PURCHASE AND SALE AGREEMENT
---------------------------
This PURCHASE AND SALE AGREEMENT (the "Agreement"), is made and
entered into as of the 25 day of June, 1997, by and among PROSERV, INC., a
Delaware corporation ("ProServ"), PROSERV TELEVISION, INC., a Delaware
corporation ("TV", and collectively with ProServ, the "Companies"), XXXXXX X.
DELL, an individual residing at 00000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx
00000 (the "Seller"), and THE MARQUEE GROUP, INC., a Delaware corporation (the
"Buyer");
WHEREAS, the Seller owns beneficially and of record 880 shares of
voting common stock of ProServ (the "ProServ Common") representing 82.24% of
the voting common stock of ProServ on a fully-diluted basis (exclusive of the
Foreign Company Shares (as defined below)), 600 shares of non-voting preferred
stock of ProServ (the "ProServ Preferred") representing 100% of the preferred
stock of ProServ, and 510 shares of voting common stock of TV (the "TV Common")
representing 51% of the capital stock of TV (collectively, the "Shares"); and
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires
to purchase from the Seller all of the Shares;
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
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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 to the Seller the Purchase Price.
ARTICLE 2
CONSIDERATION
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2.1 Purchase Price. The aggregate consideration (the "Purchase Price")
for the Shares shall be (i) SIX MILLION FIVE HUNDRED THOUSAND DOLLARS
($6,500,000.00) (the "Consideration Cash") and (ii) 225,000 shares of the
Buyer's Class A Common Stock as constituted on the date hereof (adjusted for
any stock splits, reverse stock splits, stock dividends and the like occurring
prior to the Closing) (the "Consideration Stock").
2.2 Payment.
(a) At the Closing, the Buyer shall pay to the Seller the
Consideration Cash, less the Cash Deposit (as defined below) and any investment
earnings (as described below) earned thereon held by the Escrow Agent (as
defined below) pursuant to the Escrow Agreement (as defined below), and the
Consideration Stock. Payment shall be made by wire transfer in immediately
available funds in accordance with the instructions of the Seller. At the
Closing, the parties to this Agreement shall direct the Escrow Agent to deliver
the Cash Deposit to the Seller together with investment earnings on the Cash
Deposit.
(b) The Seller may, at his sole discretion, elect to receive at
the Closing (i) the entire amount of the Consideration Cash, which includes
FIVE MILLION DOLLARS ($5,000,000.00) in immediately available funds and the
Cash Deposit, together with any investment earnings which shall be applied
against the $5,000,000.00, pursuant to the Escrow Agreement or (ii)
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a promissory note (the "Promissory Note") in the amount of THREE MILLION
DOLLARS ($3,000,000.00), payable on January 2, 1998, and secured by an
irrevocable standby letter of credit reasonably satisfactory to the Seller
issued by a nationally recognized bank having assets in excess of ONE BILLION
DOLLARS ($1,000,000,000.00), cash in the amount of TWO MILLION DOLLARS
($2,000,000.00) in immediately available funds, and the Cash Deposit, together
with any investment earnings which shall be applied against the $2,000,000.00,
pursuant to the Escrow Agreement. In the event that the Seller elects to
receive at the Closing the Promissory Note as a portion of the Consideration
Cash, the Seller shall provide the Buyer with a written notice at least five
(5) days prior to the Closing Date of such election.
2.3 Escrow Account.
(a) On the date of this Agreement, the Buyer shall deposit the sum
of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) by wire transfer
in immediately available funds into an escrow account (the "Cash Deposit") with
an escrow agent (the "Escrow Agent") selected by the Seller which may be a bank
with capital and surplus of not less than ONE BILLION DOLLARS
($1,000,000,000.00) or an accounting, brokerage, or law firm of not less than
fifty (50) professionals (the "Escrow Agent"). The Cash Deposit shall be held
in escrow in accordance with the terms of an escrow agreement (the "Escrow
Agreement") among the parties to this Agreement and the Escrow Agent in the
form attached hereto as Exhibit A. The Cash Deposit shall be invested by the
Escrow Agent in obligations issued by or guaranteed by the full faith and
credit of the United States government and having maturity terms consistent
with the closing terms herein .
(b) If the Closing (as defined below) has not occurred on or prior
to August 15, 1997, and if at that time the Buyer wishes to extend the deadline
for the Closing as set forth in Article 3 from September 15, 1997, to October
15, 1997, then the Buyer shall, in consideration thereof, not later than the
close of regular business on August 15, 1997 (i) deposit with the Escrow Agent
in immediately available funds an additional FIVE HUNDRED THOUSAND DOLLARS
($500,000), which amount shall thereafter be considered for all purposes as
part of the Cash Deposit, and (ii) deliver prompt written notice of such
additional deposit to the Seller.
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(c) In the event that the Buyer fails to close timely the
transactions contemplated herein pursuant to Article 3 (time being of the
essence for these purposes)for any reason other than due to a failure by the
Seller or the Companies to satisfy any material condition precedent contained
in Article 12, the Seller shall have the option to receive the Cash Deposit,
together with any investment earnings, as liquidated damages. In addition, the
Seller shall be indemnified and held harmless by the Buyer for all demands,
claims, actions, suits, proceedings, costs, losses, damages, liabilities and
expenses related to (i) legal fees and expenses incurred by the Seller in
negotiating and documenting the transactions contemplated in this Agreement and
all agreements referred to herein (including the Employment Agreement and the
Registration Rights Agreement) and (ii) legal fees and expenses, if any,
incurred in collecting the Cash Deposit, together with any investment earnings,
arising out of such failure to close by the Buyer as specified in Article 3.
(d) In the event that the Buyer fails to close the transactions
contemplated herein pursuant to Article 3 because of the failure by the Seller
or the Companies to satisfy any material condition precedent contained in
Article 12, the Cash Deposit, together with any investment earnings, shall be
returned to the Buyer.
2.4 Stock Legend. In addition to any legend imposed by applicable
state securities laws, or the certificate of incorporation of the Buyer, all
stock issued by Buyer pursuant to this Agreement shall bear a restrictive
legend stating substantially as follows; provided, however, that Buyer will, or
will cause its transfer agent to, remove such part (or all) of such legend from
each certificate representing stock issued pursuant to this Agreement promptly
following the elimination of the restriction referenced thereby :
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
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SECURITIES ACT OF 1933 OR THE OPINION OF COUNSEL TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. FURTHERMORE, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
HOLDING PERIODS, "CALL" AND "PUT" PROVISIONS SET FORTH IN THAT
CERTAIN STOCK PURCHASE AGREEMENT BY AND AMONG PROSERV, INC.,
PROSERV TELEVISION, INC., XXXXXX X. DELL, AND THE MARQUEE GROUP,
INC., DATED AS OF JUNE 25, 1997 (THE "AGREEMENT").
ARTICLE 3
CLOSING
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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 no later than September 15, 1997; provided, however,
that upon compliance by the Buyer with the provisions of Section 2.3(b), the
Buyer may extend such date to not later than October 15, 1997. The date on
which the Closing actually occurs and the transactions contemplated herein
become effective is hereinafter referred to as the "Closing Date."
The Closing shall be held at the Buyer's offices in New York City
or at such other place in New York City as the Buyer shall designate on a date
prior to the applicable deadline selected by the Buyer, subject to the
reasonable consent of the Seller.
ARTICLE 4
GOVERNMENTAL CONSENTS
---------------------
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4.1 The Companies have all governmental consents necessary for the
transactions contemplated in this Agreement and for the conduct of business by
the Companies in the manner in which it is presently being conducted except
where the absence of such consent would not have a material adverse effect on
the Company or its Subsidiaries ("Material Adverse Effect") or prevent or
prohibit the transactions contemplated in this Agreement..
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SELLER
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Each of the Companies (in each case, the "Company") together with
the Seller, hereby represent and warrant to the Buyer as follows. As used in
this Article, the phrase "to the Companies' knowledge" shall include only what
is (or, with the exercise of reasonable diligence of such persons in the
conduct of their respective offices, should be) known by any of the following
persons: the Seller, Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxx and (as to TV only) Xxxxxx Xxxxxxx.
5.1 Corporate Organization.
(a) Schedule 5.1 of the Disclosure Schedule sets forth the name
and jurisdiction of the Company and its direct and indirect subsidiaries, (the
"Subsidiaries"). Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has all requisite corporate
or other power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and is duly qualified and
in good standing to do business in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary except where the
failure to so qualify or to be in good standing would not have a Material
Adverse Effect. Except as set forth in Schedule 5.1 of the Disclosure Schedule,
all of the issued and outstanding capital stock of each Subsidiary of the
Company is owned, directly or indirectly, by the
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Company free and clear of any liens, claims, charges, options, rights of first
refusal, pledges, security interests, mortgages, indentures, or other
encumbrances or third party rights of any kind, written or oral, and is validly
issued, fully paid and nonassessable.
(b) Schedule 5.1 of the Disclosure Schedule contains a complete
and correct Certificate of Incorporation and By-Laws of the Company and of each
of its Subsidiaries other than ProServ Financial Services, Inc., which is
currently a shell corporation.
5.2 Capitalization. The authorized capital stock of the Company is as
set forth on Schedule 5.2 of the Disclosure Schedule. All issued and
outstanding shares of the Company are duly authorized, validly issued and
outstanding, fully paid and nonassessable and not subject to any unwaived
preemptive or appraisal rights. Other than as set forth on Schedule 5.2, 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 capital stock of the Company or any
securities convertible into, or other rights to acquire, any of the capital
stock of the Company; or (ii) obligates the Company to grant, offer or enter
into any of the foregoing; or (iii) relates to the voting or control of such
capital stock, securities or rights. No person has any right to require the
Company to register any of its securities under the Securities Act of 1933, as
amended (the "Securities Act"); or (iv) grants to any person or entity the
right to receive from any of the Companies any payment, whether in securities,
cash, or kind, the amount of which payment is a function of the value of any
class of the stock of the Company. Schedule 5.2 sets forth the name and address
of each holder of the stock of the Company and the class of such securities and
the number of such securities held by such holder. In addition, Schedule 5.2
sets forth a list of the agreements between the holders of the stock of the
Company relating to such stock, and a copy of each such shareholder agreement,
if any, is attached to Schedule 5.2.
5.3 Subsidiaries of the Company. Except as set forth in Schedule 5.1
or 5.3 of the Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock of any corporation or have any direct or indirect
equity or ownership interest in any corporation,
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business trust, firm, association, partnership, joint venture, entity or
organization.
5.4 Authorization. The Company has full power and authority to enter
into this Agreement and (subject to the approval of transactions contemplated
herein by the Seller of the Company in accordance with applicable law) to carry
out the transactions contemplated herein. The Board of Directors and
shareholders of the Company holding a majority in interest of the voting stock
thereof have approved this Agreement and the transactions contemplated herein,
and have authorized the execution and delivery of this Agreement, and no other
corporate proceedings on the part of the Company are necessary to consummate
the transactions contemplated herein. This Agreement has been duly and validly
executed and delivered by the Company and (assuming this Agreement is a legal,
valid and binding obligation of the Buyer) constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms.
5.5 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein will (with or
without notice or the passage of time, or both): (a) violate any provision of
the Certificate of Incorporation or By-Laws of the Company or of any
Subsidiary; (b) except as set forth in Schedule 5.5 of the Disclosure Schedule,
violate, conflict with, constitute a default under, permit the termination of,
cause the acceleration of the maturity of, or result in the creation or
imposition of any lien upon the properties or assets of the Company or any of
its Subsidiaries pursuant to the provisions of, any agreement, lease, document,
instrument, debt or obligation to which the Company or any of its Subsidiaries
is bound; or (c) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental agency or body by which the
Company or any of its Subsidiaries is bound or to which the Company or any of
its Subsidiaries is subject. Neither the Company nor any of its Subsidiaries
has received notice that it is in violation of any statute, law, judgment,
decree, order, regulation or rule relating to or affecting the operation,
conduct or ownership of the properties or business of the Company or any of its
Subsidiaries.
5.6 Permits; Compliance. Except as set forth in Schedule 5.6 of the
Disclosure
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Schedule, each Company and its Subsidiaries (i) is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate its properties and to carry on its business as it is now
being conducted (collectively, the "Company Permits") except where the absence
of such Company Permits would not have a Material Adverse Effect, and (ii)
there is no action, proceeding or investigation pending or threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in violation, which violation would have a
Material Adverse Effect, of (a) any law applicable to the Company or any of its
Subsidiaries or which any of their respective properties is bound by or subject
to or (b) any of the Company Permits, and neither the Company nor any of their
Subsidiaries has received notice with respect to any such violation. The
Company has provided the Buyer with copies of any currently pending written
notifications which any of its Subsidiaries has received from any governmental
entity with respect to violations of applicable laws.
5.7 Reports and Financial Statements. Schedule 5.7 of the Disclosure
Schedule contains true and complete copies of the Company's (i) Audited Balance
Sheet and Income Statement for the years ended December 31, 1994 and December
31, 1995 (ii) unaudited balance sheet and income statements for the year ended
December 31, 1996, and (iii) internally prepared unaudited quarterly combined
financial statements for the period ending March 31, 1997 (collectively, the
"Financial Statements"). Within seven (7) calendar days following the date
hereof, ProServ will add to Schedule 5.7 of the Disclosure Schedule Audited
Balance Sheets and Income Statements for the year ended December 31, 1996,
which statements will not reflect any material difference from the unaudited
statements for such year except as agreed to by the Buyer, and which statements
shall thereafter be considered for all purposes as part of the Financial
Statements. The Financial Statements were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of the Company and/or its Subsidiaries, as the case may be,
as at the dates thereof and the results of their operations and changes in
financial position for the periods then ended subject, in the case of the
unaudited interim financial statements, to the absence
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of footnotes thereto, normal year-end audit adjustments and any other
adjustments described therein which would not have a Material Adverse Effect.
The Company has delivered to the Buyer copies of all the management letters
from the Company's independent auditors to the Company's Board of Directors or
officers regarding accounting and procedures or other matters concerning the
financial operations of the Company during the past five (5) years.
5.8 Absence of Certain Changes or Events. Except as disclosed in
Schedule 5.8 of the Disclosure Schedule or as permitted after the date hereof
pursuant to Section 9.1, since April 30, 1997, the Company and its Subsidiaries
have conducted their respective businesses only in a manner consistent with
usual and customary industry practice and there has not been: (i) any material
adverse change in the business, operations or financial conditions of the
Company or any of its Subsidiaries; provided, however that operating losses in
the ordinary course of business shall not in of themselves be deemed to be a
material adverse change or to have a Material Adverse Effect; (ii) any entry
into any commitment or transaction expected to provide revenues to or
obligations of the Companies in excess of $100,000 (including, without
limitation, any borrowing or capital expenditures); (iii) any material damage,
destruction or loss (not covered by insurance) with respect to any assets of
the Company or any of its Subsidiaries involving cost or loss (not covered by
insurance) in excess of $100,000 in the aggregate; (iv) any change by the
Company or its Subsidiaries in their accounting methods, principles or
practices (except as required to remain in compliance with GAAP); (v) any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of Stock or the shares of Stock of, or other equity interests
in, any subsidiary of the Company or any redemption, purchase or other
acquisition of any of the Company's securities or any of the securities of any
Subsidiary; (vi) any increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or any
increase in the compensation payable or to become payable to directors,
officers or employees of the Company or its Subsidiaries; (vii) any
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disposition of any property of the Company or any Subsidiary with fair market
value in excess of $100,000; (viii) any waiver or compromise by the Company or
any of its Subsidiaries of a valuable right or a material debt owed to it; (ix)
any notice, written or oral, to the Company materially adversely modifying any
relationship and/or failure to renew any representation or production
agreements with projected revenues or obligations in excess of $100,000 or (x)
any agreement or commitment by the Company or any of its Subsidiaries to do all
of the foregoing.
5.9 Undisclosed Liabilities. Except as set forth in Schedule 5.9 of
the Disclosure Schedule, the Company and its Subsidiaries have no
non-contingent indebtedness, liabilities or obligations which would be required
to be reflected on a balance sheet or the footnotes thereto in accordance with
GAAP including those to any Stockholder or any affiliate of any Stockholder (as
such term is defined in Rule 144 under the Securities Act) except indebtedness,
liabilities and obligations: (a) reflected or reserved against on the balance
sheet of the Company and its Subsidiaries for the four (4) months ended April
30, 1997 (the "Balance Sheet"), including the notes thereto; or (b) incurred
since the date of the Balance Sheet consistent with usual and customary
industry practice.
5.10 Title to Properties. Except as set forth in Schedule 5.10 of the
Disclosure Schedule, the Company or one or more of its Subsidiaries has good
and marketable title to, or a valid leasehold interest in, all of their
properties and assets (real, personal or mixed), including without limitation,
all of their properties and assets, reflected on the Balance Sheet or acquired
since the date of the Balance Sheet, except for properties and assets sold or
disposed of since the date of the Balance Sheet consistent with usual and
customary industry practice. The properties and assets to be held by the
Companies and their respective Subsidiaries are all such properties and assets
used and necessary to conduct in all material respects the business and
operations of the Companies as now conducted.
5.11 Real Property.
(a) The Company and its Subsidiaries own no real property in fee.
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Schedule 5.11 of the Disclosure Schedule contains a list and brief description
of all real property leased by the Company and its Subsidiaries (including a
brief description of the use to which such property is being employed and the
termination date or notice requirement with respect to termination, annual
rental and renewal or purchase options) (the "Real Property"). Schedule 5.11 of
the Disclosure Schedule also lists all title insurance policies with respect to
the Real Property leased by the Company and its Subsidiaries and all guarantees
of such leases given by the Company and its Subsidiaries or any other person or
entity. Complete and correct copies of all such leases, title insurance
policies and guarantees have been delivered by the Company to the Buyer as of
the date hereof;
(b) Schedule 5.11(b) of the Disclosure Schedule includes evidence
of cancellation/termination of the lease agreement for ProServ's European
office located at 00 Xxx xx Xxxxxxxxxxx, Xxxxxxxx-Xxxxxxxxxxx, Xxxxx, Xxxxxx.
No landlord has asserted any claim arising from such cancellation/termination,
and no notice of default or breach on the part of the Company has been received
by the Company or its Subsidiaries or their respective agents from the landlord
thereunder;
(c) Neither the Company nor any Subsidiary has received any
notice of a pending or contemplated annexation or condemnation or similar
proceedings affecting, or which may affect, all or any portion of the Real
Property;
(d) Except as otherwise noted on Schedule 5.11, (a) the leases
described on Schedule 5.11 (d) are valid and subsisting and in full force and
effect, have not been amended, modified or supplemented and the tenants,
licensees or occupants thereunder are in actual possession, (b) no landlord has
asserted any claim which would in any way affect the relevant tenant's right of
use, possession or occupancy, (c) there are no pending summary proceedings or
other legal actions for eviction of any such tenant, (d) no notice of default
or breach on the part of the tenant under any of the leases has been received
by the Company or its Subsidiaries or their respective agents from the landlord
thereunder, (e) all decorating, repairs, alterations and other work required to
be performed by the tenant under each of the leases has been performed, and (f)
except as set forth in Schedule 5.22 of the Disclosure Schedule, no consent is
necessary from any of the landlords with regard to the transactions
contemplated in this Agreement. No landlord under any
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of the leases has any right or option to terminate the lease for any reason
other than a default thereunder by the applicable tenant of the Real Property
and no landlord has a "put" option with regard to any such Real Property. The
copies of the leases delivered to the Buyer together with all other agreements
disclosed hereunder constitute the sole agreements binding upon the Company
with respect to the Real Property. The rents set forth in Schedule 5.11(d) of
the Disclosure Schedule are the actual rents, income and charges presently
being paid by the Company and its Subsidiaries under the leases. No security
deposits have been paid by any tenants of the Real Property, except as set
forth on Schedule 5.11(d) hereto;
(e) Except as set forth on Schedule 5.11(e) of the Disclosure
Schedule, there are no commissions or other compensation now or hereafter
payable to any broker or other agent under any written or oral agreement or
understanding with such broker or agent in relation to any of the leases to
which either the Company or its Subsidiaries are a party or any extension
thereof.
(f) To the Companies' knowledge all certificates, permits and
licenses from any governmental authority having jurisdiction over the Real
Property that are necessary to permit the lawful use and operation of the
buildings and improvements on or constituting the Real Property as they
presently exist have been obtained, and are now, and will continue to be at all
times before the Closing Date, in full force and effect, and, the Companies
have received no notice of any pending threat of modification, cancellation,
termination or expiration of any such certificate, permit, approval or license;
to the Companies' knowledge no buildings or improvements located on or
constituting the Real Property depend on any dedication, variance, subdivision,
special exception or other special governmental approval for their continuing
legality under all current applicable governmental laws, regulations and
ordinances;
(g) The Company has received no notice of any violation of any
restriction, condition or agreement contained in any instrument affecting the
Real Property and the Companies have received no notices of default from any
third party who shall be benefited by any such restriction, condition or
agreements;
(h) There are no charges, complaints, actions, proceedings or
investigations pending or (to the actual knowledge of the Companies) threatened
against or involving the Company or any of its Subsidiaries with respect to the
Real Property;
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(i) The Companies and their respective Subsidiaries have not
received any notice from any insurance company which has issued a policy with
respect to the Real Property or from any landlord of the Real Property
requesting performance of any structural or other repairs or alterations to the
Real Property;
(j) There are no, and on the Closing Date there will be no,
mechanics', materialmen's or similar liens against the Real Property or any
portion thereof arising by, through or under the Company or any Subsidiary,
except for work performed with the prior written consent of the Buyer;
(k) The Companies have received no notice of any violations of
any federal, state or municipal laws, ordinances with regard to any portion of
the Real Property;
(l) Each of the Companies and their respective Subsidiaries is
not a foreign person within the meaning of Section 1445 of the Internal Revenue
Code of 1986, as amended. At the Closing, each of the Company and its
Subsidiaries shall deliver an executed certificate in the applicable form set
forth in Treasury Regulation Section 1.1445-2(b)(2);
(m) Each of the Company and its Subsidiaries has no actual
knowledge of any assessment (for real estate taxes, sewer, water, or other
municipal improvements, or not-for-profit associations) payable in annual
installments, or any part thereof, which has, or may become a lien on the Real
Property or any part thereof, nor of any pending special assessments affecting
the Real Property, or any part thereof; and
(n) To the Companies' knowledge, the Real Property is
satisfactory for its current use by the Company and the Subsidiaries, as
appropriate.
5.12 Personal Property. All of the personal property located at the
Real Property constitutes all of the material tangible personal property and
assets owned or held by the Company and its Subsidiaries (the "Personal
Property"). Except as disclosed in Schedule 5.12 of the Disclosure Schedule,
and except as may be subject to lease agreements or purchase money liens of the
Company and the Subsidiaries, 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 acquired by the
Buyer hereunder), and none of such property is, or on the
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Closing Date will be, subject to any encumbrance other than as set forth in the
Disclosure Schedule or the Financial Statements. The Personal Property include
all such properties used and necessary to conduct in all material respects the
business and operations of the Company and its Subsidiaries as it is presently
conducted.
5.13 RESERVE
5.14 Insurance. Schedule 5.14 of the Disclosure Schedule sets forth
the following information with respect to each current insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Company or
its Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(c) the policy number and the period of coverage;
With respect to each such insurance policy, the Company has not received any
pending notice of any default (including with respect to the payment of
premiums or the giving of notices), under the policy, and no party to the
policy has repudiated any provision thereof. To the Companies' knowledge, the
Company and its Subsidiaries have been covered during the past three (3) years
by insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period.
5.15 Employee Benefits. Except as provided on Schedule 5.15 of the
Disclosure Schedule, the Company and its Subsidiaries 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
15
harassment and payment and withholding of taxes. More specifically, the Company
and its Subsidiaries have substantially complied with and are not knowingly in
default in any material respect under any laws, 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 Companies'
knowledge, threatened against the Company or its Subsidiaries before any court
or governmental agency and involving any alleged unlawful employment practices,
whether or not relating to the laws described above. The Company and its
Subsidiaries 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 Company or its Subsidiaries and any of its
employees.
5.16 Employees. Schedule 5.16 of the Disclosure Schedule sets forth a
true and complete list of all employees of the Company and its Subsidiaries,
their positions, locations, salaries or hourly wages and severance
arrangements. Except as set forth on Schedule 5.16 of the Disclosure Schedule,
there is no liability for unpaid salary or wages, bonuses, vacation time or
other employee benefits due or accrued, nor liability for withheld or deducted
amounts from Employees earnings for the period ending on the Closing Date.
Neither the Company nor its Subsidiaries is a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. There is no organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees of the Company or
its Subsidiaries.
5.17 Environment, Health and Safety. Except as otherwise disclosed in
the reports and other documentation described in Schedule 5.17 hereof to the
Companies' knowledge
16
there are no actions, suits, claims, or proceedings relating to a violation or
non-compliance with any existing federal, state, or local environmental
statute, regulation, ordinance, or other environmental regulatory requirement,
whether relating to air, water, land or otherwise (collectively, "Applicable
Environmental Laws) pending which may affect the Real Property, or with respect
to the disposal, discharge or release of Hazardous Substances, hazardous wastes
or contaminants at or from or onto the Real Property. As used herein,
"Hazardous Substances" shall mean any hazardous materials, hazardous waste,
hazardous and toxic substances, pollutants and contaminants, as those terms are
defined by any Applicable Environmental Laws.
5.18 Intellectual Property.
(a) The Company and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, ("Intellectual Property"),
necessary for the operation of the businesses of the Company and its
Subsidiaries as presently conducted. Each item of Intellectual Property owned
or used by the Company and its Subsidiaries is owned or available for use by
the Company and its Subsidiaries on identical terms and conditions immediately
subsequent to the Closing. The Company and its Subsidiaries have taken all
reasonably necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns or uses.
(b) Except to the extent set forth on Schedule 5.18(b) of the
Disclosure Schedule, to the Companies' knowledge, the Company and its
Subsidiaries have not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and none of the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company has ever
received any currently pending charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that the Company or the Subsidiaries must license or
refrain from using any Intellectual Property rights of any third party). To the
Companies knowledge, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
17
Intellectual Property rights of the Company or its Subsidiaries.
5.19 Contracts. Schedule 5.19 of the Disclosure Schedule lists the
following contracts and other agreements to which either the Company or its
Subsidiaries are a party as of the date hereof:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any person providing for lease payments in
excess of $10,000 per annum or a term of more than one (1) year;
(b) any agent representation agreement, personal service
agreement, and such other agreements related to agent representation services
and/or management of athletes services;
(c) any partnership or joint venture agreement;
(d) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $100,000, or under
which it has imposed a security interest on any material portion of its assets,
tangible or intangible;
(e) any agreement concerning confidentiality or Noncompetition;
(f) any agreement with any of the stockholders or their
affiliates (as such term is defined in Rule 144 of the Securities Act)
(exclusive of employment agreements);
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(h) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis (other than agreements which
are terminable without causing a Material Adverse Effect);
(i) any agreement under which the consequences of a default or
termination would have a Material Adverse Effect; or
(j) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000.
18
The Company has delivered or made available to the Buyer a correct and complete
copy of each written agreement listed in Schedule 5.19 of the Disclosure
Schedule and a summary setting forth the terms and conditions of each oral
agreement referred to in Schedule 5.19. Except as set forth in Schedule 5.19 of
the Disclosure Schedule, with respect to each such agreement to the Companies
knowledge: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination modification, or
acceleration, under the agreement; and (D) no party has repudiated any
provision of the agreement.
5.20 Taxes.
(a) Except as otherwise disclosed in Schedule 5.20 of the
Disclosure Schedule: The Company has filed and has furnished or made available
to the Buyer (or received an appropriate extension of time to file) all
federal, state, local, and foreign Tax Returns required to be filed prior to
the Effective Date. From 1992 through the Effective Date, the Company and the
Subsidiaries filed consolidated U.S. federal income tax returns as members of
an affiliated group, the common parent of which is the Company. All such Tax
Returns were true and correct in all material respects. The Company and each of
the Subsidiaries has paid all Taxes shown to be due on such Tax Returns, and
has made appropriate provisions in the Balance Sheet for any Taxes not yet due,
or which are being contested in good faith. The Company and each of the
Subsidiaries has disclosed on all Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income tax within
the meaning of Section 6662 of the Code or any similar provision of state,
local or foreign law. The Company and each of the Subsidiaries has withheld and
paid over to the appropriate Governmental Authority all Taxes required by law
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
The Company and each of the Subsidiaries has made all payments of estimated
Taxes required to be made under federal, state, local or foreign law. All tax
deficiencies asserted or assessed against the Company and each of the
Subsidiaries have
19
been paid or finally settled. Neither the Company nor any of the Subsidiaries
expects any federal, state, local or foreign taxing authority to assess any
additional Taxes for any period for which Tax Returns have been filed. No
claims have ever been made by any tax authority in a jurisdiction where the
Company and each of the Subsidiaries do not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. Neither the Company nor any of the
Subsidiaries has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a tax assessment or deficiency
which waiver or extension remains in effect as of the date hereof. There is no
pending or, to the Companies' knowledge, threatened action, audit, proceeding
or investigation for the assessment or collection of any Taxes. There are no
requests for rulings, subpoenas or requests for information pending with
respect to any taxing authority. Any adjustments of Taxes made by any federal
taxing authority in any examination which is required to be reported to a
state, local, or foreign taxing authority has been reported, and any additional
Taxes due with respect thereto have been paid. No power of attorney has been
granted by the Company or any of the Subsidiaries, and is currently in force,
with respect to any matter relating to Taxes. There are no liens (other than
liens for Taxes that are not yet due or which are being contested in good
faith) on any assets of the Company or any of the Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax, except for
liens which would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as otherwise disclosed in Section 5.20 of the
Disclosure Schedule: Neither the Company nor any of the Subsidiaries has made
an election under Section 341(f) of the Code. Neither the Company nor any of
the Subsidiaries has made any payments, is obligated to make any payments, or
is a party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Section 280G of the
Code. Neither the Company nor any of the Subsidiaries has been a United States
real property holding company within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii). No
excess loss account (within the meaning of Treas. Reg. ss. 1.1502-19) exists
with respect to any of the Subsidiaries. Neither the Company nor any of the
Subsidiaries has, or will have, as of the Closing Date, any deferred gain or
loss arising from deferred intercompany transactions within the meaning of
Treas. Reg. ss. 1.1502-13. Neither the Company nor any of the
20
Subsidiaries was acquired in a "qualified stock purchase" under Section
338(d)(3) of the Code and no election under Section 338(g) of the Code,
protective carryover basis election, or offset prohibition election is
applicable to the Company or any of the Subsidiaries. Neither the Company nor
any of the Subsidiaries has participated in or cooperated with any
international boycott within the meaning of Section 999 of the Code. Neither
the Company nor any of the Subsidiaries is required to include in income any
adjustment pursuant to Section 481(a) of the Code (or any similar provision of
law or regulations) by reason of a change in accounting method, nor is any
taxing authority considering such change in accounting method. Neither the
Company nor any of the Subsidiaries has disposed of any property which has been
accounted for tax purposes under the installment method. Neither the Company
nor any of the Subsidiaries is a party to any interest rate swap, currency swap
or similar transaction. The net operating loss and other carryovers available
to the Company and each of the Subsidiaries as of the most recent practicable
date will be set forth in Section 5.20(b) of the Disclosure Schedule. As of the
Closing Date, the ability of the Company and each of the Subsidiaries to use
their net operating losses and carryovers will not have been affected by
Sections 382, 383 or 384 of the Code or by the SRLY or CRCO limitations of
Treas. Reg. xx.xx. 1.1502-21 or 1.1502-22. Neither the Company nor any of the
Subsidiaries owns any interest in an entity which is characterized as a
partnership for U.S. federal income tax purposes. Neither the Company nor any
of the Subsidiaries would be liable for any increase in Tax under Section 47 of
the Code, were such entity to dispose of all of its assets on the Closing Date.
As of the Closing Date, neither the Company nor any of the Subsidiaries will
have sustained an "overall foreign loss" within the meaning of Section 904(f)
of the Code. As of the Closing Date, neither the Company nor any of the
Subsidiaries will have any "non-recapture net section 1231 losses" within the
meaning of Section 1231(c) of the Code. No election under Section 1504(d) of
the Code has been made with respect to the Company or any of the Subsidiaries.
(c) The Seller covenants and agrees to pay and bear any risk with
respect to any Tax liability to any French governmental entity arising with
respect to the operations of the Company or any of the Subsidiaries in France
during calendar year 1996.
(d) The Company represents that it will implement a plan of cost
reduction and management as described in the letter from Xxxxxx X. Xxxxxxxxx to
Xxxxxx X. Dell, dated June
21
25, 1997.
(e) For purposes of this Section 5.20, the following terms will
have the following meanings:
(i) "Tax" or "Taxes" shall mean any and all federal, state,
local, foreign, and other taxes, levies, fees, imposts, duties and charges of
whatever kind (including any interest, penalties or additions to the tax
imposed in connection therewith or with respect thereto), whether imposed on
the Company or any of the Subsidiaries, including, without limitation, taxes
imposed on, or measured by, income, franchise, profits, or gross receipts, and
also ad valorem, value added, sales, use, service, real or personal property,
capital stock, license, payroll, withholding, employment, social security,
workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer, and
gains taxes and customs duties.
(ii) "Tax Return" shall mean returns, reports, information
statements, or other documentation (including any additional or supporting
material) filed or required to be filed in connection with the calculation,
determination, assessment or collection of any Tax.
5.21 Litigation. Except as set forth in Schedule 5.21 of the
Disclosure Schedule, there are no lawsuits, claims, actions, administrative
hearings, arbitration or other proceedings or governmental investigations or
inquiries (a) pending or, to the actual knowledge of the Company threatened,
against or involving the Company or any of its Subsidiaries or any property or
rights of the Company or any of its Subsidiaries, nor is there any order,
judgment, injunction or decree of any court, governmental agency or arbitrator
outstanding against the Company or any of its Subsidiaries, or (b) pending or,
to the actual knowledge of the Company threatened, against the Company or any
of its Subsidiaries which challenge the validity or propriety of this Agreement
or the transactions contemplated herein, and the Company has received no notice
of any complaints with respect to the Company or its Subsidiaries which have
been filed with any consumer protection agency.
5.22 Consents. No consent or approval under any agreement entered into
by the
22
Company is required in connection with the execution, delivery or performance
by the Company of this Agreement or in connection with the transactions
contemplated hereby, which the failure to obtain or make, either individually
or in the aggregate with all other such failures, could reasonably be expected
to (a) have a Material Adverse Effect on the business, financial condition or
results of operation of the Company and its Subsidiaries taken as a whole, or
(b) prevent the Company from consummating the transactions contemplated hereby.
5.23 Affiliate Transactions. Except as set forth on Schedule 5.23
hereof, none of the officers or directors, or individuals related to any of
them by blood or marriage, or, to the best knowledge of the Company or its
Subsidiaries, none of its other employees, including the Seller, is currently a
party (either directly or through any ownership, beneficial, contingent or
other interest in an entity, business or enterprise of any kind) to any
transaction with or involving the Company or its Subsidiaries or any assets
used in the operation of the Company or its Subsidiaries including, without
limitation, any arrangement (other than for services in the ordinary course of
business as officers, directors or employees of Seller) providing for (a) the
furnishing of services by or to, (b) the rental of the sites on which the Real
Property is located, (c) any loan or other indebtedness from or to, (d) the
grant of any mortgage, security interest, pledge or other encumbrance from or
to, or (e) otherwise requiring payments or other consideration (including a
promise of forbearance) from or to, any such person.
5.24 Broker's and Finder's Fees. The Company has not retained any
broker or finder or other person in connection with transactions contemplated
hereby.
5.25 Foreign Company. The Seller has delivered or made available to
the Buyer true and correct copies of each agreement related to the Foreign
Company Shares including a copy of the agreements under which 250 shares of
voting common stock of ProServ (the "Foreign Company Shares") were bought by a
foreign company (the "Foreign Company"). These agreements represent all of the
agreements between the buyers of the Foreign Company Shares and the Company
regarding the purchase of the Foreign Company Shares.
23
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
The Seller represents and warrants to the Buyer as follows:
6.1 Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions. The
Seller, is a natural person, is over 21 years of age and has not had a legal
representative, appointed by a court of law or otherwise, act in his behalf or
with respect to any of his property. The Seller need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
governmental entity in order to consummate the transactions contemplated by
this Agreement.
6.2 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated herein, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller is a party, by
which he is bound
24
or to which any of his assets are subject.
6.3 Title to Shares. The Seller holds of record and owns beneficially
the Shares of the Companies as set forth next to his name in Schedule 5.2 of
the Disclosure Schedule, free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and state securities laws),
security interests, options, warrants, purchase rights, liens, contracts,
commitments and equities ("Encumbrances"). The Seller is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require the Seller to sell, transfer, or otherwise dispose of the Shares. The
Seller is not a party to any voting trust, proxy or other agreement or
understanding with respect to the voting 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 Encumbrances, other than Encumbrances created by the Buyer and
restrictions on resales of the Shares under applicable securities laws.
6.5 Accredited Investor. The Seller is a natural person whose
individual net worth, or whose joint net worth with that person's spouse,
exceeds $1,000,000. The Seller is a sophisticated investor by virtue of his
education, training and/or numerous prior investments made on his or her behalf
or through entities which he or she, alone or with others, controls. The Seller
is knowledgeable and experienced in financial and business matters, and is
capable of evaluating the
25
merits and risks of an investment and of making an informed business decision.
6.6 Investment Intention. The Seller is acquiring Consideration Stock
for investment and not with a view to sell or distribute thereof in violation
of any securities laws.
6.7 Interest in Competing Business. Excluding the interests that the
Seller has in the Companies and their Subsidiaries, the Seller does not have
any interest of any type, directly or indirectly, in any business related to or
involved with sports management, marketing, or production, or which is in any
other manner competitive with the business of the Companies and their
Subsidiaries.
6.8 Receipt of Information. The Seller has received a copy of each of
the following documents relating to the Buyer: (i) Annual Report on Form 10-K
for the year ended December 31, 1996; and (ii) Prospectus relating to the
Buyer's initial public offering.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer hereby represent and warrants to each of the Companies and
the Seller as follows:
7.1 Corporate Organization.
26
(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and
will be qualified at Closing to do business where the Companies do business and
has the full power and authority to own the Shares, and to carry on the
business of the Companies as now being conducted in the manner of and in the
places in which such business is now being conducted.
(b) The copies of the Certificate of Incorporation and By-Laws of
the Buyer heretofore delivered to the Companies and the Seller are complete and
correct copies of such instruments as presently in effect.
7.2 Authorization. The Buyer has full power and authority to enter
into this Agreement and to carry out the transactions contemplated herein. The
Board of Directors of the Buyer has approved this Agreement and the
transactions contemplated herein, and have authorized the execution and
delivery of this Agreement, and no other corporate proceedings on the part of
the Buyer are necessary to consummate the transactions contemplated herein.
This Agreement has been duly and validly executed and delivered by the Buyer
and (assuming this Agreement is a legal, valid and binding obligation of the
Companies and the Seller) constitutes a legal, valid and binding obligation of
the Buyer enforceable in accordance with its terms.
7.3 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein will (with or
without notice or the passage of time, or both): (a) violate any provision of
the Certificate of Incorporation or By-Laws of the Buyer; (b) violate, conflict
with, constitute a default under, permit the termination of, cause the
27
acceleration of the maturity of, or result in the creation or imposition of any
lien upon the properties or assets of the Buyer pursuant to the provisions of,
any agreement, lease, document, instrument, debt or obligation to which the
Buyer is bound; or (c) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental agency or body by which
the Buyer is bound or to which the Buyer is subject. The Buyer has not received
notice that it is in violation of any statute, law, judgment, decree, order,
regulation or rule relating to or affecting the operation, conduct or ownership
of the properties or business of the Buyer.
7.4 Litigation. There are no lawsuits, claims, actions, administrative
hearings, arbitration or other proceedings or governmental investigations or
inquiries pending or, to the actual knowledge of the Buyer threatened, against
or involving the Buyer or any property or rights of the Buyer, nor is there any
order, judgment, injunction or decree of any court, governmental agency or
arbitrator outstanding against the Buyer, and the Buyer has received no notice
of any complaints with respect to the Buyer which have been filed with any
consumer protection agency.
7.5 Consents. Except for applicable requirements of (i) the Securities
Act, and the rules and regulations of the SEC thereunder, (ii) the Securities
Act of 1934 as amended and the rules and regulations of the SEC thereunder (the
"Exchange Act"), (iii) state securities laws ("Blue Sky Laws") (iv) NASDAQ, and
(v) The Boston Stock Exchange, no consent, approval, authorization or order of
(or registration or filing with) any court or governmental agency or body or
other third party is required to be made or obtained by the Buyer in connection
with the execution, delivery or performance by the Buyer of this Agreement or
in connection with the transactions contemplated
28
herein, which the failure to obtain or make could reasonably be expected to
prevent the Buyer from consummating the transactions contemplated herein.
7.6 Investment Intention. The Buyer is acquiring the Shares solely for
its own account and not with the view to sell or distribute thereof in
violation of any securities laws.
7.7 Shareholder Consent. The Buyer has the authority to issue the
Consideration Stock to the Seller without the requirement of any consents from
shareholders of the Buyer, and the Consideration Stock is properly registered
under the Exchange Act.
7.8 Buyer's SEC Filings. The Buyer's SEC filings (i) conform in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations thereunder and (ii) do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement therein not
misleading, in light of the circumstances under which they were made.
7.9 Material Change of Buyer. There has been no material adverse
change to the Buyer since the Buyer's most recent filing on form 10-Q that
would require the filing of a report on Form 8-K or an amendment to any prior
filing of the Buyer.
29
ARTICLE 8
COVENANTS AND AGREEMENTS 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 to the Seller the Consideration Cash and the
Consideration Stock as provided in Article 2 hereof.
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 which challenges the transactions contemplated
herein.
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 Registration Statement for Registering of Stock. The Buyer shall
enter into a registration rights agreement (the "Registration Rights
Agreement") with the Seller, whereby the Buyer undertakes to register the
resale of the Consideration Stock pursuant to the Registration Rights
Agreement, in the form attached hereto as Exhibit B.
8.5 Compliance with Laws. The Buyer shall, and shall cause its
subsidiaries to, and the Buyer and its subsidiaries shall, operate the Buyer
and its subsidiaries in all material respects in accordance with all laws,
regulations, rules and orders.
30
8.6 SEC Filings and Press Releases. The Buyer shall promptly deliver
copies to the Seller and his counsel of all SEC filings and press releases of
the Buyer issued subsequent to the date hereof.
8.7 Negotiations with Foreign Company and Key Executives. The Buyer
shall enter into prompt, good faith negotiations with (i) the Foreign Company
to purchase its shares as provided herein and (ii) Xxxxxxx Xxxxxx, Xxxx
Xxxxxxxx, and Xxxxxxx Xxxxxxx (collectively, the "Key Executives") to enter
into employment agreements and to acquire all of their stock and stock
equivalents in the Companies, in whatever form held and without regard to any
otherwise applicable vesting or payment provisions, at a price per share that
is equal to (and in the same form of consideration as) the price per share
being paid to Seller for his ProServ Common as determined in accordance with
the allocation provisions of the next sentence, provided, however, that with
respect to 50 stock equivalents held by Xxxxxx and 20 stock equivalents held by
Xxxxxxx in the form of stock options, such price per share shall be reduced by
the exercise price therefor equal to $2,585 per stock equivalent. Solely for
purposes of this Section 8.7, (i) the aggregate Purchase Price to the Seller
shall be deemed to equal $8,600,000; (ii) the portion of the Purchase Price
allocated to the ProServ Preferred shall be $600,000; (iii) the portion of the
Purchase Price allocated to the Seller's 51% interest in the TV Common shall be
equal to the product of (A) 51% and (B) a value for TV to be determined by good
faith negotiations between the Buyer and the Seller, provided, however, that in
the event that the Buyer and the Seller do not agree within five (5) business
days after the date hereof on the value of 100% of the stock of TV, ProServ
shall engage a reasonably acceptable independent entity to perform such
valuation, subject to the reasonable review of such entity's procedures by the
31
Buyer's auditors; and (iv) the balance of the Purchase Price shall be divided
by 880 to determine the price per share being paid to the Seller for his
ProServ Common, enabling the Buyer to make offers to the Key Executives for
their stock and stock equivalent interests in ProServ.
8.8 Releases. The Buyer shall cause the release of the Seller's
guarantees as described in Section 12.6.
ARTICLE 9
COVENANTS AND AGREEMENTS OF THE SELLER AND THE COMPANIES
--------------------------------------------------------
9.1 Pre-Closing Covenants. The Seller and the Companies covenant and
agree 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:
(a) The Seller shall, and shall cause the Companies to, and the
Companies shall, conduct their business and operations in the ordinary and
prudent course of business consistent with customary and industry standards and
with the intent of preserving the ongoing operations and assets of the
Companies.
(b) The Seller shall, and shall cause the Companies to, and the
Companies shall, use their commercially reasonable efforts to preserve the
operation of the Companies intact and to preserve the business of the
Companies' clients, suppliers and others having business relations with the
Companies and continue to conduct the financial operations of the Companies,
including its 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
32
of the Companies.
(c) The Seller shall, and shall cause the Companies to, and the
Companies shall, operate the Companies in accordance with all laws,
regulations, rules and orders.
(d) The Seller shall not, and shall prevent the Companies from,
and the Companies shall not (i) acquire, sell or dispose of, commit to sell or
dispose of, or encumber or mortgage any of the Companies's assets except in the
ordinary course of business; (ii) waive, release, grant or transfer any rights
of value or modify or change in any material respect any existing license,
lease, contract or other document which would affect the Companies or the
Seller after the Closing in excess of $100,000; (iii) grant or agree to grant
any general increases in the rates of salaries or compensation payable to
employees of the Companies; (iv) grant or agree to grant any specific bonus or
increase to any executive or management employee of the Companies; (v) provide
for any new pension, retirement or other employment benefits for employees of
the Companies or any increases in any existing benefits; (vi) enter into any
new agreement which would bind the Companies after the Closing which agreement
is expected to cause revenues or obligations to or from the Companies in excess
of $100,000; (vii) amend its Certificate of Incorporation or By-Laws; (viii)
change the number of authorized shares of its capital stock; (ix) split or
reclassify any shares of its capital stock or declare, set aside or pay any
dividend or other distribution or payment in cash, stock or property in respect
of shares of its capital stock; (x) undertake any debt of the Companies for
borrowed money in addition to the debt of the Companies as described in
Schedules 5.7 and 5.9 of the Disclosure Schedule or pursuant to existing lines
of credit in the ordinary course of business; or (xi) make or commit to make
any distribution from the Company to TV, in each case, except as otherwise
separately agreed to by the Seller, the Companies, and the Buyer.
Notwithstanding
33
anything to the contrary previously set forth in this Section 9.1(d): (y) the
Companies may enter into any waiver, release, grant, transfer, modifications or
change provided for in clause (ii) of this Section 9.1(d) and enter into any
new agreement provided for in clause (vi) of this Section 9.1(d), in each case
in excess of $100,000 in revenues or obligations of the Companies, taken as a
whole, in the ordinary course of the Companies' business without separate
agreement of the Buyer if the Buyer or any subsidiary or affiliate of the Buyer
is or is likely to be a competitor of the Companies for such particular
business; and (z) where any of the Companies seeks the agreement of the Buyer
as to any of the matters described in Section 9.1(d): (1) the Company shall
provide to the Buyer such information relating thereto as a reasonable person
would consider necessary or appropriate in order to reach an informed decision,
which information shall be subject to all confidentiality restrictions set
forth in Section 10.2; (2) the Buyer shall respond to such request by the third
(3rd) business day after its receipt thereof, with the absence of a timely
response from the Buyer being deemed to be its agreement to such request; and
(3) the Buyer's agreement shall not be unreasonably withheld or conditioned,
such determinations to be made solely from the perspective of the Companies
without regard to any effect (positive or negative, direct or indirect) on the
Buyer or any of its subsidiaries or affiliates. .
(e) The Seller shall provide the Buyer prompt written notice of
any material change in any of the information contained in the representations
and warranties made in Article 5 and Article 6 hereof or any of the Disclosure
Schedules.
(f) Following the execution of this Agreement, the Companies and
the Seller shall give the Buyer and the Buyer's counsel, accountants, engineers
and other representatives,
34
full and reasonable access during normal business hours and upon reasonable
notice to all of the Companies' personnel, properties, books, contracts,
reports and records including financial information and tax returns, to all
real estate, buildings and equipment, and to the Companies' employees in order
that the Buyer may have full opportunity to make such investigation as it
desires of the affairs of the Companies and to furnish the Buyer with
information, and copies of all documents and agreements including but not
limited to the representation or management of the Companies' clients financial
and operating data and other information concerning the financial condition,
results of operations and business of the Companies that the Buyer may
reasonably request. The rights of the Buyer under this Section shall not be
exercised in such a manner as to interfere with the business of the Seller or
the Companies.
(g) The Seller shall use his commercially reasonable efforts to
assist the Buyer to enter into agreements with the remaining shareholders of
the Companies, as such shareholders are identified in Schedule 5.2 of the
Disclosure Schedule, for the purchase of their shares.
9.2 Foreign Company Agreement. The Seller shall use his commercially
reasonable efforts to cause, within ten (10) days of the execution of this
Agreement, the holder of the Foreign Company Shares to enter into an agreement
(the "Foreign Company Agreement") with the Buyer for the purchase of the
Foreign Company Shares for a purchase price of $3,000,000.00, deliverable in
immediately available funds on the Closing Date against the delivery of duly
endorsed certificates for the Foreign Company Shares, free and clear of any
Encumbrances, together with mutual releases to the Buyer on the Closing Date.
The Foreign Company Agreement shall be, in form and substance,
35
reasonably satisfactory to the Buyer. In no event will the failure of the
Foreign Company to enter into the Foreign Company Agreement or to deliver the
appropriate certificates or release to the Buyer at the Closing give rise to
any liability on the part of the Seller or any of the Companies.
9.3 "Lock-Up" Requirement If the Buyer effects the registration of the
Consideration Stock through an underwritten transaction, and such underwriter
shall so request, at the request of the Buyer, the Seller shall sign a
"lock-up" letter with such underwriter restricting the Seller's transfer of the
Consideration Stock pursuant to the terms of Section 9.9; provided, however,
that the terms of such lock-up letter are not more severe than the transfer
restrictions set forth in Section 9.9.
9.4 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 herein.
9.5 No Inconsistent Action. The Seller and the Companies shall take no
action which is materially inconsistent with their obligations under this
Agreement.
9.6 Closing Covenants.
(a) 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.
36
(b) On the Closing Date, the Seller shall use his commercially
reasonable efforts to cause the holder of the Foreign Company Shares to sell
and deliver the Foreign Company Shares to the Buyer as provided in Section 9.2
of this Agreement; provided, however, that in no event shall the failure of the
Foreign Company to do so give rise to any liability on the part of the Seller
or any of the Companies.
9.7 Closing of the Companies's Transfer Books. On the date hereof, the
stock transfer books of the Companies shall be closed and no transfer of shares
at the Companies' capital stock shall thereafter be made.
9.8 Non-Solicitation. From and after the date hereof until the
Closing, the Companies and the Seller shall not initiate or solicit any
Competing Transaction (as defined below) or enter into discussions or negotiate
with any person or entity in furtherance of such inquiries to obtain a
Competing Transaction, or enter into an agreement with respect to any Competing
Transaction, and the Companies and the Seller shall promptly notify the Buyer
of all relevant terms of any such inquiries and proposals received by any of
the Companies or the Seller and if such inquiry or proposal is in writing, the
Companies or the Seller shall deliver or cause to be delivered to the Buyer a
copy of such inquiry or proposal. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving the Companies or the
Seller (i) any merger, consolidation, share exchange, business combination, or
other similar transaction (other than the transactions contemplated by this
Agreement); (ii) any sale, lease, exchange, transfer or other disposition of
25% or more of the assets of the Companies or the Seller's interest in the
Companies,
37
taken as a whole, in a single transaction or series of transactions; (iii) any
offer (whether cash or securities) for 25% or more of the outstanding Shares of
capital stock of the Companies owned by the Seller; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing.
9.9 Restrictions on Transfer.
(a) For a period of 27 months from the Closing Date, the Seller
shall not: (1) offer, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the Consideration Stock; or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Consideration Stock owned by the Stockholder,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of the Consideration Stock, in cash or otherwise.
Notwithstanding the foregoing, (i) the restrictions contained in the foregoing
sentence shall be automatically released for 50% of the Consideration Stock on
the first anniversary of the Closing Date and (ii) the Seller may transfer the
Consideration Stock by inter vivos gift or inheritance, in each case for no
consideration; or by pledge; provided, however, that in each case the donee or
pledgee agrees to be bound by the sale restrictions contained herein.
Notwithstanding the restrictions contained in this Section 9.9, the holder of
the Consideration Stock shall be entitled to (i) vote or otherwise exercise all
of the governance rights associated with the ownership of the Consideration
Stock, and (ii) receive all dividends and distributions on or with respect to
the Consideration Stock.
38
Upon the expiration or termination of any of the restrictions contained in this
Section 9.9(a), the Buyer shall cause the removal of (or modify as appropriate)
the restrictive legend on such stock at the request of the record holder.
(b) In the event of a merger, consolidation, liquidation or the
like of the Buyer pursuant to which all holders of the Buyer's Class A Common
Stock are to receive consideration, then, notwithstanding the restrictions
contained in this Section 9.9, any holder of the Consideration Stock shall be
entitled to receive consideration on a pro rata basis with all other holders of
the Buyer's Class A Common Stock, free and clear of any restrictions regarding
the sale or disposition of the Consideration Stock and/or the proceeds so
received, and Section 9.9(a) shall no longer apply.
(c) In the event that any shareholder of the Buyer's Class A
Common Stock unrelated to the holder of the Consideration Stock shall invite
the tender of all or a portion of the Buyer's Class A Common Stock, and the
holders of a majority of such shares shall tender such shares in response
thereto, then, notwithstanding any restrictions contained in this Section 9.9,
any holder of the Consideration Stock may tender his/her shares in accordance
with the tender offer and shall be entitled to receive consideration from such
tender offer on a pro rata basis with all other tendering shareholders of the
Buyer's Class A Common Stock, free and clear of any restrictions regarding the
sale or disposition of the Consideration Stock and/or such consideration, and
Section 9.9 (a) shall no longer apply.
ARTICLE 10
39
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. 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 upon the obligations
of any party hereto to consummate the transactions contemplated by this
Agreement, the parties hereto shall use their commercially reasonable best
efforts to cure the event as expeditiously as possible.
10.2 Confidentiality. The Buyer, the Seller and the Companies shall
each keep confidential (y) the existence and terms of this Agreement and all
agreements contemplated hereby and (z) all information obtained by it or them
with respect to the other in connection with the negotiations preceding this
Agreement, Buyer's due diligence with respect to the acquisition and any
communications between the Buyer and any of the Seller or any of the Companies
pursuant to Articles 8 or 9, 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 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 and any notes, memoranda,
correspondence or other compilation, however recorded and in any medium,
containing or referring to such information. Each of the Buyer and each Company
shall use all commercially reasonable efforts to cause each
40
of its employees, representatives, officers, directors, shareholders, agents
and advisors to abide by this Section 10.2. Notwithstanding the foregoing, no
party shall be required to keep confidential or return any information which
(i) is obtained 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 (provided the other parties are given reasonable prior
notice), or (iv) is developed by the receiving party independently of the
disclosure by the disclosing party. This section shall survive the Closing and
any termination of this Agreement.
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.
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:
41
11.1 Representations, Warranties and Covenants.
(a) All representations and warranties of the Companies and the
Seller made in this Agreement shall be true and complete in all material
respects as of the date hereof and on and as of the Closing Date as if made on
and as of that date; provided, however, that unless a failure of this condition
has an adverse effect on the value of the Companies, taken as a whole, in
excess of $400,000 or otherwise significantly diminish the future business
prospects of the Companies, taken as a whole, such condition precedent shall be
deemed satisfied.
(b) All of the terms, covenants and conditions to be complied
with and performed by the Companies and the Seller on or prior to Closing Date
shall have been complied with or performed in all material respects; provided,
however, that unless a failure of this condition has an adverse effect on the
value of the Companies, taken as a whole, in excess of $400,000 or otherwise
significantly diminish the future business prospects of the Companies, taken as
a whole, such condition precedent shall be deemed satisfied..
(c) The Buyer shall have received a certificate, dated as of the
Closing Date, executed by a duly qualified officer of each of the Companies and
by the Seller, to the effect that their respective representations and
warranties contained in this Agreement are true and complete in all material
respects on and as of the Closing Date as if made on and as of that date, and
that each has complied with or performed all terms, covenants and conditions to
be complied with or performed by him or it in all material respects on or prior
to the Closing Date, in each case subject only to the exceptions as would be
permitted under clauses (a) and (b) of this Section 11.1.
11.2 Governmental Authorizations. Each of the Companies shall be the
holder of
42
all material licenses, permits and other authorizations listed in the
Disclosure Schedule, and there shall not have been any modification of any of
such licenses, permits and other authorizations which has a Material Adverse
Effect on the conduct of their business and operations. No proceeding shall be
pending which seeks or the effect of which reasonably could be to revoke,
cancel, fail to renew, suspend or modify materially and adversely any material
licenses, permits or other authorizations.
11.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and 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.
11.4 Legal Opinion. Each of the Companies and the Seller shall have
delivered to the Buyer a written opinion of its and their counsel, dated as of
the Closing Date, substantially in the form attached hereto as Exhibit C.
11.5 Delivery of Shares. On the Closing Date, the Buyer shall have
received certificates representing the Shares.
11.6 Delivery of Foreign Company Shares. On the Closing Date, the
Buyer shall have received certificates representing the Foreign Company Shares.
43
11.7 Resignations. On the Closing Date, the Buyer shall have received
the resignations of all of the directors of the Companies.
11.8 Insurance, Benefits and Seller's Employment Agreement. The Buyer
shall have received a certificate, dated as of the Closing Date, executed by a
duly qualified officer of each of the Companies, to the effect that: (i) each
of the Companies has canceled its 401K Plan and any other similar plan or
program; (ii) each of the Companies has canceled its Split Money Insurance Plan
with respect to the Seller, although it is acknowledged that the existing
policies may be assigned; (iii) each of the Companies has canceled its Deferred
Compensation Plan with respect to the Seller, although it is acknowledged that
the existing policies may be assigned; and (iv) each of the Companies has
terminated its employment agreement and any other similar arrangement with the
Seller.
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 Representations, Warranties and Covenants.
(a) All representations and warranties of the Buyer shall be true
and
44
complete in all material respects as of the date hereof and on and as of the
Closing Date as if made on and as of that date.
(b) All the terms, covenants and conditions to be complied with
and performed by the Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
(c) The Seller shall have received a certificate, dated as of the
Closing Date, executed by a duly qualified officer of the Buyer, to the effect
that the representations and warranties of the Buyer contained in this
Agreement are true and complete in all material respects on and as of the
Closing Date as if made on and as of that date, and that the Buyer has complied
with or performed all terms, covenants and conditions to be complied with or
performed by it in all material respects on or prior to the Closing Date.
12.2 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no other, 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 Legal Opinion. The Buyer shall have delivered to the Seller
opinions of their corporate counsel, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit D.
45
12.4 Delivery of Consideration Stock and Consideration Cash. The Buyer
shall have delivered or caused to be delivered to the Seller the Consideration
Stock, the Consideration Cash, and if applicable, the Promissory Note, in
accordance with the terms of Article 2 hereof.
12.5 Employment Agreement. On the Closing Date, the Buyer shall have
entered into an employment agreement with the Seller in the form attached
hereto as Exhibit E and shall have tendered the initial grant of Stock Options
(as defined in the employment agreement) for 40,000 shares of Class A Common
Stock of the Buyer.
12.6 Releases. All guarantees or any other personal undertaking of the
Seller, as set forth in Exhibit F attached hereto, with respect to (a) any
outstanding credit facilities or loans for the benefit of either ProServ or TV,
or any of their subsidiaries, and (b) any settlement agreement must be released
or indemnified to the reasonable satisfaction of the Seller. In addition, the
Buyer shall cause the repayment of not less than 50% of the outstanding debt of
ProServ allowed as of Closing pursuant to this Agreement so as to create a
working capital line at least equal to the amount so repaid; provided, however,
that the Buyer may, in lieu of providing such a working capital facility from
an outside source, provide such a facility itself on terms, conditions and
provisions (including security, all-in cost of funds and covenants no more
onerous than those currently in effect at the Companies) as such debt is
described in Schedules 5.7 and 5.9 of the Disclosure Schedule.
12.7 Registration Rights Agreement. On the Closing Date, the Buyer
shall have entered into a Registration Rights Agreement with the Seller as set
forth in Exhibit B attached
46
hereto.
12.8 Board Resolutions On the Closing Date, the Buyer shall have
delivered to the Seller certified resolutions of the Board indicating that the
Seller has been appointed/elected as a director on the board of the Buyer.
ARTICLE 13
TRANSFER TAXES; FEES AND EXPENSES
---------------------------------
13.1 Expenses. Except as set forth in Sections 2.3(b), 13.2 and 13.3
hereof, 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.
13.2 Transfer Taxes and Similar Charges. All costs of transferring the
Shares in accordance with this Agreement, including recordation, transfer and
documentary taxes and fees, and any excise, sales or use taxes, shall be borne
equally by the Buyer and the Seller.
13.3 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority the consent of which is required to the
transactions contemplated hereby or is a condition of this Agreement shall be
borne by the Seller.
47
ARTICLE 14
COMMISSIONS OR FINDER'S FEE
---------------------------
14.1 Representation and Agreement to Indemnify. The parties hereto
agree to indemnify, defend and hold each other harmless from and against any
and all claims, losses, liabilities and expenses (including reasonable
attorneys' and other professionals' fees and disbursements) arising out of a
claim by any person or entity based on any arrangement or agreement made or
alleged to have been made by the Buyer, Seller or the Companies to pay a
commission, finder's fee or similar payment in connection with this Agreement
or any matter related hereto.
ARTICLE 15
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
15.1 The Seller' Documents. At the Closing, the Seller and the
Companies shall deliver or cause to be delivered to the Buyer the following:
(a) Certified resolutions of the Board of Directors of each 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;
(b) Certificates, dated the Closing Date, by each of the
Companies and the Seller in the form described in Section 11.1(c) above;
(c) Articles of Incorporation and Bylaws of each of the Companies
certified by each of the Company's secretary as of the Closing Date to be true
and accurate copies
48
thereof;
(d) The opinion letters, dated the Closing Date, referenced in
Sections 11.4 above;
(e) Certificates evidencing the Shares;
(f) Governmental certificates showing that each of the Companies
are duly incorporated and in good standing in the State of Delaware, dated not
more than forty-five (45) calendar days before the Closing Date; and
(g) Such additional information and material as the Buyer shall
have requested in a timely manner in writing and which is reasonably necessary
for the Closing.
15.2 The Buyer's Documents. At the Closing, the Buyer shall deliver or
cause to be delivered to the Seller the following:
(a) The Consideration Stock, the Consideration Cash, and if
applicable, the Promissory Note, in accordance with Article 2 hereof.
(b) A certificate, dated the Closing Date, by the Buyer in the
form described in Section 12(c) above.
(c) The opinion of the Buyer's corporate counsel, dated the
Closing Date, to the effect set forth in Section 12.3;
(d) Governmental certificates showing that the Buyer is duly
incorporated and in good standing in the State of Delaware and is qualified as
a foreign corporation in the State of New York, dated not more than forty-five
(45) calendar days before the Closing Date;
(e) Certified resolutions of the Board of Directors of the Buyer
approving
49
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;
(f) Certified resolutions of the Board of Directors of the Buyer
appointing/electing the Seller to the Board of Directors;
(g) The Employment Agreement set forth in Section 12.5;
(h) The Registration Rights Agreement set forth in Section 8.4;
and
(i) Such additional information and material as the Seller shall
have requested in a timely manner in writing and which is reasonably necessary
for the Closing.
ARTICLE 16
INDEMNIFICATION
---------------
16.1 The Seller's Indemnities.
(a) The Seller hereby agrees to indemnify, defend and hold 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 attorney's and other
professionals' fees and disbursements) asserted against, resulting from,
imposed upon or incurred by the Buyer directly or indirectly relating to or
arising out of (i) 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 and (ii) the operation of the Companies
prior
50
to the Closing; provided, however, that as a condition precedent hereto, the
Buyer shall have delivered written notice of any such claim to Seller prior to
the first anniversary of the Closing Date (or the second anniversary of the
Closing Date solely with respect to any breach of Section 5.20 hereof).
(b) The Seller hereby further agrees to indemnify the Buyer as
follows:
(i) For purposes of this Section 16.1 (b), "Net Working
Capital" shall be defined as the difference between the consolidated current
assets and current liabilities of the Companies determined on a basis
consistent with that used in the projected Net Working Capital calculations
submitted to Buyer by the Companies on June 18, 1997, under cover memo to Xxx
Xxxxxx and Xxxxx Xxxxxxx from Xxxx Xxxxxx.
(ii) To the extent that on the Closing Date the Net Working
Capital deficit is equal to or less than ($1,450,000), Seller shall have no
indemnity obligation with respect thereto.
(iii) To the extent that on the Closing Date the Net Working
Capital deficit is greater than ($1,450,000), Seller shall indemnify Buyer to
the extent of (i) 50% of the amount by which the Net Working Capital deficit as
of the Closing Date is greater than ($1,450,000) but equal to or less than
($1,750,000), and (ii) 100% of the amount by which the Net Working Capital
deficit as of the Closing Date is greater than ($1,750,000), provided, however,
that any increase in the deficit Net Working Capital caused by any action or
inaction requested by or approved by Buyer in writing in its sole discretion
shall be excluded for purposes of such indemnity.
(c) The Seller further agrees to indemnify the Buyer as follows:
Buyer shall consider in good faith for not less than four (4) months following
the Closing Date the
51
continuation of the employment by TV of Xxxxxx Xxxxxxx; if Buyer, following
such good faith consideration, shall determine to cause TV to terminate the
employment of Xxxxxx Xxxxxxx:
(i) Buyer shall cause TV to negotiate in good faith to obtain
the least costly settlement agreement with Xx. Xxxxxxx possible under the
circumstances, and
(ii) Seller will indemnify TV to the extent of 50% of any
such settlement agreement.
16.2 Buyer's Claim Against Consideration Stock. If claims with respect
to the Seller's indemnification obligations hereunder are brought on or prior
to the first anniversary of the Closing Date, the Buyer shall have the right to
offset such claims (once acknowledged by or determined adversely against the
Seller after all appeals) against (but only against) that 50% portion of the
Consideration Stock to which the transfer restrictions set forth in Section
9.9(a) remain effective after the first anniversary of the Closing Date,
provided, however, that the Seller may cause the release of such Consideration
Stock from any such claim by substituting therefor either a bond in favor of
the Buyer or pledging to the Buyer as security for such outstanding claims
property of equivalent value reasonably satisfactory to the Buyer.
16.3 The Buyer's Indemnities. The Buyer hereby agrees to indemnify,
defend and hold the Seller and the Companies 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' and other professionals' fees and
disbursements) asserted against, resulting from, imposed upon or incurred by
the Seller or any Company directly
52
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;
provided, however, that as a condition precedent hereto, the Seller and/or the
Companies shall have delivered written notice of any such claim to Buyer prior
to the first anniversary of the Closing Date.
16.4 Rights. The Buyer and the Seller agree that the rights of
indemnification provided in this Article 16 are exclusive of and in addition to
any and all other such rights of the Buyer and the Seller hereunder.
16.5 Survival of Representations and Warranties. The representations
and warranties contained in this Agreement shall survive the Closing for a
period of twelve (12) months (except for representations and warranties set
forth in Section 5.20, which shall survive for a period of twenty-four (24)
months) (the "Claims Period") following the Closing Date, and upon the
expiration of such period shall lapse and be of no further effect.
16.6 Limitation on Indemnity. Notwithstanding anything to the contrary
contained in this Agreement; (a) the Seller shall have no liability or
obligation to the Buyer for breach of (i) any representation or warranty
provided in Section 5.20 unless and only to the extent that such breach (or
breaches) reduces the value of the Companies, taken as a whole, by in excess of
$100,000 in the aggregate, or (ii) any representation, warranty, covenant or
agreement of the Seller or the Company made elsewhere in this Agreement unless
and to the extent that the aggregate of all claims
53
by the Buyer for such breaches exceed $100,000) in the aggregate; and (b) no
party may seek an indemnity claim against another for breach of a
representation or warranty contained herein, if the claimant was aware at or
prior to the execution and delivery hereof of such breach.
16.7 Procedures.
(a) Promptly after the receipt by any party (the "Indemnified
Party") of notice of (A) any claim or (B) the commencement of any action or
proceeding 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 action or proceeding and shall permit
the Indemnifying Party to assume the defense of any such claim or any
litigation resulting from such claim. So long as notice is given in accordance
with the respective provisos in Sections 16.1 and 16.3, 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 and to the extent such failure has materially prejudiced the
Indemnifying Party's ability to defend the claim or litigation. (b) If the
Indemnifying Party assumes the defense of any such claim or litigation
resulting therefrom with counsel reasonably acceptable to the Indemnified
Party, the obligations of the Indemnifying Party as to such claim shall be
limited to taking all steps necessary in the defense or settlement of such
claim or litigation resulting therefrom 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 resulting therefrom;
however, the Indemnified Party may participate, at its or his
54
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. If the Indemnified Party reasonably concludes that it may have
defenses or other interests different from or in conflict with those of the
Indemnifying Party, it may require the Indemnifying Party to provide for (at
the Indemnifying Party's expense) separate counsel for the Indemnified Party,
such counsel to be selected by the Indemnified Party, subject to the reasonable
approval of the Indemnifying Party. The Indemnified Party shall cooperate and
make available all books and records reasonably necessary and useful in
connection with the defense at no out-of-pocket cost to itself. The
Indemnifying Party shall not, in the defense of such claim or any litigation
resulting therefrom, 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.
(c) If the Indemnifying Party shall not assume the defense of any
such claim or litigation resulting therefrom, 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 expenses, legal or
otherwise, incurred by the Indemnified Party in connection with the defense
against such claim or litigation. If both parties shall agree to the terms of
any settlement of such claim or litigation, the Indemnifying Party shall
promptly pay such settlement in accordance therewith. 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
55
litigation and of all expenses, legal or otherwise, incurred by the Indemnified
Party in the defense against such claim or litigation.
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:
(a) if, on or prior to the Closing Date, the other party defaults
in any material respect in the observance or in the due and timely performance
of any of its covenants or agreements herein contained and such material
default shall not be cured within ten (10) calendar days of the date of written
notice of default served by the party claiming such material default; or
(b) if there shall be in effect any judgment, final decree or
order that would prevent or make unlawful the Closing of this Agreement; or
(c) by the Buyer or the Seller if the conditions precedent to
Closing have not been satisfied prior to the final closing date provided for in
Article 3 provided that the party seeking to terminate has compiled with all
terms and conditions hereof and is not then in default under this Agreement.
56
(d) if the holder of the Foreign Company Shares does not sign an
agreement with the Buyer, within ten (10) days of the execution of this
Agreement, for the purchase and sale of the Foreign Company Shares as described
in Section 9.2 of this Agreement.
(e) as provided in any Section of this Agreement which
specifically provides for termination.
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 Limitations on Right to Terminate. Notwithstanding anything to
the contrary contained in this Article 17: (a) the Buyer may not terminate this
Agreement and recover the Cash Deposit, together with any investment earnings
thereon, unless the aggregate reduction in the value of the Companies, taken as
a whole, resulting from the breach(es) by the Seller and/or any of the
Companies of their respective representations, warranties, covenants or
agreements exceeds $400,000 or would otherwise cause a significant diminution
in the future business prospects of the Companies, taken as a whole; and (b) if
the Buyer is eligible to terminate this Agreement pursuant to Section 17.3(a)
but instead chooses to proceed to Closing and to seek indemnity from the Seller
for such breach(es) (i) such claims shall be limited to those damages in excess
of $100,000 and (ii) the Buyer shall be precluded from seeking damages in
excess of $900,000 in the aggregate, regardless of whether such claim is made
before or after the Closing Date.
57
ARTICLE 18
PUT AND CALL PROVISIONS AFTER CLOSING
-------------------------------------
18.1 Put Option. Each record holder as of a given date may, at its
option, by written notice given to Buyer any time within sixty (60) days
immediately following the second anniversary of the Closing Date (the "Put
Period"), elect to transfer to the Buyer all of the remaining Consideration
Stock held by him, free and clear of any and all Encumbrances, including any
restrictions set forth in Section 9.9, at a price per share equal to the
quotient of $1,732,500 divided by the number of shares of Consideration Stock
(as adjusted for any stock splits, reverse stock splits, stock dividends and
the like subsequent to the Closing Date).
18.2 Put Closing. The closing of any purchase under section 18.1 shall
be held at a place and date specified by the Buyer by written notice given to
all record holders not more than ten (10) days after any such record holder
shall have exercised the option pursuant hereto; the date of the closing shall
not be more than thirty (30) days after the record holder shall have exercised
the option pursuant to Section 18.1. At the closing, (i) the holder of the
Consideration Stock who is the subject of the "put" shall deliver to Buyer a
certificate or certificates for all the shares of Consideration Stock being
transferred, duly endorsed in blank and with all required stock transfer stamps
attached, if any, and (ii) Buyer shall pay to the holder the purchase price for
such shares. The purchase price shall be payable by wire transfer of
immediately available funds to an account specified by the holder(s) by written
notice given to Buyer at least two business days before the closing.
58
18.3 Call Option. The Buyer (or its assignee) may, at its option, by
written notice given to the Seller on a given date, and at any time beginning
with the 61st day and ending with the 90th day following the second anniversary
of the Closing Date (the "Call Period"), elect to purchase from the Seller or
holder up to 50% of the Consideration Stock held by the Seller or holder, free
and clear of any and all Encumbrances, including any restrictions set forth in
Section 9.9, at a price per share equal to the quotient of $866,250 divided by
the number of shares then equal to 50% of the Consideration Stock (as adjusted
for any stock splits, reverse stock splits, stock dividends and the like
subsequent to the Closing Date). The Seller shall be prohibited from conveying
its allocation of the Consideration Stock after delivery of a notice by Buyer
pursuant to this Section.
18.4 Call Closing. The closing or any purchase under Section 18.3
shall be held at a place and date specified by the Buyer in a written notice
given to each of the holders not more than ten (10) days after the Buyer shall
have exercised the option pursuant hereto; the date of the closing shall not be
more than thirty (30) days after the Buyer shall have exercised the option
pursuant to Section 18.3. At the closing, (i) the record holder who is the
subject of the "call" shall deliver to the Buyer a certificate or certificates
for all the Shares of Consideration Stock being transferred, duly endorsed in
blank and with all required stock transfer stamps attached, and (ii) the Buyer
shall pay the Seller the purchase price for such shares of Consideration Stock
in accordance with the amount set forth herein. The purchase price shall be
payable by wire transfer of immediately available funds to the account
specified by the Seller by written notice given to the Buyer at least two
business days before the closing.
59
18.5 Call and Put Options Not Exercised. In the event and to the
extent that Seller does not exercise the Put Option (as defined above) and the
Buyer does not exercise the Call Option, the remaining Consideration Stock
shall be free and clear of any restrictions created on such stock by this
Agreement, excluding any restrictions that are required under the Securities
Laws.
18.6 Buyer's Default on Put Obligations. In the event that the Buyer
defaults on its obligations pursuant to Section 18.1, the Seller may, at his
discretion, require the Buyer to issue to the holders of the Stock
Consideration, pro rata to their holdings, additional shares of the Buyer's
Class A Common Stock to the extent that the net proceeds from the sale thereof,
together with the net proceeds from the sale of the Consideration Stock, shall
equal $1,732,500 in the aggregate; provided, however, that the Buyer's
obligation to issue such additional stock shall be limited to an additional
225,000 shares. In the event that the Seller exercises such option but the net
proceeds from such sales do not equal or exceed $1,732,500, the Buyer shall
remain liable for the balance.
ARTICLE 19
OTHER PROVISIONS
----------------
19.1 Specific Performance. In the event of a material breach by any
party of its respective obligations hereunder (other than the failure of the
Buyer to tender the consideration due at Closing) any other party shall have
the right to bring an action to enforce the terms of this Agreement by decree
of specific performance, provided, however, that Seller shall first have ten
(10) days to cure any failure to deliver the Shares after written notice to
such effect from the Buyer, it
60
being agreed that the property to be transferred hereunder is unique and not
readily available in the open market, and each party thereby 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.
19.2 Further Assurances. After the Closing, each party shall from time
to time, at the request of and without further cost or expense to the other
parties, execute and deliver such other instruments of conveyance and transfer
and take such other actions as may reasonably be requested by any party in
order to more effectively consummate the transactions contemplated hereby to
vest in such party its rights, including as to the Buyer good and marketable
title as to the assets being transferred hereunder. 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 any
obligations being assumed by the Buyer hereunder.
19.3 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the 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, except for any assignment by the Buyer to an affiliate of the
Buyer in which case the Buyer shall remain fully obligated under this Agreement
as an assignor.
19.4 Entire Agreement. This Agreement, the Disclosure Schedule and the
Exhibits
61
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements, representations,
warranties, and understandings relating to the matters provided for herein,
including that certain letter of intent between the Buyer and the Seller dated
as of May 16, 1997. 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.
19.5 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.
19.6 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
any otherwise applicable principles of conflicts of law or choice of law.
19.7 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 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, 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
62
notifying the Seller:
To the Companies: ProServ, Inc.
0000 Xxxxxx Xxxxxxxxx,
00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Fax No. (000) 000-0000
ProServ Television, Inc.
0000 Xxxxxx Xxxxxxxxx,
00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Fax No. (000) 000-0000
With a Copy (not constituting notice) to:
To the Seller: Xxxxxx X. Dell
00000 Xxxxxx Xxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
With a Copy (not constituting notice) to: Xxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax No. (000) 000-0000
To the Buyer: The Marquee Group, Inc.
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Fax No. (000) 000-0000
63
With a Copy (not constituting notice) to: Xxxxxx X. Xxxxx
The Sillerman Companies
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
19.8 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. It shall not be necessary
when making proof of this Agreement to account for more than one such
counterpart.
19.9 Alternate Dispute Resolution.
(a) In the event of any dispute, controversy or claim between the
Buyer, the Seller, and/or the Companies arising out of or relating to this
Agreement, the Seller and representatives of the Buyer shall meet at a place
mutually agreed upon by such parties as soon as reasonably possible (but not
later than ten (10) days after notice from any party hereto to the other that
the party giving notice has such a dispute) and shall enter into good faith
negotiations aimed at resolving the dispute. If they are unable to resolve the
dispute in a mutually satisfactory manner within ten (10) days from the date of
such meeting, they shall proceed as set forth below.
(b) First, the parties shall endeavor to: (i) choose a mutually
acceptable alternative dispute resolution ("ADR") mechanism, including without
limitation choosing one or more third party arbitrators; and (ii) set forth the
general framework for the ADR process. If the parties are unable to agree to a
mutually acceptable ADR mechanism within ten (10) days from the date of the
initial proposal from any party with respect thereto, the parties shall enter
into binding arbitration as set forth below.
(c) All disputes among the parties arising out of or relating to
this Agreement that are not resolved by good faith negotiations between the
parties or by an ADR mechanism as set forth above shall be resolved solely by
binding arbitration pursuant to the United States Arbitration Act, 9 U.S.C.
Section 1 et seq. All disputes as to whether any dispute is subject
64
to arbitration shall also be settled by binding arbitration. Either party may
commence arbitration proceedings at any time following the fifth (5th) day
after delivery of notice from one party to the other of the inability of the
parties to agree upon a mutually acceptable ADR mechanism as set forth above.
(d) Any arbitration shall be conducted in the Washington, D.C.
metropolitan area (or such other area mutually agreeable to all parties) before
a single arbitrator mutually selected by the parties thereto or, in the event
the parties shall fail to agree, by a three-person panel acting pursuant to the
Commercial Arbitration Rules and, if applicable at such time, the Streamlined
Arbitration Rules and Procedures, then in effect of the American Arbitration
Association. Any three person arbitration panel shall consist of one arbitrator
selected by each disputing party and one arbitrator selected by the first two
arbitrators. The presentation of evidence shall be governed by the Federal
Rules of Evidence. Discovery shall be controlled by the arbitrator/panel.
(e) Any arbitration award made shall:
(i) set forth the arbitrator/ panel's findings of fact and
conclusions of law and afford any such remedy as is within the scope of the
Agreement;
(ii) be made on an expedited basis to the extent feasible;
(iii) be final and binding upon the parties and may be
entered for enforcement in any court of competent jurisdiction.; and
(iv) include as part of the arbitrator's/panel's
determination the responsibility among the parties for payment of the
arbitrator's/panel's fees and expenses, and the prevailing party on any issue
in any arbitration shall be entitled to recover from the other party all fees
and expenses (including without limitation reasonable attorneys' and other
professionals' fees and disbursements) incurred in pursuing such issue if the
arbitrator/panel, in its discretion, determines that such an award is
warranted.
(f) Each party will participate in any such arbitration in good
faith and will (and will cause its representatives, employees and affiliates
to, and will request each participant in any ADR mechanism and each arbitrator
to) hold the existence, content and result of any dispute in confidence except
to the extent that disclosure of any such information is required by law.
65
(g) This Section 19.9 shall be a complete defense to any suit,
action or proceeding instituted before any court or agency with respect to any
matter resolvable hereunder, provided, however, that, notwithstanding this
provision, any party may seek interim judicial relief in aid of ADR or
arbitration, to prevent a violation of this Agreement pending ADR or
arbitration or to enforce any ADR or arbitration award.
19.10 Severability. Should any provision of this Agreement be
unenforceable or prohibited by any applicable law, this Agreement shall be
considered divisible as to such provision which shall be inoperative, and the
remainder of this Agreement shall be valid and binding as though such provision
were not included herein.
19.11 Interpretation. No provision of this Agreement shall be
interpreted or construed against any party because that party or its legal
representative drafted such provision. The titles of the paragraphs of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement. For all purposes of this Agreement, unless the
context otherwise requires or as otherwise expressly provided, (a) all defined
terms shall include both the singular and the plural forms thereof; (b)
reference to any gender shall include all other genders; (c) all references to
words such as "herein", "hereof", and the like shall refer to this Agreement as
a whole and not to any particular Article or Section within this Agreement; (d)
the term "include" means "include without limitation"; and (e) the term "or" is
intended to include the term "and/or".
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
Companies:
----------
PROSERV, INC.
By: /s/Xxxxxx X. Dell
--------------------------------
Name: Xxxxxx X. Dell
Title: Chairman & CEO
PROSERV TELEVISION, INC.
By: /s/ Xxxxxx X. Dell
--------------------------------
Name: Xxxxxx X. Dell
Title: Chairman & CEO
SELLER:
-------
/s/Xxxxxx X. Dell
-----------------------------------
Xxxxxx X. Dell
BUYER:
------
THE MARQUEE GROUP, INC.
By: /s/ Xxxxxx F.X. Sillerman
--------------------------------
Name: Xxxxxx F.X. Sillerman
Title: Chairman
