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EXHIBIT 2.2
June 12, 1997
Xx. Xxxxxx X. Xxxxxx
Xx. Xxxxxx Xxxxxxxxxxx
Xx. Xxxxx X. Xxxxxx
c/o Xxxxxx and Xxxx, Inc.
New Avalon, Inc.
Xxxx/Xxxxxxxx Ltd., Inc.
TBA Media, Inc.
Xxxx Xxxxxxxx Merchandising, Inc.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
RE: Acquisition by Nashville Country Club, Inc., a Tennessee
corporation (the "Company"), of a fifty-one percent (51%)
interest in certain businesses owned and/or controlled by
Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxxxxx and Xxxxx X. Xxxxxx
(collectively, the "Sellers"), including New Avalon, Inc.
(d/b/a Avalon Attractions), Xxxxxx Xxxxxxx Amphitheater,
Xxxx/Xxxxxxxx Ltd., Inc., Xxxx Xxxxxxxx Merchandising, Inc., a
to-be-formed amphitheater development corporation ("West Coast
Amphitheater Corp.") and TBA Media, Inc. (collectively,
"Avalon West Coast")
Gentlemen:
This letter agreement (the "Letter Agreement") is intended to set
forth the binding agreement between the Sellers (the sole or majority owners of
the businesses and assets comprising Avalon West Coast) and the Company on the
terms set forth herein and in the definitive Acquisition Agreement (hereinafter
defined) contemplated hereby regarding the Company's acquisition of a fifty-one
percent (51%) interest in Avalon West Coast.
Subject to the conditions set forth herein, the Company and the
Sellers agree as follows:
1. The Company, or a wholly-owned affiliate of the
Company, will purchase from Xxxxxx X. Xxxxxx ("Xxxxxx") and/or Xxxxxx
and Xxxx, Inc., a California corporation controlled by Geddes, a
fifty-one percent (51%) interest in Xxxxxx Xxxxxxx Amphitheater, a
California general partnership ("IMA Partners").
2. The Company, or a wholly-owned affiliate of the
Company, will purchase from the Sellers fifty-one percent (51%) of the
capital stock or other equity interests in each of the businesses
comprising Avalon West Coast other than the interest in IMA Partners
to be acquired from either Geddes or Xxxxxx and Xxxx, Inc.
(collectively, the "West Coast Entities"). The acquisition of the
interest in IMA Partners and the West Coast Entities will collectively
be referred to as the "Acquisition." The fifty-one percent (51%)
interest in IMA Partners and the West Coast Entities to be acquired by
the Company from the Sellers shall be free of any material management
contracts, fee
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agreements, employment or consulting agreements, or other similar
arrangements or agreements payable to one or more of the Sellers
and/or their respective affiliated entities, other than the existing
agreements between (i) IMA Partners and TBA Media, Inc., and (ii)
Avalon Entertainment Group, Inc. and New Avalon, Inc.
3. The aggregate purchase price (the "Purchase Price")
payable to all Sellers as a group for the Acquisition will be the
greater of (i) $7,000,000, or (ii) fifty-one percent (51%) of the sum
of (i) six times the average of EBITDA, as calculated in accordance
with generally accepted accounting principles, for IMA Partners and
West Coast Amphitheater Corp. for the years 1996, 1997 and 1998 (the
"Computation Period") and (ii) six times the average of the net income
before taxes, as calculated in accordance with generally accepted
accounting principles, of the West Coast Entities (other than West
Coast Amphitheater Corp.) for the Computation Period. The Purchase
Price shall be payable in two installments (i) $7,000,000 in cash by
wire transfer or certified or cashier's check at closing, and (ii)
shares of the Company's common stock as set forth hereinbelow, in each
case allocated among the Sellers as they shall agree. Within thirty
(30) days following receipt of the audited financial statements for
the businesses comprising Avalon West Coast for the last year of the
Computation Period, the Company will prepare a statement (the
"Purchase Price Statement") with respect to the Acquisition to
determine the Purchase Price and deliver the Purchase Price Statement
to Sellers. The second installment of the Purchase Price shall be
paid in shares of the Company's common stock valued at the average
closing price of the Company's common stock as reported by NASDAQ for
each day in the Computation Period. The Company shall issue to the
Sellers that number of shares of the Company's common stock as set
forth in the Purchase Price Statement within thirty (30) days of the
delivery of the Purchase Price Statement to the Sellers. Such shares
of common stock shall be registered thereafter by the Company, at its
expense, pursuant to certain demand registration rights granted to the
holders thereof. Such demand registration rights will provide for the
registration of such holders' shares of Company common stock in
connection with registrations effected by the Company with respect to
public offerings of its common stock (subject to customary cutbacks
imposed by underwriters), on a shelf registration basis pursuant to a
registration statement on Form S-3, or by such other means as the
Company and the holders shall mutually agree to facilitate the
distribution of such holders' shares in accordance with their intended
means of distribution. At closing, Sellers and the Company (or its
acquiring subsidiary, as applicable) shall enter into mutually
acceptable Shareholders' Agreements with respect to the West Coast
Entities and similar agreements with respect to IMA Partners, such
agreements to include future investment and financing rights.
4. The Company will, subject to the prior buyout of the
current Consulting Agreements between the Company and Geddes and
Xxxxxx Xxxxxxxxxxx ("Xxxxxxxxxxx"), enter into employment agreements
with Geddes, Miserendino and Xxxxx X. Xxxxxx ("Xxxxxx"), effective
upon closing. Such employment agreements will be for a term ending
December 31, 2002 and provide for aggregate annual compensation of
$750,000 to be divided between base salary and performance based
compensation. The employment agreements will provide that Geddes,
Miserendino and Xxxxxx will be entitled to participate in all benefit
and retirement plans of the Company to the same extent as other senior
executives of the Company. The
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employment agreements will provide that each employee shall devote his
full business time to the business of the Company and Avalon West
Coast, and will also contain nondisclosure covenants, noncompetition
covenants and covenants not to hire which are substantially similar to
those contained in the Consulting Agreements currently in force
between the Company and Geddes and Xxxxxxxxxxx.
5. The agreement relating to the Acquisition (the
"Acquisition Agreement") shall contain: (i) customary representations
and warranties for a transaction of the proposed nature of the
Acquisition including, but not limited to, representations and
warranties regarding (a) Organization and Standing; (b) Authorization
and Binding Obligation; (c) Taxes; (d) Personal Property; (e) Real
Property; (f) Contracts; (g) Environmental Matters; (h) Financial
Statements; (i) Personnel Information; (j) Litigation; (k) Compliance
with Laws; (ii) covenants as to the operation of the entities
comprising Avalon West Coast in the normal course in accordance with
good commercial practice and the prior established practices of the
Sellers; (iii) the required maintenance of the physical assets
associated with Avalon West Coast; (iv) maintenance of insurance as
appropriate and in accordance with past practices; (v) preservation of
the business relations of the entities comprising Avalon West Coast,
both contractual and otherwise, with suppliers, customers, employees
and patrons; and (vi) provisions for the survival of all
representations for a reasonable period after closing.
6. The Acquisition Agreement shall obligate the Sellers
to deliver at closing, among other things, all necessary consents to
the Acquisition so that the Company shall enjoy, to the extent of its
interests, the benefits of ownership of Avalon West Coast as the
Sellers currently enjoy, and shall condition the closing of the
Acquisition upon, among other things, (i) the continued truth and
accuracy of the representations and warranties contained in the
Acquisition Agreement; (ii) the maintenance of the businesses of
Avalon West Coast and the Company free of material adverse damage or
change; (iii) the conduct of the business of Avalon West Coast in
accordance with present practices; and (iv) delivery of legal opinions
as reasonably required by the parties.
7. The Company hereby acknowledges its commitment,
subject to the successful completion of the Acquisition and the
receipt by the Company of financing on acceptable terms, to provide
monetary support, at the same cost of capital at which the Company
provides capital to the Company's other subsidiary entities, to
develop the amphitheaters proposed to be constructed by West Coast
Amphitheater Corp. in Camarillo, California (the "Camarillo
Amphitheater") and Portland, Oregon (the "Portland Amphitheater").
The Company anticipates the funds for this support will be raised
through either public or private debt or equity offerings conducted by
the Company. If development of the Camarillo Amphitheater and the
Portland Amphitheater is delayed solely and exclusively due to the
Company's inability to adequately fund such development, the
Computation Period for purposes of determining that portion of the
Purchase Price allocable to West Coast Amphitheater Corp. only shall
be extended by the period of such delay. Any additional consideration
payable in shares of the Company's common stock to Sellers upon the
termination of the Computation Period, as extended, shall be issued to
the Sellers within thirty (30) days of the date of determination of
said adjusted Purchase Price.
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8. The Company hereby acknowledges that, subject to the
approval of the shareholders of the Company, it will change its state
of incorporation from the State of Tennessee to the State of Delaware.
9. It is the intention of the parties hereto that after
the consummation of the Acquisition, the Company will restructure its
operating structure (the "Restructuring") to include a Chairman/Chief
Executive Officer, a President/Chief Operating Officer, a Chief
Financial Officer and an Executive Vice President. After the
Restructuring, major operational decisions of the Company will be made
jointly by the Chairman and the President, subject to the approval,
where appropriate, of the Board of Directors of the Company. It is
anticipated that Xxxxxx Xxxxxxx Xxxxxx, III will be Chairman, Geddes
will be President and Xxxxxxxxxxx will be Executive Vice President.
10. This Letter Agreement constitutes a binding agreement
between the parties hereto as to the matters set forth above and will
inure to the benefit of the parties and their respective successors.
This Letter Agreement contemplates, however, that the parties will
enter into a mutually acceptable definitive Acquisition Agreement
which sets forth, among other things, the provisions described in
paragraphs 1 through 9 above. The parties hereto agree to use their
best efforts to close the Acquisition on or prior to July 31, 1997.
11. Except as otherwise provided herein, this Letter
Agreement may be amended or modified only by a writing executed by all
of the parties.
Prior to the consummation of the transactions contemplated herein, no
party hereto shall make any public release, statement or communication of any
information regarding, or otherwise disclose any information with respect to,
the matters contemplated herein except (i) that a press release in conformity
with SEC disclosure requirements shall be issued by the Company if deemed
necessary, (ii) that the parties hereto shall continue such communications with
directors, employees, customers, suppliers, franchisees, lenders, lessors,
shareholders, partners and other particular groups as may be legally required
or necessary or appropriate and not inconsistent with the best interests of the
other parties for the proper consummation of the transactions contemplated
herein, and (iii) as required by law.
Please sign and date this letter in the space provided below to
confirm your understandings and agreements as set forth in this letter and
return the signed copy thereof to the undersigned by fax at (000)000-0000 and
by return mail. If agreed to, the parties shall proceed in good faith and with
collective best efforts to enter into a mutually acceptable Acquisition
Agreement and other related documents. In addition to the matters set forth in
paragraph 6 above, the consummation of the Acquisition shall be contingent upon
satisfactory due diligence by the Company and the Company's ability to obtain
financing for the Acquisition on terms and conditions satisfactory to the
Company.
Each of the Company and Avalon West Coast will be solely responsible
for and bear all of their respective expenses, including, without limitations,
expenses of legal counsel, accountants and other advisors, incurred at any time
in connection with all negotiations and efforts to enter into the Acquisition
Agreement and any other related agreement and the transactions contemplated
thereby. This Letter Agreement may be executed in counterparts,
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each of which shall be deemed an original, and such counterparts shall
constitute but one and the same letter.
Sincerely yours,
NASHVILLE COUNTRY CLUB, INC.
By: /s/ Xxxxxx Xxxxxxx Xxxxxx III
------------------------------------
Xxxxxx Xxxxxxx Xxxxxx III, President
AGREED AND ACCEPTED THIS 12TH
DAY OF JUNE 1997:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx*
*Solely with respect to IMA
Partners, New Avalon, Inc.,
Xxxx/Xxxxxxxx, Ltd., Inc.,
Xxxx Xxxxxxxx Merchandising,
Inc., TBA Media, Inc. and
West Coast Amphitheater Corp.
/s/ Xxxxxx Xxxxxxxxxxx
------------------------------
Xxxxxx Xxxxxxxxxxx*
*Solely with respect to New
Avalon, Inc., Xxxx/Xxxxxxxx,
Ltd., Inc., Xxxx Xxxxxxxx
Merchandising, Inc., TBA
Media, Inc. and West Coast
Amphitheater Corp.
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx*
*Solely with respect to New
Avalon, Inc., TBA Media, Inc.
and West Coast Amphitheater
Corp.
