EX. 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of the 11th day of October, 1996 by and among DELSENER/XXXXXX ENTERPRISES,
LTD., a New York corporation, BEACH CONCERTS, INC., a New York corporation,
CONNECTICUT CONCERTS, INCORPORATED, a Connecticut corporation, BROADWAY
CONCERTS, INC., a New York corporation, ARDEE PRODUCTIONS, LTD., a New York
corporation, ARDEE FESTIVALS NJ, INC., a New Jersey corporation, IN-HOUSE
TICKETS, INC., a New York corporation, EXIT 116 REVISITED, INC., a New Jersey
corporation and DUMB DEAL, INC., a New York corporation (collectively, the
"Companies"); XXX XXXXXXXX, an individual residing at 0 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Seller"); XXXXX XXXXXX, an individual
residing at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Xxxxxx") and SFX
BROADCASTING, INC., a Delaware corporation having its principal place of
business in New York, New York (the "Buyer"):
WHEREAS, the Seller owns beneficially and of record all of the issued and
outstanding shares of stock (the "Shares") of the Companies; and
WHEREAS, the Companies conduct all of the activities of the Seller and
Xxxxxx in the concert promotion, event production, artist management, artist
development, ticket distribution, corporate sponsorship, venue operation,
concessionaire, parking, security and all similar businesses (the "Business");
and
WHEREAS, the Seller and Xxxxxx do not receive any income related to the
Business from any source other than the Companies; and
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires
to purchase from the Seller all of the issued and outstanding Shares of the
Companies;
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WHEREAS, the parties intend for the Buyer to assign its rights and
benefits (but not its obligations) hereunder to its wholly owned subsidiary,
Delsener/Xxxxxx Enterprises, Inc., a Delaware corporation (the "Buyer's Sub");
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale of Shares of the Companies. On the Closing Date (as
defined in Section 3.1), the Seller shall sell to the Buyer, and the Buyer shall
purchase from the Seller, the Shares for the Purchase Price (as defined in
Section 2.1) specified herein. At the Closing (as defined in Section 3.1), the
Seller shall deliver to the Buyer certificates representing all of the Shares
which are required to be delivered or are otherwise deliverable by the Seller
pursuant hereto duly endorsed in blank for transfer or accompanied by duly
executed stock powers assigning such Shares in blank, and the Buyer shall
deliver the Purchase Price in accordance with Article 2 below. In the event that
it is determined, at any time prior to or after the Closing, that any assets
related to the Business or any contractual relationships related to the Business
are owned or are in the name of any person or corporation other than the
Companies, this Agreement shall, at the sole and exclusive option of the Buyer,
be deemed an agreement to acquire such other corporations, assets or contracts
without any additional consideration therefor.
ARTICLE 2
CONSIDERATION
2.1 The aggregate consideration (the "Purchase Price") for the Shares
shall be the sum of Twenty-Three Million, Nine Hundred Fifty-Two Thousand and
Five Hundred Dollars ($23,952,500). The parties hereto agree to file their
respective tax returns consistent with
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this Section with such amendments thereto as either party shall be directed by
the Internal Revenue Service to submit.
2.2 Payment. The Purchase Price shall be paid as follows:
2.2.1 At the Closing, the Buyer shall pay to the Seller the sum of
Nineteen Million, Nine Hundred Fifty-Two Thousand and Five Hundred Dollars
($19,952,500) (the "Fixed Payment"), in partial payment for the Shares.
2.2.2 In addition to the Fixed Payment, the Buyer shall pay to the
Seller the aggregate sum of Three Million Dollars ($3,000,000), without
interest, in 20 equal quarterly installments over a five (5) year period
commencing on January 1, 1997 (and on the first day of each subsequent quarter
until paid in full) in partial payment for the Shares. Notwithstanding the
foregoing, if at any time prior to January 1, 2002 there shall occur an
Acceleration Event (as defined below), then upon the occurrence of such
Acceleration Event all amounts due but not yet paid or payable pursuant to this
Section shall be immediately remitted to Seller at such time.
2.2.3 In addition to the Fixed Payment, the Buyer shall pay to the
Seller the aggregate sum of One Million Dollars ($1,000,000), without interest,
in 40 equal quarterly installments over a ten (10) year period commencing on
January 1, 1997 in partial payment for the Shares. Notwithstanding the
foregoing, if at any time prior to January 1, 2002 there shall occur an
Acceleration Event (as defined below), then upon the occurrence of such
Acceleration Event all amounts due but not yet paid or payable pursuant to this
Section shall be immediately remitted to Seller at such time. The deferred
Purchase Price payments set forth in this Section 2.2.3 and in Section 2.2.2 are
referred to herein as the "Deferred Purchase Price Payments."
2.3 Escrow Account. On the date hereof, the Buyer shall deposit an
irrevocable stand-by letter of credit with a face amount of Two Million Dollars
($2,000,000) into an escrow account (the "Escrow Account") with The Chase
Manhattan Bank, to be held in escrow in accordance with the
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terms of the escrow agreement dated as of the date hereof among the Buyer, the
Seller and the escrow agent, a copy of which is attached as Exhibit A hereto.
After payment of the Fixed Payment by the Buyer at the Closing in accordance
with Article 2 hereof, the Escrow Deposit shall be returned to the Buyer.
2.4 [RESERVED]
2.5 Xxxxxx Payments. (a) The Buyer hereby agrees pay: (i) to Xxxxxx the
portions of the Deferred Purchase Price Payments identified on Exhibit B hereto
as being payable to Xxxxxx and (ii) to withhold from such portions of the
Deferred Purchase Price Payments to be so paid to Xxxxxx all applicable
withholding taxes, such taxes, along with any employer payroll taxes related
thereto (i.e., the applicable RCA taxes), to be remitted by the Buyer on a
timely basis to the appropriate taxing authorities.
(b) The Deferred Purchase Price Payments to be made by the Buyer to
the Seller pursuant to Section 2.2 shall be reduced by the portions thereof
payable to Xxxxxx by the Buyer as described in Section 2.5(a). The Seller and
the Buyer acknowledge that Exhibit B correctly sets forth, after giving effect
to such reductions, the portions of the Deferred Purchase Price Payments to be
so made by the Buyer to the Seller.
2.6 Acceleration Event. The term "Acceleration Event" shall mean any of
the following: (i) a Change in Control (as defined in the Employment
Agreements); (ii) an initial public offering of the Employer Stock (as defined
in the Employment Agreements) and (iii) a termination without Cause, other than
due to death, or a Constructive Termination Without Cause of the Seller's or
Xxxxxx'x employment pursuant to their respective Employment Agreements (such
terms being defined in the Employment Agreements), provided, that the events
described in this clause (iii) shall only be an "Acceleration Event for the
portions of the Deferred Purchase Price Payments payable to the individual so
terminated.
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2.7 Wire Instructions: Business Days. Payments to be made or caused
to be made hereunder shall be made by wire transfer in immediately available
funds to (i) the Seller to such account as the Seller shall direct and (ii)
Xxxxxx to such account as Xxxxxx shall direct: The amounts to be transferred by
wire at the Closing to the Seller and Xxxxxx and the appropriate wire
instructions are set forth on Appendix I hereto. Any such payment to be made or
caused to be made on a day that is not a business day shall be made on the first
business day immediately following such day.
ARTICLE 3
3.1 Closing. Except as otherwise mutually agreed upon by the Seller and
the Buyer, the consummation of the transactions contemplated herein (the
"Closing") shall occur on the later of (i) five (5) business days following the
date of expiration or termination of all waiting periods, including any
extensions thereof, which are applicable to the transactions contemplated by
this Agreement pursuant to Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules and
regulations thereunder and (ii) January 2, 1997. The Closing shall be held at
the Buyer's offices in New York, New York or such other location in New York,
New York as the Seller shall request. The date of the Closing is referred to
herein as the "Closing Date."
ARTICLE 4
GOVERNMENTAL CONSENTS
4.1 HSR Act. It is specifically understood and agreed by the Buyer and the
Seller that the Closing and the purchase of the Shares is expressly conditioned
on and is subject to the prior expiration or termination of all waiting periods,
including any extensions thereof, which arc applicable to the transactions
contemplated by this Agreement pursuant to the HSR Act.
4.2 Governmental Filings. The Companies, the Seller and the Buyer will,
within five
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(5) business days following the date of this Agreement, file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "Department of Justice") pursuant to
the HSR Act all requisite documents and notifications in connection with the
transactions contemplated by this Agreement. The Seller and the Buyer will use
their commercially reasonable efforts to make or cause to be made all such other
filings and submissions as may be required under applicable laws and
regulations, if any, for the consummation of the transactions contemplated by
this Agreement. The Buyer and the Seller will coordinate with one another in
exchanging such information and reasonable assistance as another may request in
connection with all of the foregoing. The parties hereby acknowledge that in
making such filings, the parties will be relying on information provided by the
other party without independent investigation. The Buyer shall pay the filing
fee payable in respect of the pre-notification filing pursuant to the HSR Act.
The Seller and the Buyer agree to request early termination of the waiting
periods under the HSR Act.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby makes the following representations and Warranties to the
Seller, each of which is true and correct on the date hereof, shall remain true
and correct to and including the Closing Date, shall be unaffected by any notice
to the Seller and shall survive the Closing.
5.1 Organization and Standing. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and will at Closing be duly qualified as a foreign corporation to do business in
the State of New York and have the corporate power and authority to own the
Shares and to carry on the business of the Companies as they are now being
conducted and as proposed to be conducted by the Companies between the date
hereof and the Closing Date.
5.2 Authorization and Binding Obligation. The Buyer has all necessary
power and
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authority to enter into and perform this Agreement and the transactions
contemplated hereby, and to own the Shares and to carry on the business of the
Companies as they are now being conducted, and the Buyer's execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by the Buyer, and this Agreement
constitutes, and the other agreements to be executed by the Buyer in connection
herewith will constitute, the valid and binding obligation of the Buyer,
enforceable in accordance with their terms, except as limited by laws affecting
the enforcement of creditors' rights.
5.3 Litigation and Compliance with Law. There is no litigation,
administrative, arbitration or other proceeding, or petition, complaint or, to
the best of the Buyer's knowledge, investigation pending, or to the best of
Buyer's knowledge, threatened before any court or governmental body, against the
Buyer or any of its affiliates that would adversely affect the Buyer's ability
to perform its obligations pursuant to this Agreement or the agreements to be
executed in connection herewith. To the best of the Buyer's knowledge, there is
no violation of any law, regulation or ordinance or any other requirement of any
governmental body or court which would have a material adverse effect on the
Buyer's ability to perform its obligations pursuant to this Agreement or the
agreements to be executed in connection herewith.
5.4 Investment Intent. The Buyer is acquiring the Shares solely for its
own account and not with a view to sale or distribution thereof in violation of
any securities laws. The Buyer acknowledges that the Shares are restricted
securities under the Securities Act of 1933, as amended, and cannot be sold,
transferred or conveyed without proper registration or an exemption from
registration under the Securities Act of 1933, as amended.
5.5 Accuracy of Information. To the best of Buyer's knowledge, no written
statement made by the Buyer herein and no information provided by the Buyer
herein or in the documents, instruments or other written communications made or
delivered directly by the Buyer to the Seller in connection with the
negotiations covering the purchase and sale of the Shares contains any
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material untrue statement of a material fact or omits a material fact necessary
to make the statements contained therein or herein not materially misleading. To
the extent that a representation or other information is made to the Buyer's
knowledge or is otherwise qualified by its terms, this representation shall not
be interpreted to expand such limitations or qualifications.
5.6 Stock Ownership. Buyer's Sub is a wholly-owned subsidiary of the
Buyer, and the Buyer owns one hundred percent (100%) of the authorized and
issued capital stock of Buyer's Sub.
5.7 Absence of Conflicting Agreements or Required Consents. Except as set
forth in Article 4 hereof with respect to governmental consents, the execution,
delivery and performance of this Agreement by the Buyer: (a) does not require
the consent of any third party; (b) will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which the Buyer is a party; and (c) will not, either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
agreement, instrument, license or permit to which the Buyer is now subject.
5.8 Audit. Schedule 5.8 of the Disclosure Schedules sets forth the results
of the audit (the "Audit") of the Companies' financial statements performed by
Ernst & Young from August 1996 through September 1996. The Audit is consistent
in all respects with the Financial Statements.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby makes the following representations and warranties to
the Buyer, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date, shall be unaffected by any
notice to the Buyer other than in the Disclosure Schedule attached hereto and
hereby made a part hereof and shall survive the Closing as provided in Article
16 hereof.
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6.1 No Other Interests. Other than through the Companies, the Seller,
directly or indirectly, individually or with others, does not own, manage,
operate, control, participate in, perform consultation services for, and is not
connected in any manner with the ownership, management, operation or control of
any business similar to, or competitive with, the business of the Companies or
any of their affiliates or subsidiaries. All activities of the Seller in the
Business are conducted by the Companies. All income of the Seller generated from
the conduct of the Business is generated by the Companies.
6.2 Ownership of Shares: Title. The Seller is the owner of record and
beneficially of all of the Shares. The Seller has not received any notice of any
adverse claim to the ownership of the Shares, does not have any reason to know
of any such adverse claim and is not aware of existing facts that would give
rise to any adverse claim to the ownership of the Shares. The sale and delivery
of the Shares to the Buyer pursuant to this Agreement shall vest in the Buyer
legal and valid title to the Shares, free and clear of all liens, security
interests, adverse claims or other encumbrances of any character whatsoever
("Encumbrances"), other than Encumbrances created by the Buyer and restrictions
on resales of the Shares under applicable securities laws.
6.3 Authorization and Binding Obligation. The Seller has all power and
authority to enter into and perform this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Seller, and this Agreement constitutes, and the other agreements to be executed
by the Seller in connection herewith will constitute, the valid and binding
obligation of the Seller, enforceable in accordance with their terms, except as
limited by laws affecting the enforcement of creditor's rights.
6.4 Absence of Conflicting Agreements or Required Consents. Except as set
forth in Article 4 hereof with respect to governmental consents, the execution,
delivery and performance of this Agreement by the Seller (a) does not require
the consent of any third party, (b) will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which the Seller is a party or by which he or the
Shares are bound; (c) will
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not, either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, agreement, instrument, license or permit to which the Seller or the
Shares are now subject; and (d) will not result in the creation of any lien,
charge or Encumbrance on any of the Shares.
6.5 Continuation of Companies' Business. Except as set forth on Schedule
6.5 to the Disclosure Schedule, the Seller does not know of any reason
whatsoever why the consummation of the transactions contemplated hereby would
adversely affect the Companies' enjoyment of all their material benefits,
rights, title and interest under all of the Contracts (as defined below).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE COMPANIES
The Seller and the Companies, jointly and severally, hereby make the
following representations and warranties to the Buyer, each of which is true and
correct on the date hereof, shall remain true and correct to and including the
Closing Date, shall be unaffected by any notice to the Buyer other than in the
Disclosure Schedule and shall survive the Closing as provided in Article 16
hereof.
7.1 Organization and Standing. Each of the Companies is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and as proposed to be conducted by the Companies between the date
hereof and the Closing Date. Each of the Companies is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by them or the nature of the business conducted by
them makes such qualification necessary. Schedule 7.1 of the Disclosure Schedule
sets forth a complete and correct list of all jurisdictions in which each of the
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Companies is incorporated and qualified or licensed to do business. The Seller
has heretofore delivered to the Buyer complete and correct copies of the
Certificate of Incorporation and By-laws (or other similar charter documents) of
each of the Companies.
7.2 Authorization and Binding Obligation. Each of the Companies has the
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and the Companies' execution, delivery and
performance of this Agreement, and the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on their
part. This Agreement has been duly executed and delivered by the Companies, and
this Agreement constitutes, and the other agreements to be executed by the
Companies in connection herewith will constitute, the valid and binding
obligation of the Companies, enforceable in accordance with their terms, except
as limited by laws affecting the enforcement of creditor's rights.
7.3 Capitalization. Schedule 7.3 of the Disclosure Schedule sets forth a
complete and correct list of the authorized and issued capital stock of each of
the Companies including the registered holder of each of the Shares. All
outstanding Shares have been duly authorized and validly issued, are fully paid
and non-assessable and were not issued in violation of any pre-emptive rights.
Other than Xxxxxx'x employment agreement dated as of January 1, 1993 with the
Companies (which shall be terminated on or prior to the Closing), there is
outstanding no security, option, warrant, right, call, subscription, agreement,
commitment or understanding of any nature whatsoever, fixed or contingent, that
directly or indirectly (i) calls for the issuance, sale, pledge or other
disposition of any Shares or of any capital stock of the Companies or any
securities convertible into, or other rights to acquire, any such Shares or
other capital stock of the Companies; or (ii) obligates the Companies or the
Seller to grant, offer or enter into any of the foregoing; or (iii) relates to
the voting or control of such Shares, capital stock, securities or rights. No
person has any right to require the Companies to register any of its securities
under the Securities Act of 1933, as amended.
7.4 Absence of Conflicting Agreements or Required Consents. Except as set
forth in Article 4 or Schedule 7.10 of the Disclosure Schedules hereof with
respect to governmental
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consents, the execution, delivery and performance of this Agreement by the
Companies: (a) does not require the consent of any third party; (b) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which any of the Companies
is a party; (c) will not, either alone or with the giving of notice or the
passage of time, or both, conflict with, constitute grounds for termination of
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, agreement, instrument, license or permit to which
any of the Companies is now subject; and (d) will not result in the creation of
any lien, charge or Encumbrance on any of the Shares.
7.5 Government Authorizations. Schedule 7.5 of the Disclosure Schedule
contains a true and complete list of all material licenses, permits or other
authorizations from governmental and regulatory authorities which are required
for the lawful conduct of the business and operations of the Companies in the
manner and to the full extent they are presently conducted. The Companies are
the authorized legal holders of the licenses, permits and authorizations listed
in Schedule 7.5 of the Disclosure Schedule, none of which is subject to any
restrictions or condition which would limit in any material respect the full
operation of the Companies as now operated.
7.6 Subsidiaries. Except as set forth in Schedule 7.6 of the Disclosure
Schedule, the Companies do not own any equity ownership interest, directly or
indirectly, in any person, corporation or other entity.
7.7 Taxes. The Companies have filed all material federal, state, local and
foreign income, franchise, sales, use, property, excise, payroll and other tax
returns required by law and have paid all material taxes, estimated taxes,
interest, assessments, and penalties due and payable. All material returns and
forms which have been filed have been true and correct in all material respects,
and no material tax or other payment in a material amount other than as shown on
such returns and forms is required to be paid and has been paid by the
Companies. Except as set forth in Schedule 7.7 of the Disclosure Schedule, there
are no present disputes as to taxes of any nature payable by the Companies.
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7.8 Personal Property. Schedule 7.8 of the Disclosure Schedule contains a
list of all material tangible personal property and assets owned or held by the
Companies (the "Personal Property"). Except as disclosed in Schedule 7.8 the
Disclosure Schedule, and except as may be subject to lease agreements of the
Companies specifically identified in Schedule 7.10 of the Disclosure Schedule,
the Companies own and have, and will have on the Closing Date, good and
marketable title to all such property (and to all other tangible and intangible
personal property and assets to be transferred to the Buyer hereunder), and none
of such property is, or at the Closing will be, subject to any Encumbrance other
than (i) as set forth in the Disclosure Schedule or the Financial Statements or
(ii) mechanics', carriers', workmen's, repairmen's or other like liens arising
or incurred in the ordinary course of business. All of the items of the tangible
personal property and assets included in the Disclosure Schedule are generally
in good operating condition (ordinary wear and tear excepted) and are available
for immediate use. The properties listed in the Disclosure Schedule include all
such properties used and necessary to conduct in all material respects the
business and operations of the Companies as now conducted.
7.9 Real Property. Schedule 7.9 of the Disclosure Schedule contains a
complete and accurate list of all real property owned and leased by the
Companies (collectively the "Real Estate Contracts") and a list of the
applicable leases. The Real Estate Contracts listed in the Disclosure Schedule
constitute valid and binding obligations of the Companies and, to the best of
the Seller's knowledge, of all other persons purported to be parties thereto and
are in full force and effect as of the date hereof and will on the Closing Date
constitute valid and binding obligations of the Companies and, to the best of
the Seller's knowledge, of all other persons purported to be parties thereto and
shall be in full force and effect. Except as set forth in the Disclosure
Schedule, none of the Companies is in default under any of such Real Estate
Contracts and none has received or given written notice of any default
thereunder from or to any of the other parties thereto and will not be in
default thereunder at or prior to the Closing.
7.10 Contracts. Schedule 7.10 of the Disclosure Schedule lists all written
and oral contracts having a remaining aggregate value in excess of $25,000 as of
the date of this Agreement
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for which the Companies shall continue to be liable as of the Closing Date (the
"Contracts").
7.11 Status of Contracts. Except as noted in Schedule 7.10 of the
Disclosure Schedule, the Seller has delivered to the Buyer true and complete
copies of all written Contracts, including any and all amendments and other
modifications to such Contracts. All Contracts are valid, binding and
enforceable by the Companies in accordance with their respective terms, except
as limited by laws affecting creditors' rights. The Companies have all complied
in all material respects with all Contracts and are not in material default
beyond any applicable grace periods under any of the Contracts, and, to the
Seller's knowledge, no other contracting party is, as of the date hereof, in
default under any of the Contracts.
7.12 Environmental Matters. To the best of the Seller's and the Companies'
knowledge, the Companies have not unlawfully disposed of any hazardous waste or
hazardous substance in a manner which has caused, or is reasonably likely to
cause, the Buyer to incur a material liability under applicable law in
connection therewith. To the best of the Seller's knowledge, the Companies have
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to their operations. To the
best of the Seller's knowledge, no hazardous waste has been disposed of by any
other person on the real estate owned or leased by the Companies. As used
herein, the term "hazardous waste" shall mean as defined in the Resource
Conservation and Recovery Act (RCRA) as amended and in the equivalent state
statute under applicable law.
7.13 Copyrights. Trademarks and Similar Rights. Schedule 7.13 of the
Disclosure Schedule lists, in all material respects, all copyrights, trademarks,
trade names, licenses, patents, permits and other similar intangible property
rights and interests applied for, issued to or owned by the Companies or under
which any of the Companies is a licensee or franchisee and used exclusively or
primarily in the conduct of the Business. Except as set forth in the Disclosure
Schedule, all of such rights and interests are issued to or owned by the
Companies, or if licensed or franchised to the Companies, to the best of the
Seller's knowledge, are valid and in good standing and uncontested. The Seller
has delivered or made available to the Buyer copies of all material documents,
if any,
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establishing such rights, licenses or other authority. The Companies have
received no written notice and have no knowledge of any material infringements
or materially unlawful use of such property. The properties listed in Schedule
7.13 of the Disclosure Schedule include all such properties necessary to conduct
in all material respects the Business.
7.14 Personnel Information. Schedule 7.14 of the Disclosure Schedule
contains a true and complete list of all persons currently employed by the
Companies, including a list of material compensation arrangements and employee
benefit plans and a list of other terms of any and all material agreements
affecting the employment of such persons. Except as set forth in the Disclosure
Schedule, as of the date hereof, the Companies have not received notification
that any of the employees of the Companies who are listed in the Disclosure
Schedule presently plan to terminate their employment, whether by reason of the
transactions contemplated hereby or otherwise.
7.14.1 Schedule 7.14 of the Disclosure Schedule contains a true and
complete list of all contracts with any labor organization. None of the
Companies has agreed to recognize any union or other collective bargaining unit
other than as listed on Schedule 7.14, nor has any union or other collective
bargaining unit been certified as representing any of the Companies' employees
other than as listed on Schedule 7.14. The Seller has no knowledge of any
organizational effort currently being made or threatened by or on behalf of any
labor union with respect to any of the employees of the Companies other than as
listed on Schedule 7.14. During the past five (5) years, none of the Companies
has experienced any strikes, work stoppages, grievance proceedings, claims of
unfair labor practices filed or other significant labor difficulties of any
nature.
7.14.2 The Companies have all complied in all material respects with
all laws relating to the employment of labor, including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those
laws relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, equal employment opportunity, sexual harassment and
payment and withholding of taxes. More specifically, the Companies have
substantially complied with and are not knowingly in default in any material
respect under any laws,
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rules and regulations relating to employment of labor, including those relating
to wages, hours, equal employment opportunities, sexual harassment, employment
of protected minorities (including women and persons over 40 years of age),
collective bargaining and the withholding and payment of taxes and contributions
and have withheld all amounts required or agreed to be withheld from wages and
salaries of its employees, and are not liable (other than for the current
payroll period) for any arrearage of wages or for any tax or penalty or failure
to comply with the foregoing. There are no claims or complaints pending or, to
the knowledge of the Seller, threatened against the Companies before any court
or governmental agency and involving any alleged unlawful employment practices,
whether or not relating to the laws described above. The Companies have not
consented to any decree involving any claim of unfair labor practice and have
not been held in any judicial proceeding to have committed any unfair labor
practice and there are no material controversies pending or threatened between
the Companies and any of its employees.
7.15 Financial Statements. A copy of the unaudited consolidated and
consolidating balance sheet of the Companies as of the fiscal years ended 1993,
1994 and 1995 (and, in the case of Ardee Festivals NJ, Inc. and In-House
Tickets, Inc., the fiscal year ended 1996) and the unaudited consolidated and
consolidating statements of income and retained earnings and changes in
financial position of the Companies for the fiscal years ended 1993, 1994 and
1995 (and, in the case of Ardee Festivals NJ, Inc. and In-House Tickets, Inc.,
the fiscal year ended 1996), including the notes thereto (collectively the
"Financial Statements") are attached hereto as Schedule 7.15. Except as noted
therein, and except as set forth on Schedule 5.8 of the Disclosure Schedules,
the Financial Statements fairly present the consolidated financial position of
the Companies and their results of operations as of those dates in conformity
with generally accepted accounting principles consistently applied for such
period.
7.16 Liabilities. Except (i) as set forth in the Disclosure Schedules or
the Financial Statements and (ii) for liabilities and obligations incurred in
the ordinary course of business consistent with past practice since December 31,
1995, including, without limitation, for income, franchise, sales, use,
property, excise, payroll and other taxes, the Companies have, as of the date
16
hereof and to the Seller's knowledge, no material debts, obligations or
liabilities of any kind or nature, either direct or indirect, absolute or
contingent, matured or unmatured.
7.17 Absence of Certain Changes or Events. Except as set forth in the
Disclosure Schedule or except as otherwise contemplated by this Agreement, from
the period from December 31, 1995, through the date hereof, there has not been
(a) any material damage, destruction or casualty loss to the physical properties
of the Companies (whether covered by insurance or not); (b) any material change
in the business, operations or financial condition of the Companies; (c) any
entry by the Companies into any transaction, commitment or agreement (including
without limitation any borrowing or capital expenditure) material to any of the
Companies' course of business other than in the ordinary course of business; (d)
any redemption or other acquisition by the Companies of the Companies' capital
stock or any declaration, setting aside or payment of any dividend or other
distribution in stock or property (other than cash) with respect to the
Companies' capital stock; (e) other than in accordance with pre-existing plans,
agreements and arrangements listed in the Disclosure Schedule, any increase in
the rate or terms of compensation payable or to become payable by the Companies
to its directors, officers or key employees or any increase in the rate or terms
of any bonus, pension, insurance or other employee benefit plan, payment or
arrangement made to, for or with any such directors, officers or key employees;
(f) any acceleration of sales or reduction of aggregate administrative,
marketing, advertising and promotional expenses or research expenditures other
than in the ordinary course of business; (g) any sale, transfer or other
disposition of any material asset of the Companies to any party, including the
Seller, except for payment of third-party obligations incurred in the ordinary
course of business in accordance with the Companies' regular payment practices;
(h) any termination or waiver of any rights of value to the business of the
Companies; or (i) any failure by the Companies to pay their accounts payable or
other obligations in the ordinary course of business consistent with past
practices.
7.20 Title to Properties. Except as set forth on the Disclosure Schedule,
the Companies have good and marketable title to all of the assets and properties
which they purport to own and which are reflected on the Financial Statements,
free and clear of all Encumbrances, except (a) for liens for
17
current taxes not yet due and payable or for taxes the validity of which is
being contested in good faith by appropriate proceedings, (b) for Encumbrances
which individually or in the aggregate do not materially and adversely affect
the business, operations or financial condition of the Companies, (c) as
otherwise set forth in the Financial Statements and (d) for lease agreements
specifically identified in Schedule 7.10 to the Disclosure Schedule.
7.21 Litigation. Except as set forth in Schedule 7.21 of the Disclosure
Schedule, as of the date hereof, none of the Companies is subject to any
judgment, award, order, writ, injunction, arbitration decision or decree
materially adversely affecting the conduct of any of their businesses, and, as
of the date hereof, there is no litigation, arbitration, administration or other
proceeding or, to the best of the Seller's knowledge, investigation pending or,
to the best of the Seller's knowledge, threatened against the Companies or the
Seller in any federal, state or local court, or before any administrative agency
or arbitrator, or before any other tribunal duly authorized to resolve disputes,
which would reasonably be expected to have a material adverse effect upon the
business, property, assets or condition (financial or otherwise) of any of the
Companies or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
7.22 Compliance With Laws. The Companies have not received any notice
prior to the date hereof asserting any material non-compliance by them in
connection with their business or operation with any applicable statute, rule or
regulation, whether federal, state or local. The Companies are not in default
with respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or any other tribunal duly
authorized to resolve disputes in any respect material to the transactions
contemplated hereby. The Companies are in compliance with all material laws,
regulations and governmental orders applicable to the conduct of their business
and operations and the present use of the assets does not violate any of such
laws, regulations or orders.
7.23 Insurance. All insurance policies with respect to the properties,
assets, operations and
18
business of the Companies (the "Insurance Policies") are in full force and
effect. Except as set forth on Schedule 7.23 of the Disclosure Schedule, as of
the date hereof there are no pending claims against the Insurance Policies by
the Companies as to which the insurers have denied liability and with respect to
which there is a reasonable likelihood of a settlement or determination adverse
to the Companies. To the best of the Companies' and the Seller's knowledge, the
operations of each of the Companies have been conducted in a manner so as to
conform in all material respects to all applicable Insurance Policies, nor are
there any other parties having an interest under the Insurance Policies. Except
as set forth in Schedule 7.23 of the Disclosure Schedule, (i) there exist no
material claims under the Insurance Policies that have not been properly filed
by the Companies; (ii) no insurance company has refused to renew any material
insurance policy of the Companies during the past eighteen (18) months; and
(iii) there have been no material rate or premium increases or written notice of
prospective changes therein on general liability, property or directors and
officers liability Insurance Policies during the past eighteen (18) months. The
Disclosure Schedule contains a list that includes all Insurance Policies.
7.24 Payola/Plugola. Neither the Seller nor any of the Companies has paid
or agreed to pay any money, service or any valuable consideration, as defined
in, and other than any such payments or agreements to pay made in accordance
with, Sections 317 and 507 of the Communications Act of 1934, as amended, for
the radio broadcast of any matter whatsoever.
7.25 Accuracy of Information. To the best of the Seller's and the
Companies' knowledge, no written statement made by the Seller or the Companies
herein and no information provided by the Seller or the Companies herein or in
the documents, instruments or other written communications made or delivered
directly by the Seller or the Companies to the Buyer in connection with the
negotiations covering the purchase and sale of the Shares contains any material
untrue statement of a material fact or omits a material fact necessary to make
the statements contained therein or herein not materially misleading. To the
extent that a representation or other information is made to the Seller's
knowledge or is otherwise qualified by its terms, this representation shall not
be interpreted to expand such limitations or qualifications.
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ARTICLE 8
COVENANTS OF THE BUYER
8.1 Closing. On the Closing Date, the Buyer shall purchase the Shares from
the Seller as provided in Articles 1 and 2 hereof and shall deliver or cause to
be delivered the Purchase Price as provided in Article 2 hereof. The Buyer shall
not permit the Companies to take any action between the Closing and the
beginning of the day after the day on which the Closing occurs other than in the
ordinary course of business.
8.2 Notification. The Buyer shall notify the Seller of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against the Buyer or its affiliates which challenges the transactions
contemplated hereby.
8.3 No Inconsistent Action. The Buyer shall not take any other action
which is materially inconsistent with its obligations under this Agreement.
8.4 Audit Costs. The Buyer agrees to pay the full cost of the audit of the
Companies' financial statements performed by Ernst & Young between August, 1996
and September, 1996.
8.5 Current Assets. The Buyer agrees that all cash and other current
assets as of December 31, 1996 and all prepaid taxes (that are not current
assets) in excess of the corresponding tax liabilities as of December 31, 1996
(collectively the "Current Assets"), other than cash in respect of advance
ticket sales for events that are scheduled to occur after December 31, 1996
("Advance Cash"), shall be solely for the account of the Seller, and Seller
shall be entitled to retain such Current Assets. The parties shall, not later
than January 31, 1997, take such steps as are necessary for Buyer to receive the
Advance Cash and Seller to receive the Current Assets.
8.6 Advances. Security Deposits. Etc. The Buyer shall reimburse the Seller
for all security deposits, advances to venues or to performers to the extent
made in the ordinary course of
20
business relating to events that will generate any portion of their revenues
after December 31, 1996, as well as all capital investments in venues (including
professional fees) that have been or are to be made in or after 1996. All such
deposits, advances and the like made prior to the date hereof are listed on
Schedule 8.6 attached hereto. The Buyer shall make the reimbursement described
above (a) on January 2, 1997 with respect to deposits, advances and the like for
which the Seller has provided to the Buyer receipts, invoices or other evidence
reasonably satisfactory to the Buyer no later than December 20, 1996 and (b)
from time to time after January 2, 1997 within five business days after the
Seller has provided to the Buyer receipts, invoices or other evidence reasonably
satisfactory to the Buyer. Notwithstanding the foregoing, the Seller shall
remain responsible for the funding of all such items, whether or not listed on
Schedule 8.6, through and including the Closing Date.
ARTICLE 9
COVENANTS OF THE SELLER AND THE COMPANIES
9.1 Pre-Closing Covenants. The Seller and the Companies covenant and agree
with respect to the Companies that between the date hereof and the Closing Date,
except as expressly permitted by this Agreement or with the prior written
consent of the Buyer, they shall act in accordance with the following:
9.1.1 The Companies shall conduct their business and operations in
the ordinary and prudent course of business consistent with past practices and
with the intent of preserving the ongoing operations and assets of the
Companies.
9.1.2 The Companies shall use reasonable efforts to preserve their
customers, suppliers and others having business relations with the Companies and
continue to conduct the financial operations of the Companies, including their
credit and collection policies, in the ordinary course of business with
substantially the same effort, and to substantially the same extent and in the
same manner, as in the prior conduct of the business of the Companies.
21
9.1.3 The Companies shall not, other than in the ordinary course of
business or in accordance with a pre-existing plan, agreement or arrangement
listed on Schedule 9.1 of the Disclosure Schedule, (i) sell or dispose of or
commit to sell or dispose of any of the Companies' assets; (ii) grant or agree
to grant any general increases in the rates of salaries or compensation payable
to employees of the Companies; (iii) grant or agree to grant any specific bonus
or increase to any executive or management employee of any of the Companies;
(iv) provide for any new pension, retirement or other employment benefits for
employees of the Companies or any increases in any existing benefits, other than
as required by law; or (v) voluntarily incur any liability not currently
reflected on the Financial Statements.
9.1.4 The Seller and the Companies shall provide the Buyer prompt
written notice of any change in any of the information contained in the
representations and warranties made in Article 6 and Article 7 hereof or any
Exhibits or the Disclosure Schedule herein or attached hereto.
9.1.5 Between the date of this Agreement and the Closing Date, the
Companies will and the Seller will cause the Companies to (i) give the Buyer and
its authorized representatives reasonable access to all books, records, offices
and other facilities and properties of the Companies; (ii) permit the Buyer to
make such inspections thereof, during regular business hours, as the Buyer may
reasonably request, and (iii) cause their officers to furnish the Buyer with
such financial and operating data, including tax returns and supporting
schedules, and other information with respect to the business and properties of
the Companies as the Buyer may from time to time reasonably request. The Seller
shall cause the Companies' officers and managerial employees, counsel and
auditors to be available upon reasonable notice and during normal business hours
for such questions of the Buyer and its authorized representatives concerning
the business and affairs of the Companies as the Buyer shall reasonably request.
9.1.6 Upon the Buyers request, the Companies shall, at the sole cost
of the Buyer, provide the Buyer with monthly unaudited consolidated and
consolidating statements of revenue and
22
expenses, such monthly statements to be provided within forty-five (45) days of
the end of each month.
9.1.7 Without the prior written consent of the Buyer, the Companies
shall not enter into or renew or modify in any material respect any agreements,
commitments or contracts, including the Contracts listed on Schedule 7.10 of the
Disclosure Schedules, except in the ordinary course of business consistent with
the past practices of the Companies.
9.1.8 The Companies shall not permit any of their insurance (or
reinsurance) policies to be canceled or terminated or any of the coverage
thereunder to lapse unless simultaneously with such termination, cancellation or
lapse, replacement policies providing coverage equal to or greater than coverage
remaining under those canceled, terminated or lapsed are in full force and
effect.
9.1.9 The Companies shall not and the Seller shall not permit the
Companies to amend any of their certificates of incorporation or by-laws.
9.2 Notification. The Seller and the Companies shall notify the
Buyer of any material litigation, arbitration or administrative proceeding
pending or, to their knowledge, threatened against the Seller or the Companies
which challenges the transactions contemplated hereby.
9.4 No Inconsistent Action. The Seller and the Companies shall take no
action which is materially inconsistent with their obligations under this
Agreement.
9.5 Closing Covenant. On the Closing Date, the Seller shall sell and
deliver the Shares to the Buyer as provided in Articles 1 and 2 of this
Agreement.
9.6 No Shopping. From and after the date hereof until the termination of
the Agreement
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in accordance with its terms, neither the Seller or any representative or agent
of the Seller, nor the Companies, any officer, director, employee agent, or
representative of the Companies, shall directly or indirectly solicit or
knowingly encourage, including by way of furnishing information, the initiation
of any inquiries or proposals regarding, or engage in any discussions or enter
into any agreements regarding any merger, sale of shares of capital stock, sale
of all or substantially all of the assets or similar business combination or
transaction involving the Companies.
9.7 Escrow. In the event the Buyer, in good faith, asserts a bona fide
claim for indemnification under Article 16 against the Seller and Xxxxxx after
the Closing and prior to the last day of the eighteenth month following the
Closing, the Seller and Xxxxxx shall promptly place funds into an escrow account
in an amount equal to the lesser of (a) $2,000,000 (less any amounts already put
in escrow) and (b) the amount of such claim (each of the Seller and Xxxxxx being
severally responsible for his respective Applicable Percentage (as defined in
the Letter Agreement) of the amount in (a) or (b)). Such amount (or an
appropriate portion thereof) shall be released from escrow (x) to the Buyer upon
resolution of the claim in the Buyer's favor, or (y) to the Seller and Xxxxxx
upon resolution of the claim in the favor of the Seller or Xxxxxx. Any claim
made shall be accompanied by a certificate signed by the Chief Executive Officer
and Chief Financial Officer of the Parent to the effect that they believe that
the claim and the amount thereof to be in good faith and bona fide.
ARTICLE 10
JOINT COVENANTS
The Buyer, the Seller and the Companies covenant and agree that between
the date hereof and the Closing Date, they shall act in accordance with the
following:
10.1 Conditions; Closing. Except as otherwise provided in this Agreement,
if any event should occur, either within or without the control of any party
hereto, which would prevent fulfillment of the conditions set forth in Articles
11 and 12 hereof upon the obligations of any party hereto to consummate the
transactions contemplated by this Agreement, the parties hereto shall use their
reasonable best efforts to cure the event as expeditiously as possible.
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10.2 Confidentiality. The Buyer, the Seller and the Companies shall each
keep confidential all information obtained by it or them with respect to the
other in connection with this Agreement and the negotiations preceding this
Agreement, and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return
promptly to the other, without retaining a copy thereof, any schedules,
documents or other written information obtained from the other in connection
with this Agreement and the transactions contemplated hereby. Notwithstanding
the foregoing, no party shall be required to keep confidential or return any
information which (i) is known or available through other lawful sources, not
bound by a confidentiality agreement with the disclosing party, (ii) is or
becomes publicly known through no fault of the receiving party or its agents,
(iii) is required to be disclosed pursuant to an order or request of a judicial
or governmental authority or because of the rules and regulations of the
Securities and Exchange Commission (the "SEC") (provided the other parties are
given reasonable prior notice and a reasonable opportunity to object or seek
exemption from such order, request or regulations), or (iv) is developed by the
receiving party independently of the disclosure by the disclosing party. The
Companies and the Seller hereby acknowledge that the Buyer is a reporting person
under the rules and regulations of the SEC and will be required, upon the
execution of this Agreement, to disclose and file this Agreement (not including
the Disclosure Schedules and the Exhibits hereto) with its regularly required
SEC reports, provided, that the Buyer shall afford the Seller reasonable time to
comment on the text accompanying any such disclosure prior to such filing.
10.3 Cooperation. The Buyer, the Seller and the Companies shall cooperate
fully with each other in taking any actions, including actions to obtain the
required consent of any governmental instrumentality or any third party,
necessary or helpful to accomplish the transactions contemplated by this
Agreement; provided, however, that no party shall be required to take any action
which would have a material adverse effect upon it or any affiliated entity.
10.4 Publicity. The Seller, the Companies and the Buyer agree that, from
the date hereof through the Closing Date, no public release or announcement
concerning the transactions
25
contemplated hereby shall be issued by such party without the prior consent of
the other parties (which consent shall not be unreasonably withheld), (i) except
that a public announcement substantially in the form of Exhibit C hereto may be
released prior to the Closing Date and (ii) except as such release or
announcement may be required by law or the rules or regulations of any United
States securities exchange, in which case the party required to make the release
or announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance; provided, however, that the
Seller may make internal announcements to the employees of the Companies
regarding the transactions contemplated hereby after reasonable prior notice to
and consultation with the Buyer.
ARTICLE 11
CONDITIONS OF CLOSING BY THE BUYER
The obligations of the Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Governmental Consents. Each of the Seller, the Buyer and the
Companies, as required in connection with the transactions contemplated hereby
to file a Notification and Report Form for Certain Mergers and Acquisitions with
the Department of Justice and the FTC pursuant to the HSR Act, shall have made
such filing and all applicable waiting periods with respect to each such filing
(including extensions thereof) shall have expired or been terminated.
11.2 Adverse Proceedings. No order, decree or judgment of any court,
agency or other governmental authority shall have been rendered against any
party hereto which would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
11.3 No Further Conditions. Other than as explicitly set forth above,
there shall be no conditions whatsoever to the obligations of the Buyer under
this Agreement.
26
ARTICLE 12
CONDITIONS OF CLOSING BY THE SELLER
The obligations of the Seller hereunder are, at his option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Governmental Consents. Each of the Seller, the Buyer and the
Companies, as required in connection with the transactions contemplated hereby
to file a Notification and Report Form for Certain Mergers and Acquisitions with
the Department of Justice and the FTC pursuant to the HSR Act, shall have made
such filing and all applicable waiting periods with respect to each such filing
(including extensions thereof) shall have expired or been terminated.
12.2 Adverse Proceedings. No order, decree or judgment of any court,
agency or other governmental authority shall have been rendered against any
party hereto which would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
12.3 Payment of Purchase Price. The Buyer shall have delivered or caused
to be delivered the Purchase Price in accordance with the terms of Article 2
hereof.
12.4 No Further Conditions. Other than as explicitly set forth above,
there shall be no conditions whatsoever to the obligations of the Seller under
this Agreement.
ARTICLE 13
FEES AND EXPENSES
13.1 Expenses. Each party hereto shall be solely responsible for all costs
and expense incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
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ARTICLE 14
COMMISSIONS OR FINDER'S FEE
14.1 The Buyer's Representation and Agreement to Indemnify. The Buyer
represents and warrants to the Seller and the Companies that neither it nor any
person or entity acting on its behalf has agreed to pay a commission, finder's
fee or similar payment in connection with this Agreement or any .matter related
hereto to any person or entity, other than to Sillerman Communications
Management Corporation. The Buyer further agrees to indemnify, defend and hold
the Seller harmless from and against any and all claims, losses, liabilities and
expenses (including reasonable attorney's fees) arising out of a claim by any
person or entity (including Sillerman Communications Management Corporation)
based on any such arrangement or agreement made or alleged to have been made by
the Buyer.
14.2 The Seller's and Companies' Representation and Agreement to
Indemnify. The Seller and the Companies, jointly and severally, represent and
warrant to the Buyer that neither they nor any person or entity acting on their
behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity. The Seller and the Companies further agree to jointly and severally
indemnify, defend and hold the Buyer harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorney's fees)
arising out of a claim by any person or entity based on any such arrangement or
agreement made or alleged to have been made by the Seller or the Companies.
ARTICLE 15
DOCUMENTS TO BE RELEASED FROM ESCROW AT CLOSING
15.1 The Seller's Documents. At the Closing, immediately after the wire
transfers to be made at the closing have cleared, the Buyer's counsel shall
release the following documents from escrow to the Buyer:
28
15.1.1 Certified resolutions of the Boards of Directors of the
Companies approving the execution and delivery of this Agreement and each of the
other documents and authorizing the consummation of the transactions
contemplated hereby and thereby;
15.1.2 Articles of Incorporation of the Companies certified by the
Secretary of State of the states of incorporation of the Companies;
15.1.3 Written opinion letters, dated the date hereof, a copies of
which are attached hereto as Exhibit D;
15.1.4 Certificates evidencing the Shares;
15.1.5 Governmental certificates showing that the Companies are duly
incorporated and in good standing under the laws of their states of
incorporation and that they are qualified as foreign corporations in the State
of New York and all other states in which they conduct business, dated not more
than ten (10) calendar days before the date hereof;
15.1.6 All stock books and records, minute books and all files and
records pertaining to the business and operations of the Companies.
15.1.17 The letter agreement dated the date hereof among the
Companies, the Seller and Xxxxxx (the "Letter Agreement"), a copy of which is
attached hereto as Exhibit E.
15.2 The Buyer's Documents. At the Closing, the Buyer's counsel shall
release from escrow the following, or otherwise cause to be delivered, to the
Seller
15.2.1 The Purchase Price in accordance with Section 2.2 hereof.
15.2.2 The written opinion of the Buyer's corporate counsel, dated
the date hereof,
29
a copy of which is attached hereto as Exhibit F;
15.2.3 Governmental certificates showing that the Buyer and the
Buyer's Sub are duly incorporated and in good standing in the State of Delaware
and that the Buyer is qualified as a foreign corporation in the State of New
York, dated not more than ten (10) calendar days before the date hereof;
15.2.4 Certified resolutions of the Board of Directors of the Buyer
approving the execution and delivery of this Agreement and each of the other
documents and agreements referred to herein and authorizing the consummation of
the transactions contemplated hereby and thereby; and
15.2.5 The Employment Agreements.
ARTICLE 16
INDEMNIFICATION
16.1 The Seller's Indemnities. 16.1.1. Subject to the limitations set
forth in this Article 16, each of the Seller and Xxxxxx hereby indemnifies,
defends and holds the Buyer harmless with respect to any and all demands,
claims, actions, suits, proceedings, assessments, judgments, costs, losses,
damages, liabilities and expenses, including, without limitation, reasonable
attorneys' fees (collectively, "Losses"), other than with respect to Taxes (as
defined below) asserted against, resulting from, imposed upon or incurred by the
Buyer directly or indirectly relating to or arising out of the inaccuracy of any
representation or warranty, or the breach of any covenant or agreement,
contained herein or in any instrument or certificate delivered pursuant hereto.
16.1.2 The Seller hereby indemnifies, defends and holds the Buyer
harmless with respect to any and all Losses asserted against, resulting from,
imposed upon or incurred by the Buyer directly or indirectly relating to or
arising out of Taxes payable by the Companies with respect to any Pre-Closing
Tax Period ("Pre-Closing Taxes"). The term "Tax" or "Taxes" shall
30
mean all Federal, state, local, foreign and other governmental taxes,
assessments, duties, fees, levies or similar charges of any kind (including,
without limitation, all interest, penalties and additions imposed with respect
to such amounts), including, without limitation, all sales, payroll, employment
and other withholding taxes, and including, without limitation, all obligations
under any tax sharing agreement, tax indemnity obligation or similar written or
unwritten agreement, arrangement or practice and any liability for taxes imposed
by reason of transferee liability or status as the successor to another entity
or member of a consolidated, combined or unitary group including other entities.
The term "Pre-Closing Tax Period" shall mean all taxable periods ending on or
before the Closing Date and the portion ending on the Closing Date of any
taxable period that includes (but does not end on) such day.
16.2 The Buyer's Indemnities. 16.2.1. The Buyer hereby indemnifies,
defends and holds the Seller harmless with respect to any and all Losses, other
than with respect to Taxes asserted against, resulting from, imposed upon or
incurred by the Seller directly or indirectly relating to or arising out of the
inaccuracy of any representation or warranty, or the breach of any covenant or
agreement, contained herein or in any instrument or certificate delivered
pursuant hereto.
16.2.2 The Buyer hereby indemnifies, defends and holds the Seller
harmless with respect to any and all Losses asserted against, resulting from,
imposed upon or incurred by the Seller directly or indirectly relating to or
arising out of Taxes payable by the Companies with respect to any Post-Closing
Tax Period ("Post-Closing Taxes") except to the extent that such Losses or Taxes
relate to the activities of the Companies prior to the Closing. The term
"Post-Closing Tax Period" shall mean all taxable periods beginning after the
Closing Date and the portion beginning on the day after the Closing Date of any
taxable period that includes (but does not begin on) such day.
16.3 Rights. After the Closing Date, the indemnification provided in
Sections 16.1 and 16.2 and any other indemnification expressly provided in this
Agreement and in the terms of any other agreements or documents delivered
pursuant to this Agreement will be the sole and exclusive
31
remedy of the parties hereto with respect to any and all Losses incurred
directly or indirectly because of or resulting from or arising out of or
relating to this Agreement, the transactions contemplated hereby, the Companies
or their respective assets, liabilities and businesses (other than claims of, or
causes of action arising from, fraud).
16.4 Survival of Representations and Warranties. The representations and
warranties contained herein, other than those contained in Sections 6.2 and 7.3,
shall survive the Closing for a period of eighteen (18) months (the "Claims
Period") following the Closing Date, and upon the expiration of such period
shall lapse and be of no further effect. The representations and warranties
contained in Sections 6.2 and 7.3 shall survive the Closing.
16.5 Limitations on Indemnity. 16.5.1 Notwithstanding anything to the
contrary contained in this Agreement, neither the Buyer on the one band nor the
Seller or Xxxxxx on the other shall have any liability or obligation to the
other for the inaccuracy or breach of any representation, warranty, covenant or
agreement of such other party made in this Agreement except to the extent that
the aggregate of such other party's Losses from such inaccuracies or breaches
exceed One Hundred Thousand Dollars ($100,000) (the "Threshold Amount") in the
aggregate, in which event the party so liable shall then be liable only for all
such Losses, including the sums constituting the Threshold Amount. Any claim for
indemnification must be made within eighteen (18) months of the Closing.
16.5.2 Notwithstanding anything to the contrary contained in this
Agreement, (1) the liability of each of the Seller and Xxxxxx under Section
16.1.1 with respect to any Loss shall be limited to an amount of such Loss equal
to his respective Applicable Percentage (as defined in the Letter Agreement) of
such Loss and (ii) the aggregate liability of each of the Seller and Xxxxxx
under this Article 16 shall not exceed the product of his respective Applicable
Percentage and the Fixed Payment.
16.5.3 The amount of any Loss for which indemnification is provided
under this Article 16 shall be net of any amounts recovered or recoverable by
the Indemnified Party (as
32
defined below) under insurance policies with respect to such Loss and shall be
(i) increased to take account of any net Tax cost incurred by the Indemnified
Party arising from the receipt of indemnity payments hereunder (grossed up for
such increase) and (ii) reduced to take account of any net Tax benefit realized
by the Indemnified Party arising from the incurrence or payment of any such
Loss. In computing the amount of any such Tax cost or Tax benefit, the
Indemnified Party shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
of any indemnity payment hereunder or the incurrence or payment of any
indemnified Loss.
16.6 Procedures.
16.6.1 Promptly after the receipt by any party (the "Indemnified
Party") of notice of (A) any claim or (B) the commencement of any action,
proceeding or litigation (collectively, "Litigation") which may entitle such
party to indemnification under this Section, such party shall give the other
party (the "Indemnifying Party") written notice of such claim or the
commencement of such claim or Litigation and shall permit the Indemnifying Party
to assume the defense of any such Litigation. The failure to give the
Indemnifying Party timely notice under this clause shall not preclude the
Indemnified Party from seeking indemnification from the Indemnifying Party
unless such failure has materially prejudiced the Indemnifying Party's ability
to defend such claim or Litigation.
16.6.2 If the Indemnifying Party assumes the defense of any such
claim or Litigation with counsel reasonably acceptable to the Indemnified Party,
the obligations of the Indemnifying Party as to such claim or Litigation shall
be limited to taking all steps necessary in the defense or settlement of such
claim or Litigation and to holding the Indemnified Party harmless from and
against any losses, damages and liabilities caused by or arising out of any
settlement approved by the Indemnifying Party or any judgment in connection with
such claim or Litigation; however, the Indemnified Party may participate, at its
or his expense, in the defense of such claim or Litigation provided that the
Indemnifying Party shall direct and control the defense of such claim or
Litigation.
33
The Indemnified Party shall cooperate and make available all books and records
reasonably necessary and useful in connection with the defense. The Indemnifying
Party shall not, in the defense of such claim or Litigation, consent to entry of
any judgment, except with the written consent of the Indemnified Party, or enter
into any settlement, except with the written consent of the Indemnified Party,
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or Litigation.
16.6.3 If the Indemnifying Party shall not assume the defense of any
such claim or Litigation, the Indemnified Party may, but shall have no
obligation to, defend against such claim or Litigation in such manner as it may
deem appropriate. The Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of all reasonable expenses, legal or otherwise,
incurred by the Indemnified Party in connection with the defense against or
settlement of such claim or Litigation. If no settlement of the claim or
Litigation is made, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any judgment rendered with respect to such
claim or in such Litigation and of all reasonable expenses, legal or otherwise,
incurred by the Indemnified Party in the defense against such claim or
Litigation.
16.6.4 Regardless of whether the Indemnifying Party shall have assumed the
defense of any such claim or Litigation, the Indemnified Party shall not admit
any liability with respect to, or settle, compromise or discharge, such claim or
Litigation without the Indemnifying Party's prior written consent (which consent
shall not be unreasonably withheld).
ARTICLE 17
TERMINATION RIGHTS
17.1 Termination. This Agreement may be terminated by either the Buyer or
the Seller, if the party seeking to terminate is not in material default or
breach of this Agreement, upon written notice to the other upon the occurrence
of any of the following:
34
(a) by mutual written consent of the Buyer and the Seller;
(b) by the Buyer if any of the conditions set forth in Article 11
shall have become incapable of fulfillment, and shall not have been waived by
the Buyer;
(c) by the Seller if any of the conditions set forth in Article 12
shall have become incapable of fulfillment, and shall not have been waived by
the Seller; or
(d) by either the Buyer or the Seller, if the Closing does not occur
on or prior to March 1, 1997.
17.2 Liability. The termination of this Agreement under Section 17.1 shall
not relieve any party of any liability for breach of this Agreement prior to the
date of termination.
17.3 Effect of Termination. If this Agreement is terminated as described
in Section 17.1, this Agreement shall become void and of no further force or
effect, except for the provisions of Sections 10.2, 10.4, 13.1, 14.1, 14.2, this
Section 17.3 and Section 18.1.
ARTICLE 18
OTHER PROVISIONS
18.1 Certain Remedies of Seller and Xxxxxx. If this Agreement is
terminated pursuant to Section 17.1 (c), the Seller shall have no liability to
the Buyer. If on the Closing Date, (i) all applicable waiting periods under the
HSR Act have expired or been terminated, (ii) no order, decree or judgment of
any governmental authority has been rendered against any party hereto which
would render it unlawful to effect the transactions contemplated by this
Agreement and (iii) the Buyer has failed to comply with Section 12.3 of this
Agreement, the Seller and Xxxxxx shall have the right to immediately draw on the
full amount of the letter of credit deposited in the Escrow Account. The
foregoing right of the Seller and Xxxxxx is in addition to any and all other
rights and remedies of the
35
Seller and Xxxxxx hereunder, under applicable law, including in a court of
equity, or otherwise.
18.2 Risk of Loss. The risk of loss or damage to the Companies or their
business or any of their assets prior to December 31, 1996 shall be upon the
Seller. The Companies shall repair, replace and restore any such damaged or lost
asset to their prior condition, as soon as possible and in no event later than
the Closing Date. If the Companies fail to restore or replace any such asset
having a value exceeding Fifty Thousand Dollars ($50,000), the Companies shall
assign or cause to be assigned to the Buyer at Closing his rights under any
insurance policy or pay over to the Buyer all proceeds of insurance covering
such asset's damage, destruction or loss.
18.3 Specific Performance. In the event of a material breach by one of the
parties hereto of their respective representations and obligations hereunder,
not cured within ten (10) calendar days after written notice to that effect from
another party, such other party shall have the right to bring an action to
enforce the terms of this Agreement by decree of specific performance without
being required to prove actual damages, post bond or furnish other security, it
being agreed that the property to be transferred hereunder is unique and not
readily available in the open market, and each party hereto further agrees to
waive any and all defenses against any such action for specific performance
based on the grounds that there is an adequate remedy for money damages
available.
18.4 Further Assurances. After the Closing, the Seller shall from time to
time, at the request of and without further cost or expense to the Buyer,
execute and deliver such other instruments of conveyance and transfer and take
such other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby to vest in the Buyer good and
marketable title to the Shares being transferred hereunder, and the Buyer shall
from time to time, at the request of and without further cost or expense to the
Seller, execute and deliver such other instruments and take such other actions
as may reasonably be requested in order to more effectively relieve the Seller
of the obligations being assumed by the Buyer in connection herewith.
18.5 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the
36
benefit of the parties hereto and their respective successors and permitted
assigns. No party may voluntarily or involuntarily assign its interest under
this Agreement without the prior written consent of the other party; provided,
that, prior to the Closing Date, the Buyer shall assign its rights and benefits
(but not its obligations) hereunder to the Buyer's Sub and, effective upon such
assignment, all references herein to the "Buyer" shall be deemed to be to each
of SFX Broadcasting, Inc. and Delsener/Xxxxxx Enterprises, Inc.
18.6 Entire Agreement. This Agreement, the Disclosure Schedule and the
Exhibits hereto embody the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. In the event of a
conflict between the terms of this Agreement and any other agreement executed in
connection herewith, the terms of this Agreement shall prevail. No amendment,
waiver of compliance with any provision or condition hereof or consent pursuant
to this Agreement shall be effective unless evidenced by an instrument in
writing signed by the party against whom enforcement of any waiver, amendment,
change, extension or discharge is sought.
18.7 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.9 Payments. Neither Buyer on the one hand nor the Seller, Xxxxxx or the
Companies on the other has made any representation or warranty with respect to
the tax treatment of either the Fixed Payment or the Deferred Purchase Price
Payments.
18.10 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of New York without giving effect to
the choice of law provisions thereof.
18.11 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and
37
received on the date of personal delivery or on the date of receipt, if mailed
by registered or certified mail, postage prepaid and return receipt requested,
or on the date of a stamped receipt, if sent by an overnight delivery service,
or on the date of written confirmation of delivery by facsimile or facsimile
transmission, and shall be addressed to the following addresses, or to such
other address as any party may request, in the case of the Seller, by notifying
the Buyer, and in the case of the Buyer, by notifying the Seller:
To the Companies:
Delsener/Xxxxxx Enterprises, Ltd.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxx Xxxxxxxx
Attn: Xx. Xxxxx Xxxxxx
Facsimile #: (000) 000-0000.
With copies to:
Xxxxxx X. Xxxxxxx, Esq.
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile #: (000) 000-0000
Xxxxxxx X. Xxxxxx, Esq.
Proskauer, Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
To the Seller:
Xx. Xxx Xxxxxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000)000-0000
38
With a Copy to:
Xxxxxxx X. Xxxxxx, Esq.
Proskauer, Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
To Xxxxxx:
Xx. Xxxxx Xxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
With a Copy to:
Xxxxxx X. Xxxxxxx, Esq.
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile #: (000) 000-0000
To Buyer:
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxx
Facsimile #: (000) 000-0000
With a Copy to:
Xxxxxx X. Xxxxx, Esq.
Executive Vice President
and General Counsel
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
18.12 Arbitration. Any dispute between the Buyer and the Seller over
any of the terms or conditions of this Agreement shall be submitted to the
American Arbitration Association in the City of New York, State of New York
for arbitration under its then prevailing rules, the arbitrator(s) to be
selected as follows: Each of the parties hereto shall by written notice to
the other have the right
39
to appoint one arbitrator. 11 within thirty (30) days following the giving of
such notice by one party, the other shall not, by written notice, appoint
another arbitrator, the first arbitrator shall be the sole arbitrator. If two
arbitrators are so appointed, they shall appoint a third arbitrator. If thirty
(30) days elapse after the appointment of the second arbitrator and the two
arbitrators are unable to agree upon the third arbitrator, then either party
may, in writing, request the American Arbitration Association to appoint the
third arbitrator. The award made in the arbitration shall be binding and
conclusive on the parties and judgment may be, but need not be, entered in any
court having jurisdiction. Such award shall include the fixing of the costs,
expenses and reasonable attorney's fees of arbitration, which shall be borne by
the unsuccessful party.
18.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE COMPANIES
DELSENER/XXXXXX ENTERPRISES, LTD. CONNECTICUT CONCERTS,
INCORPORATED
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
------------------------------- -------------------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President President
BEACH CONCERTS, INC. BROADWAY CONCERTS, INC.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
------------------------------- -------------------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President President
40
ARDEE PRODUCTIONS, LTD. DUMB DEAL, INC.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
------------------------------- -------------------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President President
ARDEE FESTIVALS NJ, INC. SELLER:
------
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
------------------------------- -------------------------------
Xxx Xxxxxxxx Xxx Xxxxxxxx
President
IN-HOUSE TICKETS, INC. XXXXXX:
------
By: /s/ Xxx Xxxxxxxx By: /s/ Xxxxx Xxxxxx
------------------------------- -------------------------------
Xxx Xxxxxxxx Xxxxx Xxxxxx
President
EXIT 116 REVISITED, INC. SFX BROADCASTING, INC.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxxxxx F.X. Sillerman
------------------------------- -------------------------------
Xxx Xxxxxxxx Xxxxxx F.X. Sillerman
President Chief Executive Officer
41
