common enterprise with any
other entity.
3.9 Ownership of ADR. ADI owns, beneficially and of record,
all of the outstanding capital stock of ADR.
4. REPRESENTATIONS AND WARRANTIES OF FIELDCO. FieldCo hereby
represents and warrants that as of the date of this Agreement:
4.1 Organization, Good Standing and Qualification. FieldCo is
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. FieldCo has all requisite
limited liability company power and authority to (i) own and operate its
property and assets and to carry on its business as now conducted and as
presently proposed to be conducted, and (ii) to execute, deliver and perform its
obligations under
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the Transaction Documents, to which it is a party, to be executed and delivered
upon the date hereof or at the Closing, as the case may be. FieldCo is duly
qualified and is authorized to transact business and is in good standing as a
foreign limited liability company in each jurisdiction in which the failure to
so qualify could reasonably be expected to have, either in one case or in all
cases taken together, a material adverse effect on its business or properties.
4.2 Authorization. Each of the Transaction Documents to which
FieldCo is a party, upon the execution and delivery thereof by a duly authorized
officer of FieldCo, will be duly executed and delivered by FieldCo. All
requisite action on the part of each of the FieldCo, and its officers, directors
or members necessary for the authorization, execution and delivery of each
Transaction Document to which it is a party, and the performance of all
obligations of FieldCo hereunder and thereunder, has been taken or will be taken
prior to the Closing, and each Transaction Document when executed and delivered
by FieldCo, if a party thereto, will constitute valid and legally binding
obligations of FieldCo enforceable in accordance with their respective terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
4.3 Litigation. There is no action, suit, proceeding or
investigation pending or, to FieldCo's knowledge, threatened against FieldCo or
that questions the validity of any Transaction Document, or the right of FieldCo
to enter into such agreements, or to consummate the transactions contemplated
hereby or thereby. FieldCo is not a party to, or subject to the provisions of,
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
that FieldCo intends to initiate.
4.4 Compliance with Other Instruments and Laws. FieldCo is not
in violation or default of (a) any statute, rule or regulation that could
reasonably be expected to have, either in one case or in all cases taken
together, a materially adverse effect on ADR's business, results of operation or
properties if decided adversely to FieldCo, (b) any provision of its operating
agreement, or of any note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which it is a party
or by which it is bound, or (c) any order, writ, injunction or decree of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that
specifically names FieldCo that could reasonably be expected to have a
materially adverse effect on the FieldCo's business, results of operations or
properties if decided adversely to FieldCo. There exists no condition, event or
act which after notice, lapse of time, or both, would constitute a default by
FieldCo under any of the foregoing. To the best of the FieldCo's knowledge, no
third party is in default under any agreement, contract or other instrument,
document, or agreement to which FieldCo is a party.
4.5 Effect of Transactions. The execution, delivery and
performance of the Transaction Documents, to which it is a party, and the
compliance with the provisions hereof and thereof by FieldCo, do not and will
not, with or without the passage of time or the giving of notice or both, (a)
violate any provision of law, statute, rule or regulation or any ruling, writ,
injunction, order, judgment or decree of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign to which FieldCo is subject or by which it
is affected or (b) conflict with or result in any
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breach of any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of FieldCo under its operating
agreement or under any note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which FieldCo is a
party.
4.6 Operating Agreement Representations. All of the
representations and warranties made by FieldCo to the other Members of the
Company under the Operating Agreement are true and correct as of the date hereof
and are hereby made by FieldCo to BMG and, accordingly, are incorporated by
reference for purposes of this Section 4.6; provided, however, that Field has
caused FieldCo to grant certain "phantom" interests in FieldCo to employees of,
and one recording artist under contract with, the Company (it being understood
and agreed that, wherever in this Agreement or the Schedules hereto reference is
made to a transfer or grant of so-called "phantom" interests in net proceeds of
or from a sale, of equity or assets, or change of control of FieldCo or the
Company or proceeds of or from the sale of Units of FieldCo or the Company, such
reference will mean that the transferor or grantor of such phantom interests has
retained all record ownership of, and voting rights under, the securities in
respect of which a transfer or grant of phantom interests has been made and that
the transferee(s) thereof are entitled solely to look to the transferor or
grantor of such phantom interests insofar as the enforcement of rights to such
interests are concerned and are in no way entitled to enforce any right against
the issuer of such securities or to enjoy any rights as a security holder of
such securities).
4.7 Investments. FieldCo owns no stock, shares, partnership
interests, membership interests participations in any profit-sharing agreement
or arrangement, options, warrants, bonds, debentures, notes or other evidences
of indebtedness, or any other interests, or any right to subscribe to, purchase
or acquire any of the foregoing in any entity other than the Company, and
FieldCo is not a participant in any joint venture or similar common enterprise
with any other entity.
4.8 Ownership of FieldCo. Field owns, directly or indirectly,
all of the outstanding membership interests of FieldCo.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants that as of the date of this Agreement:
5.1 Organization, Good Standing and Qualification. The
Purchaser is a general partnership, validly existing and in good standing under
the laws of the State of New York. The Purchaser has all requisite power and
authority to (i) own and operate its property and assets and to carry on its
business as now conducted and as presently proposed to be conducted and (ii) to
execute, deliver and perform its obligations under the Transaction Documents to
which it is a party, to be executed and delivered upon the date hereof or at the
Closing, as the case may be. The Purchaser is duly qualified and is authorized
to transact business and is in good standing as a foreign partnership in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have, either in one case or in all cases taken together, a material adverse
effect on its business or properties.
5.2 Authorization. Each of the Transaction Documents, upon the
execution and delivery thereof by a duly authorized officer of the Purchaser,
will be duly executed and delivered by the Purchaser. All requisite action on
the part of each of the Purchaser, and its
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officers, directors or partners necessary for the authorization, execution and
delivery of each Transaction Document to which it is a party and the performance
of all obligations of the Purchaser hereunder and thereunder has been taken or
will be taken prior to Closing, and each Transaction Document when executed and
delivered by the Purchaser will constitute valid and legally binding obligations
of the Purchaser enforceable in accordance with their respective terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
5.3 Restricted Securities. The Purchaser is acquiring the
Units hereunder for its own account as an investment and without any intent to
distribute such Units in violation of applicable securities laws. BMG hereby
acknowledges that the Units it is purchasing have not been registered under the
Securities Act of 1933, as amended (the "ACT"), or any state securities laws,
and may not be transferred or resold by BMG without registration in accordance
with the Act or the availability of an exemption from such requirements.
5.4 Effect of Transactions. The execution, delivery and
performance of the Transaction Documents and compliance with the provisions
hereof and thereof by the Purchaser, do not and will not, with or without the
passage of time or the giving of notice or both, (a) violate any provision of
law, statute, rule or regulation or any ruling, writ, injunction, order,
judgment or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign to which the Purchaser is subject or by which it is
affected, or (b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
respective properties or assets of the Purchaser under its partnership agreement
or under any note, indenture, mortgage, lease, agreement, contract, purchase
order or other instrument, document or agreement to which the Purchaser is a
party.
6. [INTENTIONALLY OMITTED].
7. CONDITIONS OF PURCHASER'S OBLIGATIONS AT CLOSING. The obligations
of the Purchaser in Section 1 hereof are subject to the fulfillment on or before
the Closing of each of the following conditions, the waiver of which will not be
effective against the Purchaser if it does not consent in writing thereto:
7.1 Representations and Warranties. The representations and
warranties of the Company, ADI, ADR and FieldCo contained in Sections 2, 3 and 4
are true and correct in all material respects on and as of the Closing (and
after giving effect to the Amendment to the Operating Agreement and the
Amendment to the Loan Agreement) with the same effect as though such
representations and warranties had been made on and as of such date. It is
hereby agreed and acknowledged that (1) ADR's funding Advances pursuant to the
terms of the Loan Agreement, (2) the Company's executing additional "artist's
agreements", on terms not materially more favorable to the artists than those
delivered as of the date hereof, and (3) the Company's executing additional
employment agreements, which agreements are entered into in the ordinary course
of business, are anticipated events, the mere occurrence and scheduling of which
will not be deemed to be a failure to satisfy the condition set forth in this
Section 7.1.
7.2 Performance. Each of the Company, ADI, ADR and FieldCo
have
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performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing.
7.3 Compliance Certificate. A duly authorized officer of the
Company, ADI and ADR will deliver to the Purchaser at the Closing a certificate
stating that the conditions specified in Sections 7.1 and 7.2 have been
fulfilled and stating that there has been no material adverse change in the
business, affairs, operations, properties, assets or condition of the Company
since the date hereof.
7.4 Proceedings and Document. All corporate, limited liability
company and other proceedings, as the case may be, in connection with the
transactions contemplated at the Closing and all documents incident thereto will
be reasonably satisfactory in form and substance to Purchaser's counsel, and
they will have received all such counterpart original and certified or other
copies of such documents as they may reasonably request.
7.5 Opinion of Company Counsel. The Purchaser will have
received from Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, special counsel for the
Company, an opinion, dated as of the Closing, in the form attached hereto as
Exhibit F.
7.6 Amendment to the Operating Agreement. The Company, the
Founders and the Purchaser will have entered into an amendment to the Operating
Agreement in form and substance reasonably satisfactory to each of them and
their respective counsel (the "AMENDMENT TO THE OPERATING AGREEMENT"), which
Amendment to the Operating Agreement, it is hereby agreed, will incorporate the
terms set forth on Exhibit D hereto.
7.7 Amendment to the Loan and Security Agreement. The Company,
ADR and the Purchaser will have entered into the Amendment to the Loan and
Security Agreement in form and substance reasonably satisfactory to each of them
and their respective counsel (the "AMENDMENT TO THE LOAN AGREEMENT"), which
Amendment to the Loan and Security Agreement, it is hereby agreed, will
incorporate the terms set forth on Exhibit E hereto.
7.8 Note. The Company will have issued and delivered to the
Purchaser a promissory note (the "BMG NOTE"), evidencing the Advance made to it
by the Purchaser in accordance with the terms of the Loan Agreement, as amended
by the Amendment to the Loan Agreement and otherwise from time to time.
8. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of ADR to the Purchaser under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the
Purchaser, unless otherwise waived:
8.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Section 5 are true and correct in all
material respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
8.2 Amendment to the Operating Agreement. The Company, the
Founders and the Purchaser will have entered into the Amendment to the Operating
Agreement in form and substance reasonably satisfactory to each of them and
their respective counsel, which Amendment to the Operating Agreement, it is
hereby agreed, will incorporate the terms set forth on Exhibit D hereto.
8.3 Amendment to the Loan and Security Agreement. The Company,
ADR
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and the Purchaser will have entered into the Amendment to the Loan and Security
Agreement in form and substance reasonably satisfactory to each of them, which
Amendment to the Loan and Security Agreement, it is hereby agreed, will
incorporate the terms set forth on Exhibit E hereto.
9. COVENANTS.
9.1 Use of Proceeds. ADR agrees that it will immediately upon
receipt transfer to the Company an amount equal in the aggregate to the Purchase
Price, or direct the Purchaser to pay the aggregate Purchase Price directly to
the Company. Each of the Company and ADR hereby agrees that the amount equal in
the aggregate to the Purchase Price that is paid by ADR to the Company or paid
directly at ADR's direction to the Company by the Purchaser, will be, and for
all purposes will be deemed to be, an Advance by ADR under the Loan Agreement
and the Operating Agreement.
9.2 Reasonable Efforts. The parties hereto hereby agree to use
all reasonable efforts to satisfy the terms and conditions set forth herein
prior to Closing and will negotiate in good faith all documents reasonably
required prior to Closing, including, without limitation, the Amendment to the
Operating Agreement, the Amendment to the Loan Agreement and the BMG Note.
9.3 Ownership Covenants.
(a) ADI hereby agrees that, absent the prior written
consent of the Purchaser, which consents may be withheld for any reason
whatsoever, for so long as (1) the Purchaser, or any of its Permitted
Transferees, has a direct or indirect beneficial interest in the Company and (2)
ADR or any of its Permitted Transferees remains a Member of the Company, (i) ADI
and its Permitted Transferees will own (directly or indirectly) 100% of the
outstanding equity interests of ADR or its permitted successors in interest in
the Company, and (ii) ADI and its Permitted Transferees will not transfer any of
its voting rights, consent rights, rights of approval and like rights and powers
with respect to ADR or its permitted successors in interest in the Company,
except to a Permitted Transferee, provided, however, that ADI may transfer up to
twenty percent (20%) of its shares in ADR, or beneficial or other derivative
interests in up to twenty percent (20%) of its shares in ADR to such entities
that provide financing, services or support to the Company, provided, further,
that at no time will ADI own (directly or indirectly) less than 80% of ADR and
its successors in interest in the Company; and
(b) Field hereby agrees that, absent the prior written
consent of the Purchaser, which consents may be withheld for any reason
whatsoever, for so long as (1) the Purchaser, or any of its Permitted
Transferees, has a direct or indirect beneficial interest in the Company, (2)
FieldCo or any of its Permitted Transferees remains a Member of the Company, (i)
Field or his Permitted Transferee will own (directly or indirectly) 100% of the
outstanding equity interests of FieldCo or its permitted successor in interest
in the Company, and (ii) Field and his Permitted Transferees will not transfer
any of his or their voting rights, consent rights, rights of approval and like
rights and powers with respect to FieldCo or its permitted successor in interest
in the Company (or beneficial or other derivative interests in such interests of
FieldCo or its permitted successor in interest in the Company), provided,
however, that Field may transfer up to twenty percent (20%) of his interests in
FieldCo or its permitted successor in interest in the Company to employees of
the Company, provided, further that at no time will Field and his Permitted
Transferees own (directly or indirectly) less than 80% of FieldCo and its
successors in interest. Notwithstanding, anything set forth above, FieldCo may
be converted into a corporation
10
at any time.
10. MISCELLANEOUS.
10.1 Survival of Warranties. The representations and warranties
of the parties made in Sections 2, 3, 4 and 5 will survive the Closing for a
period of two years from such Closing, except that the representations made in
Sections 2.1, 2.2, 2.4, 3.1, 3.2, 3.3, 4.1, 4.2, 5.1 and 5.2 will survive
indefinitely. The covenants set forth herein will survive until a date 30 days
after the expiration of the applicable statute of limitations for the breach of
such covenants (or extensions or waivers thereof).
10.2 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement will inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any Units). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
10.3 Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto will be governed by and construed under the laws of the State of New York
without reference to the choice of law provisions thereof.
10.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
10.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
10.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement will be given in writing and will be deemed
effectively given (i) upon personal delivery to the party to be notified, (ii)
five days after having been sent by registered or certified mail, return receipt
requested, postage prepaid or (iii) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications will be sent to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
10.7 Fees and Expenses. Each party will pay all costs and
expenses that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement.
10.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto.
10.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision will be
excluded from this Agreement and the balance of the Agreement will be
interpreted as if such provision were so excluded and will be enforceable in
accordance with its terms.
11
10.10 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties pertaining
to the subject matter hereof.
10.11 Waiver of Jury Trial. The parties hereto hereby
irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement or any related
agreement, instrument or document.
10.12 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, will impair any such
right, power or remedy of such non-breaching or non-defaulting party nor will it
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
will any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and will
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, are cumulative and not alternative.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
ARTISTdirect RECORDS, L.L.C.
By ARTISTdirect Recordings, Inc., a Member
By: ____________________________
Name:
Title:
By Radar Records Holdings, LLC, a Member
By: ____________________________
Name: Xxxxxxxxx X. Field
Title:
Address: ARTISTdirect Recordings, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Chief Executive Officer
Address: Radar Records Holdings, LLC
00000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxxx X. Field
And: Address: c/o Bertelsmann Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Senior Vice President and General Counsel
With copies to: Address: Legal & Business Affairs Department
ARTISTdirect Recordings, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Rho
S-1
Xxxxxx, Xxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Ziffren Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
And: Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
BMG MUSIC
By: Bertelsmann Music Group, Inc.,
its general partner
By: ____________________________
Name:
Title:
Address: c/o Bertelsmann, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Senior Vice President and General Counsel
With a copy to: Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
S-2
ARTISTDIRECT RECORDINGS, INC.
By: ____________________________
Name:
Title:
Address: ARTISTdirect Recordings, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Chief Executive Officer
With copies to: Address: Legal & Business Affairs Department
ARTISTdirect Recordings, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Rho
and: Xxxxxx, Xxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
RADAR RECORDS HOLDINGS, LLC
By: ____________________________
Name: Xxxxxxxxx X. Field
Title:
Address: Radar Records Holdings, LLC
00000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxxx X. Field
With a copy to: Ziffren Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
S-3
BMG MUSIC
By: Bertelsmann Music Group, Inc.,
its general partner
By: ____________________________
Name:
Title:
Address: c/o Bertelsmann Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Senior Vice President and General Counsel
With a copy to: Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
ARTISTdirect, Inc.
By: ____________________________
Name:
Title:
Address: ARTISTdirect Recordings, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Chief Executive Officer
With copies to: Address: Legal & Business Affairs Department
ARTISTdirect Recordings, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Rho
Xxxxxx, Xxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
S-4
With respect to the covenants set forth in
Section 9.3(b) only,
______________________________________
Name: Xxxxxxxxx X. Field
Address: c/o Radar Records Holdings, LLC
00000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxxx X. Field
With a copy to: Ziffren Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
S-5
EXHIBIT A
UNITS TO BE SOLD
Purchaser Number of Units Percentage
--------- --------------- ----------
BMG Music 500,000 5%
1
EXHIBIT B
CAPITALIZATION AT CLOSING
Purchaser Number of Units Percentage
--------- --------------- ----------
Radar Records Holdings, LLC 5,000,000 50%
ARTISTdirect Recordings, Inc. 4,500,000 45%
BMG Music 500,000 5%
1
EXHIBIT C
MATERIAL CONTRACTS
1. Certificate of Formation of the Company dated May 29, 2001.
2. Operating Agreement of the Company among the Company, ADR and FieldCo
dated May 31, 2001.
3. Loan and Security Agreement dated May 31, 2001.
4. Letter Agreement among ADI, ADR, the Company, FieldCo and Field dated
May 31, 2001.
5. Employment Agreement between the Company and Field dated May 31, 2001.
6. A&R Consulting and First Look Agreement between the Company and Xxxx Xxxxx
dated as of June 1, 2001.
7. Agreement between the Company and Tuff Break Entertainment, LLC f/s/o
Brigade dated June 5, 2001.
8. Employment Agreement between the Company and Xxxx Xxxxxx dated as of
July 1, 2001.
9. Contingent Compensation Agreement between FieldCo and Xxxxx Xxxxxx dated
as of July 1, 2001.
10. Employment Agreement between the Company and Xxxxxxx XxXxxxxx dated as of
July 1, 2001.
11. Employment Agreement between the Company and Xxx Xxxxxxxx dated as of
July 1, 2001.
12. $50,000,000 Revolving Credit Note by the Company in Favor of ADR dated
July 13, 2001.
13. Waiver by FieldCo in respect of ADR's initial Advance, dated as of
July 13, 2001.
14. Employment Agreement between the Company and Xxxx Xxxxxxx dated as of
July 30, 2001.
15. Short Form Recording Agreement with Production Deal between the Company
and Xxxxx Xxxxxx p/k/a "Custom "dated as of August 2, 2001.
16. Unanimous Written Consent approving Custom Recording Agreement, with
Written Consent of ADR approving FieldCo grant of "phantom" FieldCo equity
participation to Custom, dated as of August 3, 1001.
17. Contingent Compensation Agreement between FieldCo and Custom (Draft).
18. Short Form Recording Agreement between the Company and Xxxxxx Xxxxxxx,
Xxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx p/k/a
"Blood Brothers" dated as of August 27, 2001.
1
19. Employment Agreement between the Company and Xxxxxxx Xxxxxxxxx dated
September 6, 2001.
20. Employment Agreement between the Company and Xxxxx Xxxxx Xxxxxxxx dated as
of September 10, 2001.
21. Employment Agreement between the Company and Xxxxxxx Xxxxxxx dated
September 30, 2001.
22. Employment Agreement between the Company and Xxxx Xxxxxxx dated _____,
2001.
23. Contingent Compensation Agreement between FieldCo and Xxxxxxx dated _____,
2001.
24. Unanimous Written Consent approving Xxxxxxx and Xxxxxxx Employment
Agreement, as of September 28, 2001.
25. Employment Agreement between the Company and Xxxx Xxxx (Draft -- Employee
Has Commenced Employment).
26. Employment Agreement between the Company and Xxxxx Xxxxxx (Draft --
Employee Has Commenced Employment).
27. Employment Agreement between the Company and Xxxxx Xxxxxxx (Draft --
Employee Has Commenced Employment).
28. Contingent Compensation Agreement between FieldCo and Xxxxxxx (Draft).
29. Employment Agreement between the Company and Xxxxxx Xxxxxx (Draft --
Employee Has Commenced Employment).
30. Employment Agreement between the Company and Xxxxx Xxxxxx (Draft --
Employee Has Commenced Employment).
31. Employment Agreement between the Company and Xxx Xxxxxxx (Draft --
Employee Has Commenced Employment).
32. Employment Agreement between the Company and Xxxxx Xxxxxx (Draft --
Employee Has Commenced Employment).
2
EXHIBIT D
TERMS OF THE AMENDMENT TO THE OPERATING AGREEMENT
This Term Sheet summarizes the principal terms of the Amendment to the
Operating Agreement, which will be executed and delivered by the Company, the
Founders and BMG as of Closing (capitalized terms used herein, and not otherwise
defined herein or in the Unit Purchase Agreement to which this Exhibit D is
attached, have the meaning given to such terms in the Operating Agreement as in
affect on the date of such Unit Purchase Agreement):
Admission of BMG: The Founders will consent to and take all affirmative action
necessary to admit BMG as a Member of the Company, including
amending the Schedule of Members of the Operating Agreement
to reflect the ownership of the Company as set forth in
Exhibit A to the Unit Purchase Agreement, to reflect the
agreements set forth herein and making any other amendments
or corrections deemed reasonably necessary by the parties
thereto. BMG will agree to be bound by all of the terms and
conditions of the Operating Agreement, as amended.
Consent: Prior to a Vesting Event (defined below), BMG will have no
right to vote on, or consent to or withhold consent or
approval with respect to any matter relating to the
management of the Company, except as set forth below. ADR
will be deemed to continue to hold the Purchased Units for
purposes of all votes (but for no other purposes), except
that BMG's consent will be required for the Company to do any
of the following:
(a) effect a Liquidation, except in connection with a
transaction contemplated by the sale procedure set
forth in Section 10.2 of the Operating Agreement,
unless, immediately after such Liquidation, BMG
will have received aggregate payments in cash on
its Advance or in distribution or redemption of the
Purchased Units in an amount no less than the sum
of (i) the product of (X) two multiplied by (Y) the
sum of (a) $5,000,000 plus (b) interest thereon
accruing during the period from the date of Closing
until the date such amount is paid in full at the
rate specified in the Loan Agreement as applicable
to Advances thereunder plus (ii) fully recouped or
received payment in full in cash of an amount equal
to not less than all of its recoupable advances to
the Company under the Distribution Agreement, of
even date herewith (the "DISTRIBUTION AGREEMENT"),
by and between the Company and BMG, (the "MINIMUM
RETURN");
(b) cause or permit the sale, transfer, lease,
sublease, license or otherwise dispose of all or
substantially all of the Company's assets, except
in connection with a transaction contemplated by
the sale procedure set forth in Section 10.2 of the
Operating Agreement, unless, immediately after such
transaction, the Minimum Return will have been paid
in full in cash;
(c) cause or permit the merger or consolidation of the
Company
1
into or with another entity, except in connection
with a transaction contemplated by the sale
procedure set forth in Section 10.2 of the
Operating Agreement unless, immediately after such
transaction, the Minimum Return will have been paid
in full in cash;
(d) cause or permit the conversion of the Company into
another form of business entity, other than in
connection with an initial public offering of stock
of the Company;
(e) conduct any business other than the Record Label
Business or the music publishing business, or
engage in any transaction not substantially related
thereto;
(f) during the "DISTRIBUTION PERIOD", which means the
period during which BMG or an Affiliate of BMG has
a distribution agreement with the Company, (1)
admit any new Member, whether such proposed Member
is to receive Units on issuance from the Company,
from existing Members or as a proposed Substitute
Member, who is a "major record label" or Zomba, or
(2) enter into any joint venture, partnership or
similar arrangement with a "major record label" or
Zomba that is effective during the Distribution
Period;
(g) during the Distribution Period, encumber (whether
by mortgage, lien pledge, charge, security
interest, guarantee or otherwise) any assets of the
Company other than in accordance with the
provisions of the Operating Agreement relating to
Substitute Financing, other than to secure Purchase
Money Indebtedness (as defined in the Loan
Agreement) or any Lien (as defined in the Loan
Agreement) that by its terms is subordinated to the
Liens granted pursuant to the Loan Agreement;
(h) enter into any agreement, contract or arrangement
that provides for an event of default, termination,
acceleration or payment of any amount or penalty in
the event (i) any Officer or employee of the
Company no longer performs a specified function or
(ii) of a change of control of the Company;
(i) (A) terminate Field's employment (other than for
Cause), (B) during the Distribution Period, enter
into or modify the terms of any employment
agreement or arrangement with Field in a manner
that increases Field's compensation, benefits or
perquisites or, (C) during the Distribution Period,
insofar as the actions referred to in clause (B)
above are concerned, take any such actions, at such
times, with respect to any person or people who
succeed to Field's duties, title or position with
the Company;
(j) sell, transfer, license exclusively or otherwise
dispose of any intellectual property rights other
than in the ordinary course of
2
business, it being understood and acknowledged that
a sale of any assets that generate
seventeen-and-one-half percent (17.5%) or more of
the revenue of the Company as measured during any
12-month period during the preceding 24 months will
be deemed not to be in the ordinary course of
business;
(k) change, in any manner materially adverse to BMG or
its Permitted Transferees or to its or their rights
under the Transaction Agreements, the nature of the
rights and/or obligations of ADR, FieldCo, Field,
the Company or BMG to one another as set forth in
the Operating Agreement, as amended, the Loan
Agreement, as amended, or any exhibits thereto, or
any other terms thereof, except such changes as are
contemplated therein in accordance with the terms
of such agreements; or
(l) authorize any amendment to the Certificate of
Formation of the Company or the Operating Agreement
in a manner that materially and adversely alters
the rights or obligations of BMG.
Post-Vesting
Management
Rights: A "Vesting Event" means the occurrence of any event after
which BMG, together with any Affiliates, owns Units
representing at least a seventeen-and-one-half percent
(17.5%) Percentage. Upon the occurrence of a Vesting Event,
notwithstanding any amount, whether or not equal to or
greater than the Minimum Amount, previously paid to BMG on or
in respect of its Units or Advances, or in any distribution
or redemption on or in respect thereof, and also
notwithstanding any such amount paid to BMG after the Vesting
Event, the right to vote the Units owned and held by BMG will
automatically revert to and vest in BMG, and BMG will have
the consent rights set forth in items (d) -- (l).
Transfers of
Artist's Agreements: If the Company desires to sell an "artist's
agreement" or "artist's agreements", it will be obligated to
first offer BMG the opportunity to purchase such "artist's
agreement(s)" at a price named by the Company:
(a) In the event the Company proposes to sell any of
its "artist's agreement(s)", the Company will make
BMG a written offer to sell to BMG such "artist's
agreement(s)" (the "AA Offer"), which offer will
describe the price and the material terms upon
which it is proposed that the "artist agreement(s)"
be sold.
(b) BMG will have an option for a period of thirty (30)
days from the date of the AA Offer to elect to
purchase all, but not less than all, of the offered
"artist's agreement(s)" at the same price and
subject to the same material terms and conditions
as described in the AA Offer (the "AA Purchase
Option"). BMG
3
may exercise the AA Purchase Option by notifying
the Company in writing before expiration of such
thirty (30)-day period that it wishes to do so (the
"AA Purchase Notice"). If BMG fails to deliver the
AA Purchase Notice within such thirty (30)-day
period, it will be deemed not to have exercised the
AA Purchase Right. If BMG does not exercise or is
deemed not to have exercised the AA Purchase Right,
insofar as BMG is concerned, the sale of such
"artist's agreement(s)" may be made to one or more
third parties, on terms not more favorable to the
third parties than those offered to BMG or its
Affiliate, for a period of up to ninety (90) days
thereafter. If such "artist's agreements" are not
sold to a third party on the terms set forth above
within such ninety (90) day period, those
agreements will again be subject to BMG's rights
described herein.
(c) The closing of the sale of any "artist's
agreement(s)" to BMG hereunder will occur no more
than sixty (60) days following the last date for a
timely election by BMG to exercise the AA Purchase
Option. If said closing does not occur within said
time period, due to failure by BMG to tender timely
payment in full, the sale of such "artist's
agreement(s)" may be made to one or more third
parties, on terms not more favorable to the third
parties than those offered to BMG, for a period of
up to ninety (90) days thereafter. If such
"artist's agreements" are not sold to a third party
on the terms set forth above within such ninety
(90) day period, those agreements will again be
subject to BMG's rights described herein.
Restrictions on
BMG Transfers;
Right of First
Offer To Purchase
BMG Units: BMG may Transfer its Units or the BMG Note to a Permitted
Transferee and, subject to the right of first offer in favor
of ADR (solely to the extent of the first 500,000 Units owned
by BMG that are proposed to be transferred) and thereafter
the Company, as set forth below, to any Person (other than a
Direct AD Competitor):
(a) In the event BMG proposes to Transfer all or any
portion of its Units or the BMG Note to a Person
other than a Permitted Transferee, then, with
respect to each such sale (the "BMG Sale"), BMG
will make ADR and the Company a written offer to
sell (the "BMG Sale Offer"), which offer will
describe the portion of the Units or the BMG Note
proposed to be sold (the "BMG Offered Interest"),
as well as the price and the material terms upon
which BMG is willing to make such sale.
(b) ADR will have an option for a period of twenty-five
(25) days from the date of the BMG Sale Offer to
elect to purchase all or any portion of the BMG
Offered Interest at the same price and subject to
the same terms and conditions as described in the
BMG Sale Offer; provided, however, that ADR will
not have the right to purchase more than 500,000
Units in the aggregate
4
pursuant to this right of first offer. ADR may
exercise such purchase option by notifying BMG and
the Company in writing before expiration of such
twenty-five (25)-day period that it wishes to make
such a purchase (such notice, an "ADR Purchase
Notice"). If ADR fails to deliver the ADR Purchase
Notice within such twenty-five (25)-day period, it
shall be deemed not to have exercised its right of
first offer under this paragraph.
(c) If ADR does not elect to purchase the BMG Offered
Interest (as set forth above), then the Company
will have an option for a period of five (5)
Business Days from the date of the ADR Purchase
Notice, or, if there is no ADR Purchase Notice, the
date thirty (30) days from the date of the BMG Sale
Offer, to elect to purchase all, but not less than
all, of such portion of the BMG Offered Interest,
if any, as ADR shall not have elected (or be deemed
not to have elected) to purchase at the same price
and subject to the same material terms and
conditions as described in the BMG Sale Offer, by
notifying BMG and ADR in writing of its desire to
do so. If the Company fails to deliver such notice
within the prescribed time period, then it will be
deemed not to have exercised its right of first
offer under this paragraph (c). If ADR and the
Company do not exercise or are deemed not to have
exercised their right of first offer to purchase
the entire BMG Offered Interest, insofar as they
are concerned, the sale of the entire BMG Offered
Interest may be made to one or more third parties,
on terms not more favorable to the third parties
than those set forth in the BMG Sale Offer, for a
period of up to ninety (90) days thereafter. For
purposes of clarification, ADR and the Company do
not have any rights of first offer to purchase only
a portion of the BMG Offered Interest. Separately
or collectively, they only have the right to
purchase the entire BMG Offered Interest.
(d) The closing of any purchase of the BMG Offered
Interest by ADR or the Company, as the case may be,
will occur no more than sixty (60) days following
the last date for a timely election by ADR or the
Company to make such purchase. If not thus sold,
BMG may Transfer to third parties, on terms not
more favorable to the third parties than those
offered to ADR, for a period of up to ninety (90)
days thereafter. If such Units are not sold to a
third party on the terms set forth above within
such ninety (90) day period, those Units will again
be subject to the limitations on transfer described
herein.
Restriction Period;
Relationship Period: (a) As used herein, "RESTRICTION PERIOD" means (i) any
time after the occurrence of a Vesting Event or
(ii) during the Relationship Period (as defined
below).
(b) As used herein, "RELATIONSHIP PERIOD" means the
Distribution Period, subject to either early
termination as set forth in paragraph (i) below, or
extension as set forth in paragraph (ii) below:
5
(i) The Relationship Period will terminate either
(A) immediately following the fifteenth month
of the term of the Distribution Agreement if
BMG has not exercised its option to extend
the Distribution Agreement to a third year or
(B) upon the end of the period during which
BMG has the Right of First Negotiation (as
defined in the Distribution Agreement) if BMG
fails to make a good faith offer to extend
the term of the Distribution Agreement
pursuant thereto.
(ii) If BMG exercises the option set forth in
clause (b)(i)(B) above, and makes a good
faith offer to extend the Distribution
Agreement during the period of its Right of
First Negotiation, the Relationship Period
will be extended for so long as (A) the
Purchaser or its Permitted Transferees owns a
Unit (or an economic interest in a Unit) of
the Company and (B) either (I) the Company
enters into a distribution agreement with a
third party on terms less favorable to the
Company than, or equivalent to, those
contained in BMG's last offer to the Company,
or (II) if the Company enters into a
distribution agreement with a third party on
terms more favorable to the Company than
those contained in BMG's last offer to the
Company, without affording BMG the
opportunity, exercisable within thirty (30)
days, to match the terms offered by such
third party. It being understood that, as
used in this section, BMG is deemed to
include its Affiliates.
Restrictions on
Founders' Transfers;
Right of First
Offer To Purchase
Founder Units: During the Restriction Period, transfers of Units by ADR or
FieldCo and any proposed transfer by ADR of its interests or
obligations under the Loan Agreement, as amended (a "LOAN
INTEREST"), are subject to a right of first offer in favor of
BMG.
(a) This right of first offer will not apply to
transfers of Units: (i) that are permitted without
the consent of the "Majority in Interest" pursuant
to Article 10 of the Operating Agreement; (ii) in
connection with establishment of a business
relationship deemed by a Majority in Interest to be
strategic to the Company from an operational
perspective; unless (A) such business relationship
is with Zomba, one of the other so-called "major
record labels" or any Affiliate thereof or (B) the
number of Units proposed to be Transferred
hereunder represent a Percentage of ten percent
(10%) or greater in any single transaction or
twenty percent (20%) or greater in the aggregate;
or (iii) being Transferred to effect a forced sale
of all of the Company pursuant to Section 10.2(e)
of the Operating Agreement if BMG is not exercising
the BMG
6
Company Purchase Option.
(b) In the event that, during the Restriction Period, a
Founder proposes to Transfer all or any portion of
its Units or ADR proposes to transfer a Loan
Interest, other than pursuant to Section 10.2 of
the Operating Agreement, then, with respect to each
such sale (the "Founder Sale"), such Founder will
make BMG a written offer to sell (the "Founder Sale
Offer"), which offer will describe the portion of
the Founder's Units or Loan Interest proposed to be
sold (the "Founder Offered Interest"), as well as
the price and the material terms upon which such
Founder is willing to make such sale.
(c) BMG will have an option for a period of thirty (30)
days from the date of the Founder Sale Offer to
elect to purchase all, but not less than all, of
the Founder Offered Interest at the same price and
subject to the same terms and conditions as
described in the Founder Sale Offer. BMG may
exercise such purchase option by notifying the
Founders and the Company in writing before the
expiration of such thirty (30)-day period that it
wishes to purchase the Founder Offered Interest
(the "BMG Purchase Notice"). If BMG fails to
deliver the BMG Purchase Notice within such thirty
(30)-day period, it will be deemed not to have
exercised its right of first offer under this
paragraph. If BMG does not exercise or is deemed
not to have exercised with respect to its right of
first offer with respect to the entire Founder
Offered Interest, insofar as BMG is concerned, the
sale of the Founder Offered Interest may be made to
one or more third parties, on terms not more
favorable to the third parties than those set forth
in the Founder Sale Offer, for a period of ninety
(90) days thereafter. If the Founder Offered
Interests are not sold to a third party on the
terms set forth above within such ninety (90) day
period, such sale will again be subject to BMG's
rights described herein.
(d) The closing of any purchase of the Founder Offered
Interest by BMG will occur no more than sixty (60)
days following the last date for a timely election
by BMG to make such purchase, provided that such
closing is not delayed due to the need to satisfy
the requirements of any law, regulation or any
governmental agency or entity with respect to
anti-trust or competition regulations (including,
but not limited to, requirements to file set forth
in the Xxxx-Xxxxx-Xxxxxx Act), in which case the
period for such closing will be extended until such
time as all filings have been made and all
necessary approvals, licenses or permits have been
issued, provided BMG is working diligently and in
good faith to promptly satisfy all such regulatory
or governmental requirements, and provided,
further, that such extension shall not be for a
period exceeding ninety (90) days. To the extent
not thus sold, the applicable Founder may Transfer
to third parties, subject to the provisions of the
Operating Agreement, on terms not more favorable to
the third parties than those offered to BMG, for a
period of up to ninety (90) days thereafter. If
such Founder Offered Interests are not sold to a
third party on the terms set forth
7
above within such ninety (90) day period, the Units
represented thereby will again be subject to the
limitations on transfer described herein.
(e) In the event that a Founder proposes to Transfer
its Units, pursuant to Section 10.2 of the
Operating Agreement, one of the Founders (the
"OPTION FOUNDER") will be given the option to elect
to buy the Units subject to the proposed Transfer,
or to sell its Units. If such proposed Transfer is
to occur during the Restriction Period, BMG will be
given prompt notice of the Option Founder's
decision to buy or sell Units, and will have the
option, upon delivery of written notice to the
Option Founder and the other Founder (the "BMG
PARTICIPATION NOTICE") for a period of thirty (30)
days to purchase or sell, as applicable, on the
same terms and conditions as the Option Founder,
(A) up to thirty-five percent (35%) of the amount
of Units that the Option Founder has elected to
purchase or (B) to sell all of its Units, if the
Option Founder has elected to sell, in connection
with the rights under Section 10.2. If BMG fails to
deliver the BMG Participation Notice within such
thirty (30) day period, it will be deemed not to
have exercised its right of first offer under this
paragraph. If BMG does not exercise or is deemed
not to have exercised its right of first offer
under this paragraph, insofar as BMG is concerned,
the sale of the Founder's Units may be made
pursuant to the terms of 10.2. If BMG exercises its
option to participate in the Option Founder's
purchase of Units hereunder, the selling Founder
will sell subject Units proportionally as among BMG
and the purchasing Founder, with BMG purchasing, at
its election, up to thirty-five percent (35%) and
the remainder being purchased by the purchasing
Founder. If BMG exercises its option to sell
hereunder it will sell all of its Units.
Notwithstanding the foregoing, a Founder may not
purchase Units held by BMG or its Permitted
Transferees hereunder without its consent.
(f) The closing of any purchase of the Founder's Units
by BMG or the non-transferring Founder as described
in paragraph (e) above will occur within the time
periods provided in Section 10.2(d)(ii) of the
Operating Agreement.
(g) Notwithstanding anything set forth above, nothing
in this section is intended or will be deemed to
affect the Founders' obligation to obtain consents
set forth in Section 10.1(a) of the Operating
Agreement.
BMG Right of
First Offer to
Provide Substitute
Financing: The Company will provide BMG with prompt written notice of
its decision to seek a Substitute Financier subject to the
terms and conditions set forth in such notice (a "SUBSTITUTE
FINANCIER NOTICE"). Upon receipt of a Substitute Financier
Notice, BMG will have an option for a period of ten (10) days
to offer to become the Substitute Financier on the terms and
conditions set forth in the Substitute Financier Notice. If
BMG does not exercise its right of first offer or is deemed
not to exercised its right of first offer hereunder, the
Company
8
will have ninety (90) days following the last date for a
timely election by BMG to reach a firm commitment with a
third party pursuant to which such third party would become
the Substitute Financier. If the Company fails to sign such a
firm commitment within such ninety (90) day period or fails
to appoint a Substitute Financier within one hundred and
twenty (120) days, the first offer procedure set forth above
again will apply.
BMG Right of
First Offer to
Purchase the
Entire Company: If, during the Restriction Period, the Founders desire to
cause a sale of the entire Company (whether by way of sale of
assets or Units, merger or other form of transaction,
including as a result of a Founder initiating the procedure
to cause a forced sale pursuant to Section 10.2(e) of the
Operating Agreement) (a "Company Sale"), then the Founders
and the Company first will be obligated to offer BMG the
opportunity to purchase the entire Company at a price named
by the Company (or, if applicable, the Founder entitled to
seek to cause a forced sale pursuant to Section 10.2(e) of
the Operating Agreement).
(a) In the event the Founders propose to cause a
Company Sale, the Founders and the Company will
make BMG a written offer to sell (the "Company Sale
Offer"), which offer will describe the price and
the material terms upon which it is proposed that
the entire Company be sold.
(b) BMG will have an option for a period of thirty (30)
days from the date of the Company Sale Offer to
elect to purchase the entire Company at the same
price and subject to the same material terms and
conditions as described in the Company Sale Offer
(the "BMG Company Purchase Option"). BMG may
exercise the BMG Company Purchase Option by
notifying the Founders and the Company in writing
before expiration of such thirty (30)-day period
that it wishes to do so (the "BMG Company Purchase
Notice"). If BMG fails to deliver the BMG Company
Purchase Notice within such thirty (30)-day period,
it will be deemed not to have exercised the BMG
Company Purchase Right. If BMG does not exercise or
is deemed not to have exercised the BMG Company
Purchase Option, the sale of the Company may be
made to one or more third parties, on terms not
more favorable to the third parties than those
offered to BMG for a period of up to ninety (90)
days thereafter. If the Company is not sold to a
third party on the terms set forth above within
such ninety (90) day period, such sale will again
be subject to BMG's rights described herein.
(c) The closing of the Company Sale to BMG will occur
no more than sixty (60) days following the timely
election by BMG to exercise the BMG Company
Purchase Option, provided that such closing is not
delayed due to the need to satisfy the requirements
of any law, regulation or any governmental agency
or entity with respect to anti-trust or competition
regulations (including, but not limited to,
9
requirements to file set forth in the
Xxxx-Xxxxx-Xxxxxx Act), in which case the period
for which such closing will be extended until such
time as all filings have been made and all
necessary approvals, licenses or permits have been
issued, provided BMG is working diligently and in
good faith to promptly satisfy all such regulatory
or governmental requirements, and provided,
further, that such extension shall not be for a
period exceeding ninety (90) days. If said closing
does not occur within said time period, insofar as
BMG is concerned, the Company Sale may be made to
one or more third parties, on terms not more
favorable to the third parties than those offered
to BMG, for a period of up to ninety (90) days
thereafter. If the Company is not sold to a third
party on the terms set forth above within such
ninety (90) day period, such sale will again be
subject to BMG's rights described herein.
BMG Preemptive
Right: BMG will have the right to purchase up to 35%, during the
Restriction Period, and, thereafter, up to the greater of 10%
or its Percentage of the Company as of the date such right is
being exercised (the "Preemptive Percentage") of any and all
Units or other equity securities that the Company may, from
time to time, propose to sell and issue to any Person or
Persons (each, a "Proposed Issuance"), on the same terms and
conditions as offered to such Person or Persons.
(b) BMG's preemptive right will not apply to issuance
of Units or other equity securities: (i) to
employees or officers of the Company in
transactions with primarily non-financing purposes,
if the aggregate number of Units so issued does not
exceed a Percentage of ten percent (10%) in the
aggregate; (ii) in connection with establishment of
a business relationship deemed by a Majority in
Interest to be strategic to the Company from an
operational perspective, unless (A) such business
relationship is with Zomba, one of the other
so-called "major record labels" or any Affiliate
thereof and (B) the number of Units to be
transferred represents a Percentage of ten percent
(10%) or greater in a single transaction or twenty
percent (20%) or greater in the aggregate; or (iii)
to any Units issued by the Company as Substitute
Financier Units or Field Replacement Units under
the Operating Agreement.
(c) In the event the Company proposes to undertake a
Proposed Issuance, then, with respect to such
Proposed Issuance, the Company will give BMG
written notice of its intention, describing the
price and the general terms upon which the Company
proposes to make such Proposed Issuance. BMG will
have thirty (30) Business Days from the date such
notice is given to agree, by giving written notice
to the Company and
10
stating therein the portion of the new issuance to
be purchased, to purchase up to the Preemptive
Percentage of such new issuance for the price and
upon the terms applicable to the Proposed Issuance.
If BMG determines to participate in a Proposed
Issuance, it will have sixty (60) days (commencing
on the expiration of the above-described notice
period) to consummate the purchase from the
Company.
Tag-Along Rights: In the event that BMG does not exercise its "Right of First
Offer" to purchase Founder's Units as contemplated above
(including, without limitation, in connection with a Company
Sale), BMG will have tag-along rights to participate in any
proposed transfer of Units by FieldCo or ADR, as the case may
be, on the same terms and conditions as are obtained by
FieldCo or ADR, as the case may be, from the proposed
transferee of such Units. If BMG exercises its tag-along
right in lieu of its "Right of First Offer" to purchase a
Founder's Units in connection with a sale of all of a
Founder's Units pursuant to Section 10.2 of the Operating
Agreement, then, in lieu of selling a pro rata proportion of
the Units to be sold, BMG will sell all of its Units to the
purchasing Founder, who will be required to purchase all such
Units.
Guaranty: ADI agrees to guaranty to BMG the prompt, complete and
punctual performance and payment by ADR of ADR's obligation
to provide Advances to the Company under the Loan Agreement
(except to the extent that the Company waives its right to
the full amount of Advances that it may draw for a Fiscal
Year as described in 5.1(d)(i) of the Operating Agreement).
11
EXHIBIT E
TERMS OF THE AMENDMENT TO THE LOAN AND SECURITY AGREEMENT
This Term Sheet summarizes the principal terms of the Amendment to the
Loan and Security Agreement, which will be executed and delivered by the
Company, ADR and BMG as of Closing (capitalized terms used herein, and not
otherwise defined or in the Unit Purchase Agreement to which this Exhibit E is
attached, having the meaning given to such terms in the Loan Agreement as in
affect on the date of such Unit Purchase Agreement):
Advance: A $4,750,000 advance made by BMG (the "BMG ADVANCE") at the
Closing will be deemed to be an Advance under the Loan and
Security Agreement, as amended, subject to the terms and
conditions found therein. The funds advanced by BMG will
reduce ADR's obligation to provide funding under the Loan
Agreement, as amended, on a dollar for dollar basis for all
purposes.
Commitment: BMG will have no obligation to make any further Advances
under the Loan Agreement, as amended, or otherwise,
notwithstanding any repayments or prepayments of principal.
Repayment: Any repayment or prepayment of principal under the Loan
Agreement, as amended, will be shared ratably between ADR
and BMG based on the ratio of their respective principal
amounts outstanding at the time of such repayment or
prepayment.
Interest Payments: Will be shared ratably between ADR and BMG based on the
ratio of their respective interest amounts outstanding at
the time of such payment.
No Approval Rights: Except as explicitly set forth below, BMG will have no
right to vote on, or consent to or withhold consent or
approval with respect to any matter relating to the Loan
Agreement.
Agent: ADR will act as agent for BMG (in addition to acting on
ADR's own behalf) with respect to all notices to be given
or received (and agrees to promptly forward any and all
such notices received or given by ADR to or from the
Company), and all votes, approvals, decisions or consents
to be made or given, pursuant to the Loan Agreement, as
amended. ADR also will hold all security interests granted
to it under the Loan Agreement, as amended, as agent for
BMG as well as on ADR's own behalf. Nothing in this
paragraph, is intended, and it will not be construed, to
limit BMG's rights upon default or remedies under the Loan
Agreement.
Subordination: BMG's rights to payments under the Loan Agreement,
including repayment of Advances, and its security interest
in respect of such rights, will rank pari passu with a
Substitute Financier's right of repayment and security
interest in respect of such right. In addition, any
successor distributor will be entitled to a security
interest and priority of
1
payment of the same rank and quality as BMG's security
interest and priority of payment under the Distribution
Agreement and for purposes of the Loan Agreement, such
third-party distributor's security interest will have the
same rank and priority that BMG's security interest had
pursuant to the Distribution Agreement.
Minority Lender
Protections: The Amendment to the Loan Agreement will afford BMG the
right to consent to any amendment that would (1) reduce the
interest rate applicable to BMG's Advance, (2) reduce
principal of BMG's Advance, (3) postpone the maturity of
BMG's Advance, (4) postpone the interest payments on BMG's
Advance, (5) alter any of the foregoing consent rights, (6)
subordinate its security interests, except as contemplated
herein, or (7) limit the lenders remedies, including its
right to payment of fees and expenses of enforcement
actions.
2
EXHIBIT F
FORM OF OPINION
The proposed rendering by Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP ("Xxxxxx Xxxxx")
of the opinions listed below is subject to Xxxxxx Levin's review of final
executed versions of all Transaction Documents and other documents upon which
such opinions will be based, verification of all facts necessary to support such
opinions, and expression of appropriate assumptions, exclusions, limitations,
qualifications, and exceptions in the opinion letter, as well as authorization
by Xxxxxx Levin's Opinion Committee. Without limiting the generality of the
foregoing, certain opinions listed below will be limited in that Xxxxxx Xxxxx
will express no opinion that any payments by Purchaser to the Company as
contemplated under the Transaction Documents (each as defined below) will be
treated as debt rather than equity. All such opinions will also be limited to
Relevant Laws (as defined below).
Opinions
1. The Company is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
2. The Company has all requisite limited liability company power and authority
(i) to own its property and assets and to carry on its business as now conducted
and (ii) to execute, deliver and perform its obligations under the Transaction
Documents to which it is a party.
3. The Company is qualified as a foreign corporation in each of the
jurisdictions listed on Exhibit [__] hereto.
4. __________ membership interests in the Company ("Units") are validly issued
and outstanding as of the date hereof.
5. To our knowledge, except as set forth in the Operating Agreement and the Loan
Agreement (each as amended through the date hereof), there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal or similar rights) or agreements orally or in writing for the
purchase or acquisition from the Company of any Units.
6. Each of the Transaction Documents to which the Company is a party has been
duly executed and delivered by the Company.
7. The execution, delivery, and performance by the Company of the Transaction
Documents to which it is a party have been duly authorized by all necessary
limited liability company action on the part of the Company.
8. The Transaction Documents to which the Company is a party constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their respective terms.
9. To our knowledge, there is no action, suit, proceeding or investigation
pending or threatened against the Company that questions the validity of any of
the Transaction Documents to which the Company is a party or the right of the
Company to enter into such Transaction Documents or to consummate the
transactions contemplated thereby.
10. The execution, delivery and performance by the Company of the Transaction
Documents to which it is a party do not, at the date of this letter, (a) violate
any Relevant Laws or, to our knowledge, any ruling, writ, injunction, order,
judgment, or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, to which the Company is subject, or (b) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under, or (except as contemplated under the Transaction
Documents) result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company under, the
Operating Agreement (as amended to date) or the agreements listed on Exhibit
[___] hereto.
11. The Loan Agreement (as amended by the Amendment to the Loan Agreement) is
effective to create in favor of the Collateral Agent (as defined in the
Amendment to the Loan Agreement) a security interest under the UCC in the
Company's right, title and interest in and to the Collateral (as defined in the
Loan Agreement) to the extent a security interest in the Collateral would be
governed by the UCC.
12. Financing Statements have been filed with the Secretary of State of the
State of Delaware which perfect the security interest granted in the Collateral
under the Loan Agreement (as amended by the Amendment to the Loan Agreement) but
only to the extent that, under the UCC, a security interest in the Collateral
can be perfected by filing.
13. ADR is a corporation validly existing and in good standing under the laws of
the State of Delaware.
14. ADR has all requisite corporate power and authority to (i) own its property
and assets and to carry on its business as now conducted and (ii) to execute,
deliver and perform its obligations under the Transaction Documents to which it
is a party.
15. ADR is qualified as a foreign corporation in each of the jurisdictions
listed on Exhibit [__] hereto.
16. Each of the Transaction Documents to which ADR is a party has been duly
executed and delivered by ADR.
17. The execution, delivery, and performance by ADR of the Transaction Documents
to which it is a party have been duly authorized by all necessary corporate
action on the part of ADR.
18. The Transaction Documents to which ADR is a party constitute valid and
legally binding obligations of ADR, enforceable against ADR in accordance with
their respective terms.
19. To our knowledge, there is no action, suit, proceeding or investigation
pending or threatened against ADR that questions the validity of any of the
Transaction Documents to which ADR is a
party or the right of ADR to enter into such agreements or to consummate the
transactions contemplated thereby.
20. The execution, delivery and performance by ADR of the Transaction Documents
to which it is a party do not, at the date of this letter, (a) violate any
Relevant Laws or, to our knowledge, any ruling, writ, injunction, order,
judgment, or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, to which ADR is subject, or (b) conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute a
default under, or (except as contemplated under the Transaction Documents)
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company under, its certificate of
incorporation or by-laws or the agreements listed on Exhibit [___] hereto.
Defined Terms
For purposes of the foregoing opinions:
"AD Parties" means the Company and ADR.
"Financing Statements" means the UCC financing statements in the form of Exhibit
[__] hereto.
"Relevant Laws" means the laws of the State of New York and the United States of
America, the General Corporation Law of the State of Delaware, and the Limited
Liability Company Act of the State of Delaware, in each case which in Xxxxxx
Levin's experience are generally applicable to transactions of the type
contemplated by the Transaction Documents.
"Transaction Documents" means the following documents:
a. The Agreement to which this Exhibit F is attached.
b. Amendment to the Operating Agreement.
c. Amendment to the Loan Agreement.
d. BMG Note.
"UCC" means the Uniform Commercial Code in effect in the State of Delaware on
the date the opinion is rendered.
As to all opinions limited to "our knowledge," such opinions are based solely
upon the information contained in the respective certificates executed by
___________, on behalf of the Company, and by ____________ on behalf of ADR and
delivered to us in connection with the rendering of this opinion; and facts,
based upon our limited representation of the AD Parties, actually known to
attorneys within our firm who have been directly involved in representing the AD
Parties in connection with the Agreement to which this Exhibit F is attached,
without having undertaken any search of the public records, investigation,
verification or other inquiry of any kind.
Capitalized terms used but not defined in this Exhibit F have the respective
meanings assigned to such terms in the Agreement to which this Exhibit F is
attached.
