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MEMBERSHIP INTEREST PURCHASE AGREEMENT
BETWEEN
NEDERLANDER ARENA MANAGEMENT, LLC
NEDERLANDER CINCINNATI, LLC,
NEDERLANDER CLUB MANAGEMENT LLC
AND THE PARTIES LISTED ON SCHEDULE A
AND
SFX ENTERTAINMENT, INC.
AND CONCERT ACQUISITION SUB, INC.
Dated February 1, 1999
MEMBERSHIP INTEREST PURCHASE AGREEMENT dated February 1, 1999
("Agreement") among Nederlander Arena Management, LLC, an Ohio limited
liability company ("Arena"), Nederlander Cincinnati, LLC, a Michigan limited
liability company ("Xxx Cincinnati"), Nederlander Club Management, LLC, an Ohio
limited liability company ("Xxx Club"), the holders of the membership interests
in Arena, Xxx Cincinnati and Xxx Club as listed on Schedule A hereto (the
"Members"), and SFX Entertainment, Inc., a Delaware corporation ("SFX"), and
Concert Acquisition Sub, Inc., a Delaware corporation, a wholly-owned
subsidiary of SFX ("Acquisition Sub").
RECITALS
WHEREAS, the Members desire to sell and SFX desires to
purchase all of the membership interests in Arena, Xxx Cincinnati and Xxx Club
(which are sometimes referred to herein individually as a "Company" and
collectively as the "Companies"). The sale and purchase of the membership
interests in the Companies is sometimes referred to herein as the
"Transaction."
WHEREAS, the principal amount outstanding of certain loans
made by the Michigan National Bank to Arena as of the date hereof is $3,800,000
(the "Arena Bank Debt").
WHEREAS, (i) Arena holds a one third membership interest in
CEA Holdings LLC, an Ohio limited liability company ("CEA"), (ii) CEA holds 99%
of the membership interests in Cincinnati Entertainment Associates, L.P., an
Ohio limited liability company ("Associates"), which is the owner of the Crown
Arena located in Cincinnati, Ohio, and (iii) Arena and Associates are parties
to a management agreement (the "Arena Management Agreement") pursuant to which
Arena is responsible for the day-to-day management and operation of the Crown
Arena (all of the foregoing interests are sometime referred to herein
collectively as the "Crown Interests").
WHEREAS, Xxx Cincinnati has certain interests in the Xxxx
Theatre and Xxx Club has certain interests in Bogart's, each located in
Cincinnati, Ohio. The Crown Arena, the Xxxx Theatre and Bogart's, collectively,
are sometimes referred to herein as the "Venues."
WHEREAS, simultaneously with the consummation of the
Transaction under this Agreement, (i) SFX, Acquisition Sub and Greater Detroit
Theatres, Inc. ("GDT"), which owns certain interests in The World Music
Theatre, located in Tinley Park, Illinois, Alpine Valley Music Theatre, located
in East Xxxx, Wisconsin, and Xxxxxxxxxxxx Post Pavilion, located in Columbia,
Maryland, shall effect a transaction under a stock purchase agreement of even
date herewith (the "Stock Purchase Agreement") pursuant to which Acquisition
Sub shall acquire 100% of the capital stock of GDT; (ii) SFX, Acquisition Sub
and Nederlander of Ohio, Inc. shall effect a transaction under an asset
purchase agreement of even date herewith (the "Asset Purchase Agreement")
pursuant to which Acquisition Sub shall acquire certain interests in Riverbend
Music Center located in Cincinnati, Ohio; and (iii) SFX, Acquisition Sub and
Nederlander of New Mexico LLC ("Xxx NM"), which owns certain interests in the
Mesa del Sol Theater located in Albuquerque, New Mexico, and Nederlander
Festivals, Inc. ("Xxx Festivals"), which promotes, operates and conducts
concert performances and multi-artist festivals in various markets in North
America through a joint venture between Xxx Festivals and The Event Group,
shall effect a transaction under a purchase agreement of even date herewith
(the "Albuquerque/Festivals Agreement") pursuant to which Acquisition Sub
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shall acquire 100% of the membership interests in Xxx NM and 100% of the
capital stock of Xxx Festivals. (This Agreement, the Stock Purchase Agreement,
the Asset Purchase Agreement and the Albuquerque/Festivals Agreement are
sometimes referred to herein as the "Agreements.")
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. DEFINITIONS
Certain terms used herein are defined in Exhibit 1 attached
hereto and, whenever used herein (including the exhibits and schedules hereto),
shall have the meanings set forth therein for all purposes of this Agreement.
All terms used herein shall be applicable to both the singular and plural forms
of such terms; and, unless otherwise indicated, all section references herein
are to sections of this Agreement.
2. PURCHASE AND SALE OF MEMBERSHIP INTERESTS
Subject to the terms and conditions contained in this
Agreement, including, without limitation, the provisions of Section 3(g)
hereof, and in reliance upon the representations, warranties, covenants and
agreements of the parties, on the Closing Date, the Members shall sell, assign
and deliver to SFX, and SFX shall purchase from the Members, all of the
membership interests in the Companies (the "Membership Interests"), free and
clear of all Encumbrances, at the price and on the terms set forth in this
Agreement.
3. CLOSING
(a) Time and Place of Closing. The Closing shall take place
at the offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000 at 10:00 a.m., New York time on a date selected by the parties not
later than the third business day following the satisfaction or waiver of all
conditions in Sections 5 and 6, subject to Section 16, or at such other time,
date and place as the parties may otherwise agree (the "Closing Date").
(b) Down Payment. Upon the execution of this Agreement, SFX
shall deposit with the Members the sum of Two Million Four Hundred Seventy-Five
Thousand Dollars ($2,475,000) as a down payment (the "Down Payment") toward the
Purchase Price (as defined below). The Members shall invest the Down Payment in
interest-bearing bank deposits or money market funds. The amount of the Down
Payment may be increased pursuant to Section 12(q).
(c) Purchase Price. Subject to Section 3(d) and 3(f), the
aggregate consideration to be paid by SFX to the Members in connection with the
Transaction shall be Twenty-Four Million One Hundred Sixty-Two Thousand Eight
Hundred Two Dollars ($24,162,802) (the "Purchase Price"), consisting of:
(i) The Down Payment, including any increase thereof
pursuant to Section 12(q), which shall be credited against the
Purchase Price;
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(ii) Twenty-One Million Six Hundred Eighty-Seven
Thousand Eight Hundred Two Dollars ($21,687,802), payable in
immediately available federal funds by wire transfer at the Closing no
later than 3:00 p.m. New York time on the Closing Date to an account
or accounts designated by the Members in writing at least two business
days prior to the Closing, it being understood and agreed that this
amount shall be decreased by $1,650,000 if the Down Payment is
increased by $1,650,000 pursuant to Section 12(q).
(iii) Subject to the prorations and adjustments
expressly provided for herein, including, without limitation, the
payment of the Adjustment Closing Cash Payment, if any, which shall be
deemed allocable to the Membership Interests in Arena, the parties
hereby agree that the Purchase Price shall be deemed allocated among
the Membership Interests to be conveyed hereunder in the amounts set
forth on Schedule 3(c)(iii) hereto.
(d) Adjusted Closing Cash Payment. The Purchase Price shall
be (i) decreased (A) if the Closing occurs on or prior to June 30, 1999, by an
amount equal to 1% of that portion of the Purchase Price (as adjusted)
allocable to the Membership Interests in Arena (the "Cincinnati Adjustment"),
and (B) by the amount of interest actually earned on the Down Payment from the
date the Down Payment is deposited with the Members, including pursuant to
Section 12(q) hereof, until the Closing Date and (ii) increased by the amount
of any funds provided by the Members, Arena or their respective Affiliates to
CEA prior to the Closing Date in respect of operating losses incurred prior to
the Closing Date (the"Adjusted Closing Cash Payment").
(e) Closing Transactions. On the Closing Date:
(i) The Members shall deliver or cause to be
delivered to SFX:
(A) a duly executed instrument of
assignment for the Membership Interests;
(B) the minute book and membership interest
records of each of the Companies;
(C) the certificates, agreements and other
instruments referred to in Section 5;
(D) the written resignation of the officers
of each of the Companies effective as of the Closing Date,
substantially as directed by SFX at least five (5) days prior
to the Closing Date, in their capacities as such;
(E) a written opinion or opinions of
counsel, dated the Closing Date, substantially in the form
annexed hereto as Exhibit 3(e)(i)(E);
(F) Intentionally Omitted;
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(G) Estoppel certificates from the
landlords and other parties, if any, listed on Schedule
3(e)(i)(G) and in the form required by the respective Leases
(as hereinafter defined) with such landlords or other
agreements entered into with such other parties, if any.
Notwithstanding the foregoing, the Members shall request each
of the landlords under the Leases listed on such schedule to
deliver an estoppel certificate in recordable form reasonably
satisfactory to SFX, provided, however, the failure of any
such landlord to deliver such an estoppel certificate in
recordable form shall not give rise to any liability on the
part of the Members and the failure to obtain the same shall
not constitute a condition to the performance by SFX of its
obligations under this Agreement;
(H) evidence of satisfaction of the Arena
Bank Debt and certain indebtedness owing by any of the
Companies to the National Bank of Detroit in the form of
either the respective promissory notes marked "canceled" or a
letter of satisfaction, together with written releases and
Form UCC-3 Termination Statements, as applicable, with
respect to liens securing such debts, if any, from the
obligee(s) with respect to such debts;
(I) A non-imputation affidavit in the form
annexed hereto as Exhibit 3(e)(i)(I) (the "Non-Imputation
Affidavit") with respect to any Real Property which is
covered by a Lease which has been recorded or as to which a
memorandum of lease, an estoppel certificate or a notice of
lease has been, or then can be, recorded and with respect to
which SFX or the Acquisition Sub will obtain leasehold title
insurance as of the Closing Date, provided however, it is
expressly understood and agreed that (a) SFX shall indemnify
the Members with respect to pursuant to such Non-Imputation
Affidavit to the extent provided in Section 14 of this
Agreement and (b) the ability of SFX or Acquisition Sub to
obtain leasehold title insurance with respect to the
leasehold estate created by any of the Leases shall not
constitute a condition to the performance by SFX of its
obligations under this Agreement; and
(J) If Xxx Club and Xxx Cincinnati have not
obtained liquor licenses with respect to Bogart's and/or the
Xxxx Theatre, respectively, prior to the Closing Date, an
agreement, consistent with the Members' existing
arrangements, from the applicable landlord of Bogart's and/or
the concession holder at the Xxxx Theatre permitting SFX or
its Subsidiary to continue to sell liquor under the existing
liquor license for such venue.
(K) If the Closing occurs prior to June 30,
1999, an amendment to the Limited Liability Company Agreement
of Arena providing that the only interest attributable to the
1% interest to be retained by the Members pursuant to Section
3(g) shall be 100% of the loss for the fiscal year ending
June 30, 1999, which shall be allocated to the Members other
than SFX and its Subsidiaries and Affiliates.
(ii) SFX shall deliver or cause to be delivered:
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(A) the Purchase Price to the Members as
decreased by the Adjusted Closing Cash Payment as required
under Section 3(d) above and as adjusted pursuant to Section
3(f);
(B) the certificates, agreements and other
instruments to be delivered to the Members as referred to in
Section 6;
(C) Intentionally Omitted;
(D) a written opinion of counsel, dated the
Closing Date, substantially in the form annexed hereto as
Exhibit 3(e)(ii)(D); and
(E) an amendment to the Limited Liability
Company Agreement of Arena to be adopted by Acquisition Sub
contemporaneously with or immediately subsequent to the
Closing, as the sole member of Arena, in form reasonably
satisfactory to the Members, providing that (i) Arena shall
be required to give written notice to the Members, as
required by Section 17(h) of this Agreement, of any
transaction described in Section 4(a) of this Agreement both
(A) not less than 30 days prior to the expected effectuation
date thereof, and (B) not more than 5 business days
subsequent to the effectuation thereof, and (ii) such
provision of the Limited Liability Company Agreement of Arena
shall not be amended, modified, rescinded or deleted, in
whole or in part, without the prior written consent of the
Members, which may be withheld in their sole and absolute
discretion.
(f) Apportionments. SFX and the Members shall apportion the
following items of revenue and expense as of midnight of the date immediately
preceding the Closing Date in accordance with the following terms and
conditions.
(i) (A) The Members shall receive a credit in an
amount equal to any deposits made on behalf of any of the Companies
together with any accrued interest thereon, all prepaid expenses and
subscriptions, if any, to the extent the same are attributable to
periods preceding the Closing Date, and all cash on deposit in
accounts of any of the Companies as of the date immediately preceding
the Closing Date less an amount equal to: (1) any outstanding checks
as of such date, and (2) any cash on deposit as of such date relating
to advance ticket sales, advance group sales and unearned sponsorship
fees except as set forth below.
(B) all accounts receivable, including
those set forth below, shall be apportioned in the following
manner (except that there shall no apportionment with respect
to accounts receivable owing from the Sellers, their
immediate family members and any Subsidiaries or Affiliates
of any thereof, which shall be released at Closing pursuant
to Section 17(e))
(1) To the extent not paid prior to
the Closing, the Members shall be entitled to an
amount equal to any sponsorship fees due on account
of shows or events occurring prior to the Closing
Date; SFX shall
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remit such amount to the Members within five
(5) days following receipt thereof.
(2) The Members shall be entitled
to a credit equal to any general accounts receivable
and any notes receivable due on account of shows or
events occurring prior to the Closing Date or any
promissory notes receivable in existence prior to
the Closing Date.
(3) There shall be no adjustment
for payments made prior to January 1, 1999 under
that certain Sponsorship Agreement dated April 1,
1998 among The Coca-Cola Company, Xxxxxxxx Coca-Cola
Bottling Group, Inc., Trafalgar Productions, Inc.
and Nederlander Cincinnati (the "Coke Sponsorship
Agreement").
(4) There shall be no adjustment
for payments made prior to January 1, 1999 under
that certain Licensed User Agreement dated March 9,
1998 by and between Ticketmaster-Indiana, d/b/a
Ticketmaster-Ohio, and Xxx Cincinnati (the
"Ticketmaster Agreement").
(C) deferred income with respect to any of
the Companies (excluding the amounts to be apportioned in
respect of items set forth in Subsection (f)(i)(B)) shall be
apportioned between SFX and the Members based upon the period
to which such deferred income relates such that SFX shall
receive a credit for all such deferred income allocable to
periods from and after the Closing Date and the Members shall
receive a credit for all such deferred income through the
date immediately preceding the Closing Date; and
(D) if the Closing Date is other than the
first day of a calendar month, all fixed rent payable under
Leases shall be apportioned for the month in which the
Closing Date occurs provided that SFX shall receive a credit
for any unpaid amounts for any other periods prior to the
Closing Date.
(ii) To the extent that the following items are not
subject to adjustment pursuant to the provisions of Section (f)(i)
hereof, SFX and the Members shall also apportion all accounts payable,
including the following items (except that there shall no
apportionment with respect to accounts payable due to the Members,
their immediate family members and any Subsidiaries or Affiliates of
any thereof which shall be released at Closing pursuant to Section
17(e)), as of midnight on the date immediately preceding the Closing
Date:
(A) all wages and salaries of employees for
current periods, including accruals up to the Closing Date,
for bonuses, commissions, vacations and sick pay and related
payroll taxes;
(B) utility expenses, including without
limitation, telephone, electricity and gas, on the basis of
the most recently issued bills therefor, with a
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subsequent reapportionment of such utilities promptly after
issuance of bills for the same for the period which includes
the Closing Date; and
(C) payments in lieu of taxes and
additional rents payable under Leases and any prepaid charges
or advance payments under service contracts.
(iii) The apportionments contemplated by this
Section 3(f), to the extent practicable, shall be made on the Closing
Date. Such apportionments relate solely to items of revenue and
expense of the Companies. Apportionments with respect to the Arena
Management Agreement shall be made on a monthly basis. At least five
(5) business days prior to the estimated Closing Date, the Members
shall furnish to SFX a proposed apportionment schedule with respect to
the items set forth in Subsections (f)(i) and (ii). Thereafter, the
Members and SFX shall negotiate in good faith in order to resolve any
disputed amounts contained therein. In the event that the Members and
SFX are unable to resolve any such disputed items (the "Disputed
Apportionments"), such dispute shall be resolved as provided in
Subsection (f) (iv). On the Closing Date, to the extent that the
aggregate apportionments which are not the subject of dispute shall
result (x) in an amount due to the Members, SFX shall increase the
amount of the Purchase Price in an amount equal to the amount due, or
(y) in an amount due to SFX, SFX shall be entitled to reduce the
amount of the Purchase Price to the extent of such amount due SFX.
(iv) Within thirty (30) days following the Closing
Date, the Members shall deliver to SFX a schedule of all final
apportionments which were not made on the Closing Date together with a
schedule of all Disputed Apportionments including the Member's
position with respect thereto (the "Final Schedule"). Within ten (10)
business days following receipt of such Final Schedule, SFX shall
either give the Members written notice of acceptance of such Final
Schedule or written notice of any remaining disputed amounts (a
"Notice of Dispute"). If SFX fails to either accept such Final
Schedule or deliver a Notice of Dispute within said ten business day
period, SFX shall be deemed to have accepted the Final Schedule. The
Notice of Dispute shall state the amount that SFX believes it is
entitled to receive or obligated to pay in respect of the final
apportionments and any Disputed Apportionments (the "SFX Amount") and
the Members shall have a period of ten (10) business days following
receipt of the Notice of Dispute either to accept the SFX Amount or to
reject the SFX Amount. If the Members reject the SFX Amount and the
amount in dispute is $25,000 or less in the aggregate, then the
disputed amount shall be shared equally between SFX and the Members.
If the Members reject the SFX Amount and the SFX Amount exceeds
$25,000, and the Members and SFX are unable to resolve any remaining
differences within ten (10) business days following the rejection of
the SFX Amount by the Members, then such dispute shall be submitted to
an independent arbitrator (the "Apportionment Arbitrator") designated
by the American Arbitration Association under the expedited procedures
then in effect for the resolution of commercial disputes. The
Apportionment Arbitrator shall be a certified public accountant
designated by the American Arbitration Association. SFX and the
Members shall share equally the costs and expenses of the
Apportionment Arbitrator, but each party shall bear its own legal and
other expenses, if any. Upon final resolution of the amount due in
respect of the Final Schedule including any Disputed Apportionments,
the amounts due to either SFX or the Members shall be paid
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promptly in cash. Judgment may be entered on the Apportionment
Arbitrator's award in any court having jurisdiction, and the parties
irrevocably consent to the jurisdiction of the New York courts for
that purpose.
(g) Arena Option.
(i) Notwithstanding the provisions of Section 2 hereof, if
the Closing occurs on or prior to June 30, 1999, SFX shall purchase from the
Members on the Closing Date 99% (rather than 100%) of the Membership Interests
in Arena, subject to the prorations and adjustments expressly provided for
herein.
(ii) In such event, SFX shall grant to the Members an
irrevocable option (the "Put Option") to sell to SFX their remaining 1%
Membership Interest in Arena (the "Option Interest") and the Members shall
grant to SFX a corresponding irrevocable option (the "Call Option") to purchase
from the Members the Option Interest. The purchase price for the Option
Interest purchased pursuant to the Call Option shall be equal to the Cincinnati
Adjustment. The purchase price for the Option Interest purchased pursuant to
the Put Option shall be equal to 120% of the Cincinnati Adjustment.
(iii) Provided the Closing Date is on or prior to June 30,
1999, the Call Option shall commence on July 1, 1999, and shall expire on
September 30, 1999. If the Call Option has not been exercised, the Put Option
shall commence on October 1, 1999, and shall expire on November 30, 1999.
Exercise of the Call Option by SFX and the Put Option by the Members shall be
by written notice (which shall be irrevocable) to the other party.
(iv) Within ten (10) business days of the exercise of either
the Call Option or the Put Option, unless otherwise agreed by the Members and
SFX, the Members shall deliver to SFX, at a mutually agreeable time and
location, the Option Interest, free and clear of all Encumbrances.
Simultaneously with the delivery of the Option Interest, SFX shall make payment
to the Members of the appropriate purchase price in immediately available
funds.
4. POST-CLOSING ADJUSTMENTS
(a) Crown Arena. In the event that, subsequent to the Closing
Date and on or before the tenth anniversary of the Closing Date, a transaction
or a series of related transactions is effected involving the sale, transfer,
assignment, mortgage or hypothecation of all or substantially all of the Crown
Interests, whether through the outright sale of the Crown Arena, the sale of
all or a controlling interest in CEA or Associates, the refinancing or
restructuring of all or substantially all of the mortgage indebtedness
encumbering the Crown Arena, or such other transaction through which the owners
of the Crown Interests receive direct or indirect consideration or other
benefits of any kind or nature with respect to their beneficial ownership of
the Crown Arena, then (i) SFX shall promptly give notice of such transaction to
the Members, and (ii) the Members shall be entitled to receive from SFX an
immediate cash payment equal to (x) one third (if the transaction is effected
on or before the fifth anniversary of the Closing Date) or one quarter (if the
transaction is effected after the fifth anniversary of the Closing Date but on
or before the tenth anniversary of the Closing Date) of the consideration paid
and/or the benefits provided to SFX or any of its Subsidiaries or Affiliates in
connection with such a transaction with respect to the Crown Interests (y)
minus an
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amount equal to the sum of (i) all directly related out-of-pocket third party
costs and expenses incurred by SFX in connection with such transaction, (ii)
SFX's direct or indirect allocable share of the amount of the debt encumbering
the Crown Arena immediately prior to the Closing Date (but in no event to
exceed SFX's direct or indirect allocable share of such debt as of the Closing
Date), and (iii) the aggregate of any capital expenditures by SFX with respect
to the Crown Arena prior thereto. In calculating the amount of the
consideration paid and/or the benefits provided to SFX or any of its
Subsidiaries or Affiliates in connection with such a transaction, all items of
value paid or provided by the transferee(s) to the transferors in any form
including, without limitation, below market rental terms, below market
financing terms or the reduction or elimination of debt service, shall be
included.
(b) Crown Earnout. On or before September 30, 2000, SFX shall
pay to the Members an amount equal to (x) eight times SFX's allocable share of
the Crown Earnings minus (y) an amount equal to the sum of (i) SFX's allocable
share of any indebtedness hereafter incurred by CEA or any of its subsidiaries
in excess of $38,800,000 plus any accrued and unpaid interest thereon (which
amount the Members represent is the approximate aggregate indebtedness as of
the date hereof of CEA and its Subsidiaries plus the approximate amount
available to be drawn down on the existing credit facility of CEA and its
Subsidiaries) for the purpose of paying operating losses attributable to the
period subsequent to the Closing Date and prior to June 30, 1999, (ii) an
amount equal to the increase in the Purchase Price paid by SFX pursuant to
Section 3(d)(ii) hereof, and (iii) any funds provided by SFX to CEA or its
subsidiaries prior to the June 30, 1999 in respect of operating losses incurred
subsequent to the Closing Date and prior to June 30, 1999 (the "Earnout");
provided, however, in no event shall the Earnout exceed an amount equal to
$3,200,000 and, if the Crown Earnings shall be $500,000 or less, no Earnout
shall be payable by SFX. For the purposes of the foregoing, the term "Crown
Earnings" shall mean the revenues of CEA on a consolidated basis as reduced by
the operating expenses of CEA on a consolidated basis, in each case for the
period from July 1, 1999 through June 30, 2000 without taking into
consideration taxes, depreciation or amortization. From and after the Closing
Date until June 30, 2000, SFX and its Subsidiaries and Affiliates shall not
engage in any transaction with any other Subsidiary or Affiliate of SFX in the
operation of the Crown Arena on terms less favorable than would be applicable
if such transaction was effected on an arms length basis with a third party.
SFX shall prepare and submit to the Members SFX's proposed computation of the
Earnout on or before September 1, 2000 and the Members shall have the right to
review and audit the books and records of SFX and, to the extent SFX is
entitled to, CEA in order to confirm such calculation of the Earnout. SFX
hereby agrees that it will not sell, transfer or convey the Membership
Interests in Arena without (a) giving the Members thirty (30) days prior
written notice of such sale, transfer or conveyance, and (b) obtaining the
express written agreement of the purchaser or transferee of such Membership
Interests to assume and be bound by the covenants and agreements of SFX
pursuant this Section 4(b) and in no event shall any such sale, transfer or
conveyance of such Membership Interests by SFX release or relieve SFX from any
liability in respect of the obligations and agreements of SFX pursuant to this
Section 4(b). It is expressly understood and agreed that (except in connection
with the calculation of the Earnout as expressly provided above) the Members
shall have no obligation or liability in respect operating losses incurred in
connection with CEA.
(c) Arbitration.
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(i) Any dispute or controversy arising in connection with the
calculation of the amount due to the Members as a result of (A) a transaction
involving the Crown Interests as described in Section 4(a), or (B) the
calculation of the Earn-Out as described in Section 4(b), shall be settled
exclusively by arbitration to be held in the City of New York in accordance
with the rules of the American Arbitration Association. There shall be one
arbitrator designated by the American Arbitration Association under the
expedited procedures then in effect for the resolution of commercial disputes.
SFX and the Members shall share equally the costs and expenses of such
arbitrator, but each party shall bear its own legal and other expenses, if any.
The arbitrator shall render his or her award within thirty (30) days after the
commencement of the arbitration; provided, however, that no failure on the part
of the arbitrator to render such award within such thirty (30) day period shall
constitute a release from liability or otherwise affect the liability of any
party hereto. With respect to a dispute concerning a transaction described in
Section 4(a), such award, among other things, shall be based on the value of
the consideration of all types in such transaction including those set forth in
Section 4(a). Failure by either party to submit to arbitration under this
Section 4 shall result in the arbitrator ruling in favor of the other party if
such other party has submitted to arbitration under this Section 4. Judgment
may be entered on the arbitrator's award in any court having jurisdiction, and
the parties irrevocably consent to the jurisdiction of the New York courts for
that purpose.
(ii) In connection with any arbitration under Section 4(c)(i)
hereof, each party shall submit to the arbitrator its estimate of the amount
due to the Members under Section 4(a) or Section 4(b), as the case may be,
within ten (10) days after the appointment of the arbitrator. The arbitrator
shall be charged solely with determining, within ten (10) days after expiration
of the period during which the parties are to submit their respective
estimates, which estimate is closest to the amount that is due and shall award
the amount of that estimate to the Members; except that, if the larger of the
two estimates is equal to or less than 120% of the smaller of the two
estimates, the amount to be awarded by the arbitrator shall be the average of
the two estimates. No failure on the part of the arbitrator to make such
determination within such ten (10) days shall constitute a release from
liability or otherwise affect the liability of SFX under Section 4(a) or
Section 4(b) hereof.
(d) Xxxx Clawback. With respect to that certain provision set
forth in Section 11 of the Lease of the Xxxx Theatre currently in effect giving
the Landlord the right on a minimum of one year's prior written notice to the
tenant to terminate such Lease (a "Lease Termination Notice"), and upon the
termination of such Lease pursuant to such provision, the Members shall refund
to SFX: (i) $7,523,183 of the Purchase Price if the term of such Lease shall
expire pursuant to Section 11 thereof at any time on or before the day
immediately preceding the first anniversary of the Closing Date; (ii)
$5,642,387.25 of the Purchase Price if the term of such Lease shall expire
pursuant to Section 11 thereof at any time from the first anniversary of the
Closing Date and the day immediately preceding the second anniversary of the
Closing Date; (iii) $3,761,591.50 of the Purchase Price if the term of such
Lease shall expire pursuant to Section 11 thereof at any time from the second
anniversary of the Closing Date and the day immediately preceding the third
anniversary of the Closing Date; and (iv) $1,880,795.75 of the Purchase Price
if the term of such Lease shall expire pursuant to Section 11 thereof at any
time from the third anniversary of the Closing Date and the day immediately
preceding the fourth anniversary of the Closing Date; provided, however, that
(A) the amounts to be refunded to SFX pursuant hereto shall be net of any
penalties or other consideration paid by the Landlord to the tenant under the
Lease as a result of the termination of the
10
Lease and (B) SFX shall not consent to or modify Section 11 of the Lease of
the Xxxx Theater and SFX shall take no action to cause the Landlord of the Xxxx
Theater to provide a notice of termination under Section 11 of Lease of the
Xxxx Theater. No portion of the Purchase Price shall be refunded to SFX if such
termination becomes effective after the fourth anniversary of the Closing Date.
Notwithstanding the foregoing, in the event that a Lease Termination Notice
shall be received by the tenant under the Lease for the Xxxx Theater on or
before the Closing Date (a "Pre-Closing Termination Notice"), then the
following provisions shall apply: (i) on the Closing Date, SFX shall deposit
the sum of $7,523,183 (the "Xxxx Purchase Price") with counsel to the Members
or such other escrow agent as shall be mutually satisfactory to the parties
(the "Escrow Agent") pursuant to an escrow agreement in form mutually
satisfactory to the parties (the "Xxxx Escrow Agreement"), (ii) the Xxxx
Purchase Price and any interest earned thereon shall be held in escrow and
shall be released to (x) the Members in the event that the Lease for the Xxxx
Theater is not terminated pursuant to Section 11 thereof in accordance with
such Pre-Closing Termination Notice or (y) SFX in the event that the Lease for
the Xxxx Theater is terminated pursuant to Section 11 thereof in accordance
with such Pre-Closing Termination Notice, (iii) if the Lease for the Xxxx
Theatre is terminated pursuant to Section 11 thereof in accordance with such
Pre-Closing Termination Notice, SFX shall, within sixty (60) days following the
date the term of such Lease shall expire, pay to the Members an amount equal to
50% of (x) any penalties or other consideration paid by the landlord of the
Xxxx Theatre to the tenant under the Lease as a result of the termination of
such Lease, and (y) all revenues and earnings received by SFX and its
applicable Subsidiary or Affiliate in respect of the operation of the Xxxx
Theatre on or prior to the date of such expiration less all out-of-pocket third
party operating expenses incurred by SFX or such Subsidiary or Affiliate during
such period directly in connection therewith (the "Net Xxxx Earnings"), and
(iv) if the Lease for the Xxxx Theatre is not terminated in accordance with
such Pre-Closing Lease Termination Notice, the preceding provisions of this
Section shall govern the obligations of the Members to refund any portion of
the Xxxx Purchase Price to SFX upon a termination of the Lease for the Xxxx
Theater pursuant to Section 11 thereof. SFX shall prepare and submit to the
Members SFX's proposed computation of the Net Xxxx Earnings within thirty (30)
days following the expiration of the term of the Lease for the Xxxx Theater and
the Members shall have the right to review and audit the books and records of
SFX and its applicable Subsidiary or Affiliate in respect of the operation of
the Xxxx Theatre for the purpose of confirming the accuracy of such
computation. If a Pre-Closing Termination Notice is received, from and after
the Closing Date until such time as the Lease of the Xxxx Theatre is terminated
pursuant to Section 11 thereof in accordance with such Pre-Closing Termination
Notice, SFX and its Subsidiaries and Affiliates shall not engage in any
transaction with any other Subsidiary or Affiliate of SFX in the operation of
the Xxxx Theatre on terms less favorable than would be applicable if such
transaction was effected on an arms length basis with a third party.
5. CONDITIONS TO OBLIGATIONS OF SFX
The obligations of SFX to perform this Agreement are subject
to the satisfaction of the following conditions on or prior to the Closing
Date, unless waived in writing by SFX, and the Members shall use commercially
reasonable efforts to cause such conditions to be fulfilled:
(a) Representations and Warranties. The representations and
warranties of the Members in this Agreement or in any schedule or certificate
delivered in connection herewith shall
11
be true and accurate in all material respects on the Closing Date as though
made on and as of the Closing Date, except for such changes permitted or
contemplated by the terms of this Agreement and except insofar as any such
representations and warranties refer solely to a particular date or period, in
which case they shall be true and correct in all material respects on the
Closing Date with respect to such date and period, and SFX shall have received
a certificate signed by the Members to that effect.
(b) Performance of Agreements. (i) The Members and the
Companies shall have duly performed in all material respects, on or before the
Closing Date, all agreements and obligations required to be performed by them
under this Agreement, (ii) SFX shall have received a certificate signed by the
Members to that effect, (iii) the closing conditions contained in Section 5 of
each of the Stock Purchase Agreement, the Asset Purchase Agreement and the
Albuquerque/Festivals Agreement shall have been satisfied or waived, and (iv)
the Members and SFX shall have entered into a side letter incorporating the
terms of Schedule 5(b) hereof.
(c) Litigation; Consents. No action, suit or other proceeding
shall be pending or overtly threatened before or by any court, tribunal or
governmental authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or seeking to
obtain substantial damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree, rule or
regulation of any governmental authority having appropriate jurisdiction, which
violation would result in a Material Adverse Effect with respect to the
Companies taken as a whole. The Members shall have obtained the consents,
waivers and amendments, if any, identified on Schedule 7(c), from third parties
or governmental authorities in connection with the consummation of the
transactions contemplated hereby.
(d) Intentionally Omitted.
(e) Closing Deliveries. The Members shall have delivered to
SFX all closing deliveries as contemplated in Sections 3(e)(i) and (ii).
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods in respect of the Transaction contemplated by this Agreement under the
HSR Act shall have expired at or prior to the Closing.
6. CONDITIONS TO OBLIGATIONS OF THE MEMBERS
The obligations of the Members to perform this Agreement are
subject to the satisfaction of the following conditions on or prior to the
Closing Date, unless waived in writing by the Members, and SFX shall use
commercially reasonable to cause such conditions to be fulfilled:
(a) Representations and Warranties. The representations and
warranties of SFX in this Agreement or in any certificate or document delivered
in connection herewith shall be true and accurate in all material respects on
the Closing Date as though made on and as of the Closing Date, except for such
changes permitted or contemplated by the terms of this Agreement and except
insofar as any such representations and warranties refer solely to a particular
date or period, in which case they shall be true and correct in all material
respects on the Closing Date with respect to such
12
date and period, and the Members shall have received a certificate signed by a
duly authorized officer of SFX to that effect.
(b) Performance of Agreements. SFX shall have duly performed
in all material respects all agreements and obligations required to be
performed by it under the Agreements on or before the Closing Date, the Members
shall have received a certificate signed by a duly authorized officer of SFX to
that effect, and the Members and SFX shall have entered into a side letter
incorporating the terms of Schedule 5(b) hereof.
(c) Litigation; Consents. No action, suit or other proceeding
shall be pending or overtly threatened before or by a court, tribunal or
governmental authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or seeking to
obtain substantial damages in respect thereof or involving a claim that
consummation thereof would result in the violation of any law, decree, rule or
regulation of any governmental authority having appropriate jurisdiction, which
violation would result in a Material Adverse Effect with respect to SFX and its
subsidiaries taken as a whole. SFX shall have obtained all necessary material
consents, if any, from third parties or governmental authorities in connection
with the consummation of the transactions contemplated hereby.
(d) Intentionally Omitted.
(e) Closing Deliveries. SFX shall have delivered to the
Members all closing deliveries as contemplated in Section 3(e)(iii).
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods in respect of the Transaction contemplated by this Agreement under the
HSR Act shall have expired at or prior to the Closing.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
The Companies represent and warrant to SFX as follows:
(a) Organization, Standing and Power. Each of the Companies
is a duly organized and validly existing limited liability company in good
standing under the laws of its state of organization and has full power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted in the manner and in the places in which such business
is now being conducted. Each of the Companies is duly qualified to do business
and is in good standing as a foreign entity in each jurisdiction set forth on
Schedule 7(a), which are all of the jurisdictions in which each of the
Companies is required to be so qualified, except such jurisdictions where the
failure so to qualify by any Company would not result in a Material Adverse
Effect with respect to such Company.
(b) Capitalization. The Members own all of the Membership
Interests as set forth in Schedule A free and clear of all Encumbrances, except
as set forth on Schedule 7(b). The Membership Interests are duly authorized,
validly issued and outstanding. Except for the Membership Interests, there are
no other membership interests or equity securities of any of the
13
Companies issued or outstanding. Except as set forth in Schedule 7(b), 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 any of the Companies or any securities
convertible into, or other rights to acquire, any of the capital stock of any
of the Companies; or (ii) obligates any of the Companies 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.
(c) Crown Ownership Interests.
(i) Schedule 7(c) sets forth a true and complete
organization chart showing the direct and indirect ownership interests
with respect to the Crown Arena including, without limitation, CEA and
Associates. Except as set forth in Schedule 7(c), the Companies do not
own, directly or indirectly, any capital stock of any corporation or
have any direct or indirect equity or ownership interest in any
corporation, limited liability company, business trust, firm,
association, partnership, joint venture, entity or organization.
(ii) Except as set forth in Schedule 7(c), all of
the issued and outstanding membership interests of Arena in CEA and,
to the knowledge of Arena, all of the membership interests of CEA in
Associates, are owned 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 (collectively, "Liens") and are validly
issued, fully paid and nonassessable.
(d) Due Authorization; Legal Authority, Binding Effect. The
execution and delivery of this Agreement and all other agreements, consents and
documents relating hereto to be executed and delivered by the Members and the
Companies (the "Nederlander Closing Documents"), and the consummation by the
Members and the Companies of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary action. The Members and the
Companies have, and will on the Closing Date have, full legal right, power and
authority to execute, deliver and perform this Agreement and the Nederlander
Closing Documents and to consummate the transactions contemplated hereunder and
thereunder, including selling and transferring the Membership Interests to SFX.
This Agreement and the Nederlander Closing Documents, when executed by the
Members, the Companies and SFX, shall constitute legal, valid and binding
obligations of the Members and the Companies, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, liquidation, reorganization, moratorium or
other laws affecting the rights of creditors generally and subject to the
exercise of judicial discretion in accordance with general principles of equity
(whether applied by a court of law or equity).
(e) No Conflicts; Consents. Except as set forth on
Schedule 7(e), the execution and delivery of this Agreement or any of the other
Nederlander Closing Documents, or the consummation by the Members and the
Companies of the transactions contemplated hereby or thereby, or compliance
with any of the provisions hereof or thereof, will not: (i) conflict with or
result in a breach of the Certificate of Formation or Limited Liability Company
Agreement of any of the Companies; (ii) violate any statute, law, rule or
regulation applicable to the Members, or, to
14
the actual knowledge of the Members, any of the Companies or any order, writ,
injunction or decree of any court or governmental authority presently in
effect; (iii) violate or conflict with, result in any breach of, constitute a
default under, give rise to any right of termination or acceleration of any
Material Contract or (iv) result in the creation of any Lien or Encumbrance on
any of the Membership Interests. Except as set forth on Schedule 7(e), none of
the Companies has received notice that it is in material violation of any
statute, law, judgment, decree, order, regulation or rule relating to or
affecting the operation, conduct or ownership of its properties or business.
Except as set forth on Schedule 7(e), no consent or approval of any person,
court, governmental authority or other entity is required to be obtained by the
Members or any of the Companies in connection with the execution and delivery
of this Agreement or the consummation of the transactions provided for herein.
(f) Organizational Documents. The Members have delivered to
SFX true, correct and complete copies of the Certificates of Formation or
analogous organizational documents (including all amendments thereto), of each
of the Companies, certified by the Secretary of State of their respective
states of organization, and a true, correct and complete copy of the Limited
Liability Company Agreement or analogous organizational document of each of the
Companies currently in effect, certified by the Secretary of each such Company.
No action or proceeding is pending or contemplated for the amendment of any
such organizational documents or for the dissolution or liquidation of any of
the Companies. The Members have delivered to SFX copies of organization
documents with respect to CEA and Associates which, to the knowledge of the
Members, are true and correct.
(g) Financial Statements. The Members have delivered to SFX
the Financials, a copy of which are attached hereto as Schedule 7(g). Except as
set forth on Schedule 7(g), the Financials of each Company were prepared in
accordance with all books, records and accounts of such Company on an accrual
basis and present fairly in all material respects the financial position of such
Company and the results of operations and statements of cash flows and members'
equity as of the dates and for the respective periods indicated. The expenses
reflected on the income statement in the Financials of each Company include all
expenses necessary to conduct the operations of such Company as currently
conducted.
(h) Liabilities. (i) Other than as specifically disclosed in
the notes thereto or on Schedule 7(h) hereto, the balance sheets for each
Company contained in the Financials makes adequate provision for all material
fixed and contingent obligations and liabilities of such Company (including all
taxes) as of the date indicated. Except as set forth on the balance sheets for
each Company as of the date indicated, included in the Financials (the "Balance
Sheets") or on Schedule 7(h) hereto, none of the Companies has any outstanding
indebtedness, accrued expenses, liabilities or obligations required to be
provided for in such Balance Sheets other than those incurred since the date
indicated thereon, in the ordinary course of business.
(ii) The accounts receivable, if any, reflected on
the Balance Sheet of each Company (except those collected since the
date thereof), and such additional accounts receivable as are
reflected on the books and records of such Company as of the date
hereof, if any, represent obligations due to such Company arising in
the ordinary course of business.
15
(i) Absence of Changes. Except as otherwise set forth on
Schedule 7(i), since the date of their respective Financials, each of the
Companies has been operated in the ordinary course consistent with past
practices and has not:
(i) experienced a Material Adverse Effect; (ii)
declared, set aside, made or paid any dividend or other distribution
in respect of its membership interests, or purchased or redeemed,
directly or indirectly, any shares of its membership interests; (iii)
issued or sold any of its membership interests of any class, or any
options, warrants or other rights to purchase any such membership
interests or any securities convertible into or exchangeable for such
membership interests; (iv) incurred any indebtedness for borrowed
money or issued or sold any debt securities; (v) sold, assigned,
mortgaged, transferred, encumbered or granted a security interest in
any material asset, tangible or intangible, to any party, except in
the ordinary course of business; (vi) forgiven or canceled any
material debt or claim or terminated or waived any material right of
value, except for the release of certain intercompany obligations owed
to or by any of the Members, their immediate family members or any of
their Affiliates for the fiscal year beginning January 1, 1998; (vii)
amended its Certificate of Formation, Limited Liability Company
Agreement or analogous organizational documents; (viii) made any
material change in its accounting methods, principles or practices;
(ix) established, amended or materially increased the benefits under
any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option, stock purchase or other
employee benefit plan; (x) materially increased the compensation
payable to its directors, officers or employees, except with respect
to bonuses payable for 1998; (xi) agreed to or permitted any of the
foregoing; or (xii) suffered any material damage, destruction or loss
not covered by insurance with respect to any of its assets involving
cost or loss in excess of $50,000 in the aggregate.
(j) Foreign Person. None of the Companies is a foreign person
within the meaning of Section 1445 of the Internal Revenue Code of 1986, as
amended. At the Closing, each of the Companies shall deliver, if required, an
executed certificate in the applicable form set forth in Treasury Regulation
Section 1. 1445-2(b)(2).
(k) Environmental Matters. To the knowledge of each of the
Companies and subject to the provisions of Section 15(d) hereof, except as set
forth on Schedule 7(k):
(i) Neither such Company nor any of the Venues is in
violation of, or has any liability under, any applicable Environmental
Law, nor are there any Hazardous Substances in, on, over, under or at
any of the Venues in concentrations which would currently violate any
applicable Environmental Laws or would be reasonably likely to result
in the imposition of liability or obligations on the Members or
Associates under any applicable Environmental Laws, other than such
violations or liabilities that would not, individually or in the
aggregate, result in a Material Adverse Effect with respect to the
operation of its businesses.
(ii) Each such Company and each of the Venues has in
effect, or has applications pending for, all material Permits required
under applicable Environmental Laws for the operation of its business,
and is not in violation in any material respect of the terms
16
and conditions of such Permits. Schedule 7(k)(ii) contains a list of
all material Permits held by each of the Companies issued under
applicable Environmental Laws.
(iii) Other than as would not, individually or in
the aggregate, result in a Material Adverse Effect with respect to its
businesses, none of the Companies nor any of the Venues is subject to
any consent decree, compliance order, or administrative order issued
pursuant to applicable Environmental Laws, and has not received any
written notice or request for information, notice of violation, demand
letter, administrative inquiry, complaint or claim from any
Governmental Authority pursuant to any Environmental Law.
(iv) Each such Company has not received notice that
it, or any of the Venues, is subject to any Liens recorded by any
Governmental Authority under applicable Environmental Laws.
(l) Insurance. Schedule 7(l) contains a list of all insurance
policies maintained by each of the Companies with respect to its businesses,
copies of which have been made available to SFX, and a summary of the claims
history under such policies for the past two years. To the knowledge of each
Company, such Company is in substantial compliance with all of the provisions of
such insurance policies to which it is a party listed on Schedule 7(1) and such
policies are in full force and effect. All premiums and other payments due from
each Company under or on account of any such policy listed on Schedule 7(l) have
been or by the Closing Date will be paid. All material property damage or
personal injury claims asserted but unresolved against each Company have
previously been provided to SFX. At the Closing, except as otherwise described
on Schedule 7(l), all insurance policies maintained by each Company shall be
canceled and/or endorsed to withdraw coverage for any future claim with respect
to such Company. None of the Companies has received any notice of any default
(including with respect to any payment of premiums or the giving of notices),
under any of the policies to which it is a party, and no party to the policy has
repudiated any provision thereof. Each of the Companies has been covered during
the past three (3) years by insurance in scope and amount customary for the
business in which it is engaged.
(m) Litigation, Etc. Except as set forth on Schedule 7(m),
there are no actions, suits, claims, proceedings or investigations pending or,
to the knowledge of each Company, threatened against such Company or, to the
knowledge of each Company, any of the Venues, at law or in equity, before or by
any court, commission, board, bureau, agency or other federal, state, local or
other governmental authority that would result, individually or in the
aggregate, in a Material Adverse Effect with respect to its businesses. There
is no outstanding order, injunction, decree of any court or governmental agency
or arbitrator against any of the Companies or the Membership Interests, and
none of the Companies has received any complaints which have been filed with
any consumer protection agency, which would result, individually or in the
aggregate, in a Material Adverse Effect with respect to its businesses.
(n) Material Contracts. Schedule 7(n) contains a list of all
Material Contracts to which each of the Companies and, to the actual knowledge
of the Members, Associates with respect to the Crown Arena, is a party. With
respect to all such Material Contracts, except as otherwise set forth on
Schedule 7(n), (i) such Material Contracts are in full force and effect and
constitute legal, valid and binding obligations of the respective parties
thereto; (ii) each Company has substantially
17
performed all obligations required to be performed by it and no material
default, or event that with notice or lapse of time or both would constitute a
material default, exists in respect thereof on the part of such Company or the
other parties thereto, (iii) the continuation, validity and effectiveness of
such Material Contracts under the current terms thereof will not be affected by
the transfer of the Membership Interests to SFX under this Agreement and (iv)
no party to any such Material Contracts has repudiated a material provision
thereof.
(o) Compliance; Governmental Authorizations. Except as set
forth on Schedule 7(k) or 7(o), each of the Companies and their respective
properties and assets and, to the knowledge of each of the Companies, each of
the Venues, is in substantial compliance with all federal, state and local
laws, statutes, ordinances, rules, regulations and orders applicable to the
operation, conduct or ownership of its business or properties. Except as set
forth on Schedule 7(o), (i) each Company and, to the knowledge of each Company,
each of the Venues, has all material Permits necessary in the conduct of its
businesses, and such material Permits are in full force and effect, (ii) no
material violations are or have been recorded in respect of any such material
Permits, and (iii) no proceeding or, to the knowledge of each Company,
investigation is pending or threatened to revoke or limit any such material
Permits. Schedule 7(o) sets forth a list of all such material Permits of each
of the Companies and, to the knowledge of the Members, Associates.
(p) Employee Benefit Plans.
(i) Schedule 7(p) hereto contains a list of (A) each
employee benefit plan, as defined in Section 3(3) of ERISA, and (B) to
the extent not covered under (A) above, each stock option, bonus,
deferred compensation, incentive, fringe benefit, excess, supplemental
executive compensation, employee stock purchase, vacation, sickness,
disability, severance, restricted stock or other employee benefit
plan, policy or arrangement, sponsored, maintained or contributed to
by any of the Companies or by an ERISA Affiliate (as defined below)
for the benefit of employees or former employees of any of the
Companies and under which any of the Companies currently has an
obligation or a liability (the "Benefit Plans"). For purposes hereof,
an ERISA Affiliate is any entity that would be deemed a "single
employer" with any of the Companies under Section 414(b), (c), (m), or
(o) of the Code or Section 4001 of ERISA. With respect to each Benefit
Plan (other than a Multiemployer Plan, as defined below), each Company
has heretofore delivered or made available to SFX true and complete
copies of the following documents, where applicable: (A) the text of
the Benefit Plan and of any trust maintained in connection therewith,
and each amendment thereto, (B) the annual report (Form 5500 series)
filed for the most recent three plan years together with required
schedules, (C) the most recent summary plan description (D) a copy of
the most recent determination letter issued by the IRS regarding the
qualified and tax exempt status of such Benefit Plans under Section
401(a) and 501(a) of the code, (E) all material administrative
documents used in connection with the Benefit Plans, including without
limitation, enrollment forms, distribution or claim forms, loan forms,
beneficiary designation forms and investment selection forms; and (F)
any employee handbook or employee manual for employees of any of the
Companies.
(ii) Except as set forth in Schedule 7(p), none of
the Benefit Plans is (A) a "multiemployer plan", as defined in
Section 3(37) of ERISA (a "Multiemployer Plan"), or
18
(B) otherwise subject to Title IV of ERISA. No event or set of
circumstances has occurred under which, and there exist no conditions
or set of circumstances under which, the Companies could be subject to
any liability that would result in a Material Adverse Effect with
respect to a Multiemployer Plan to which the Companies or any other
ERISA Affiliate contributes other than for contributions made in the
ordinary course of business, none of which are overdue (including, but
not limited to, contributions arising under Sections 4201, 4242 or
4245 of ERISA). With respect to any Benefit Plan (other than any
Multiemployer Plan) subject to Section 412 of the Code, no
"accumulated funding deficiency" (within the meaning of Section 302 of
ERISA and Section 412 of the Code) has been incurred that would result
in a Material Adverse Effect. Other than as would result in a Material
Adverse Effect, with respect to each employee pension benefit plan
subject to Title IV of ERISA or Section 412 of the Code (other than
the Benefit Plans) maintained or contributed to by an ERISA Affiliate,
to the knowledge of each Company, (A) there is no actual or contingent
liability of such Company under Title IV of ERISA or Section 412 of
the Code to such plan or the Pension Benefit Guaranty Corporation and
(B) the assets of such Company have not been subject to a lien under
ERISA or the Code.
(iii) Each Benefit Plan (other than a Multiemployer
Plan) intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service (the "IRS") that such Benefit Plan is qualified and that its
related trust has been determined to be exempt from taxation under
Section 501(a) of the Code. No act or failure to act has occurred
since the effective date of any such IRS determination letter that
would cause the qualified status of any Benefit Plan (other than a
Multiemployer Plan) to be revoked. None of the Companies nor, to the
knowledge of the Companies, any ERISA Affiliate, any of the Benefit
Plans (other than a Multiemployer Plan) or any trust created
thereunder, or any trustee or administrator or fiduciary thereof has
engaged in a transaction or has taken or failed to take any action
that could reasonably be expected to subject the trust or the trustee
to either a material civil penalty under sections 409 or 502(i) of
ERISA or a material tax imposed pursuant to section 4975, 4976 or
4980B of the Code. With respect to each of the Benefit Plans (other
than a Multiemployer Plan) set forth in Schedule 7(p), (A) each
Benefit Plan has, in all material respects, been administered in
accordance with the applicable provisions of ERISA, the Code and other
applicable law and with its terms, (B) there is no arbitration, claim,
suit, or grievance, pending or, to the knowledge of any of the
Companies, threatened, involving a Benefit Plan (other than routine
claims for benefits or appeals of such claims) and (C) no Benefit Plan
(other than a Multiemployer Plan) is under audit or investigation by
the IRS, the United States Department of Labor, or any other
governmental authority.
(iv) No Benefit Plan provides health or life
insurance benefits to employees or former employees of any of the
Companies after their retirement or other termination of employment
from such Company (other than continuation coverage required under
COBRA). The consummation of the transactions contemplated by this
Agreement will not give rise to any material liability under any
Benefit Plan, including, without limitation, liability for or
termination or severance pay, or accelerate the time of payment or
vesting or materially increase the amount of compensation or benefits
due to any employee of any of the Companies solely by reason of such
transactions.
19
(q) Employees. Schedule 7(q) sets forth a true and complete
list of all employees of the Companies, their positions, locations, salaries or
hourly wages and severance arrangements. The Companies have complied in all
material respects with all laws relating to the employment of labor including,
without limitation, ERISA, and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and sexual harassment. Except as set forth on Schedule 7(q), none
of the Companies have received notification that any of its employees that are
listed on Schedule 7(q) currently plans to terminate his or her employment,
whether by reason of the transactions contemplated hereby or otherwise. Except
as set forth on the Balance Sheets or on Schedule 7(q), there is no liability
for unpaid salary or wages, bonuses, vacation time or other employee benefits,
including, without limitation, Retirement Benefits, due or accrued, nor
liability for withheld or deducted amounts from Employees earnings for the
period ending on the Closing Date. Except as set forth on Schedule 7(q), none
of the Companies is a party to or bound by any collective bargaining agreement,
nor, except as otherwise set forth on Schedule 7(q) has it experienced, since
February 1997, any strikes, employee grievances, claims of unfair labor
practices, or other collective bargaining disputes. None of the Companies has
committed any unfair labor practice, and there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of such Company.
(r) Taxes.
(i) Except as otherwise disclosed in Schedule 7(r):
(A) each Company has filed (or received an appropriate extension of
time to file) all federal, state, local, and foreign Tax Returns
required to be filed by it prior to the Closing Date and such Tax
Returns were true and correct in all material respects; (B) each
Company has paid all Taxes shown to be due on such Tax Returns or has
made appropriate provisions in the Balance Sheets for any Taxes which
are being contested in good faith; (C) each Company 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,
shareholder, or other third party; (D) all tax deficiencies asserted
or assessed against each Company has been paid or finally settled; (E)
no claims have ever been made by any tax authority in a jurisdiction
where any of the Companies does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction; (F) none of the Companies
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 is currently in effect; (G) there is no
pending or, to the knowledge of any of the Companies, threatened
action, audit, proceeding or investigation for the assessment or
collection of any Taxes; (H) there are no requests for rulings,
subpoenas or requests for information pending with respect to any
taxing authority; (I) 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; (J) no
power of attorney has been granted by any of the Companies, and is
currently in force, with respect to any matter relating to Taxes; and
(K) 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 any
of the Companies 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,
20
have a Material Adverse Effect with respect to any of the Companies.
(ii) For purposes of this Section 7(r), the
following terms will have the following meanings:
(A) "Tax" or "Taxes" shall mean any
federal, state, local and foreign income, franchise, profits
or gross receipts taxes; ad valorem, value added, sales and
use taxes; real or personal property or capital stock taxes;
payroll, employment, social security, workers' compensation
or unemployment compensation taxes; or excise, transfer and
gains taxes; and interest, penalties or additions thereto
imposed by any tax authority payable by any of the Companies,
or chargeable or relating to the assets, income or revenue of
any of the Companies.
(B) "Tax Return" shall mean returns,
reports, information statements, or other documentation
(including any additional or supporting material) filed or
maintained, or required to be filed or maintained in
connection with the calculation, determination, assessment or
collection of any Tax;
(iii) None of the Companies shall make any election
under Section 338 of the Code or under any similar provision of any
state or local law with respect to the Transaction.
(s) No Brokers or Finders. No person or entity is entitled to
any brokerage commission, finder's fees, advisory or other like payment from
the Members in connection with this Agreement or the transactions contemplated
hereby except Xxxxxx & Xxxxxxxx LLP, whose fee shall be paid by the Members.
(t) Title to Properties. Except as set forth on Schedule
7(t), the Companies and, to the Members' knowledge, CEA and Associates, have
good and marketable title to, or valid leasehold interests in, the leasehold
estates created by the Leases and in all of their other respective material
properties and assets (real, personal or mixed), including without limitation,
all of the material properties and assets listed on the Balance Sheets or
acquired since the date of the Balance Sheets. There are no outstanding rights
or options to acquire the interests of the Companies or, to the Members'
knowledge, CEA or Associates, in their respective properties and assets,
whether owned or leased. The properties and assets owned, leased or licensed by
the Companies and, to the Members' knowledge, CEA and Associates, are all of
the properties and assets used to conduct their business and operations in all
material respect as now conducted.
(u) Intellectual Property.
(i) The Companies 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
("Intellectual Property") necessary to conduct their business and operations in
all material respect as now conducted. Except as set forth in Section 12(d),
each item of Intellectual Property owned or used by each of the Companies to
conduct its business and operations is owned or available for use by such
Company on identical terms and conditions immediately subsequent to
21
the Closing Date.
(ii) None of the Companies has interfered with,
infringed upon or misappropriated any Intellectual Property rights of third
parties, and have not received any charge, complaint, claim, demand or notice
alleging any such interference, infringement or misappropriation (including any
claim that any of the Companies must license or refrain from using any
Intellectual Property rights of any third party). To the knowledge of each
Company, no third party has interfered with, infringed upon or misappropriated
any Intellectual Property rights of such Company.
(v) Transactions With Affiliates. Except as set forth on
Schedule 7(v), none of the Members, officers or directors, or any of their
immediate family members, or, to the knowledge of the Companies, none of their
respective employees, is currently a party (either directly or indirectly) to
any transaction with or involving the Companies or, to the knowledge of the
Companies, any of the Venues, including, without limitation, any arrangement
(other than for services in the ordinary course of business as directors,
officers or employees of the Companies) providing for (a) the furnishing of
services by or to, (b) the rental of the sites on which the properties leased
by any of the Companies 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.
(w) Real Property.
(i) Schedule 7(w) contains a list and brief
description of all real property owned leased or managed and/or operated by
each of the Companies and, to the Members' knowledge, CEA and Associates, and
the improvements (including buildings and other structures) located on such
real property (including a brief description of the use to which such property
is being employed and, in the case of any such property which is leased,
managed and/or operated the termination date or notice requirement with respect
to termination, annual rental (or other fees and charges) and renewal or
purchase options) (the "Real Property"). For the purposes of this Agreement.
"Real Property" shall include, without limitation, the Venues. Complete and
correct copies of all such leases have been made available to SFX as of the
date hereof. Schedule 7(w) contains a list of all of the title insurance
policies with respect to the Real Property owned, leased or subleased by each
of the Companies.
(ii) Except as provided in Schedule 7(w), none of
the Companies 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.
(iii) The tenancies described on Schedule 7(w)
constitute all of the written and oral agreements which grant rights of use or
possession with respect to the Real Property; except as otherwise noted on
Schedule 7(w), (a) the leases described on Schedule 7(w) 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) there are no pending summary proceedings or other legal actions
for eviction of any such tenant, (c) no written notice of default on the part
of the tenant under any of the leases has been received by any of the Companies
or their
22
respective agents from the landlord thereunder which has not been cured and
none of the Companies has any actual knowledge of any default by the tenant
under any such leases.
(iv) Those management agreements and operating
agreements listed on Schedule 7(w) constitute all of the written and oral
agreements for the provision of management and/or operating services to the
Real Property and all such agreements unless otherwise disclosed on Schedule
7(w) are terminable upon thirty (30) days notice by the party to whom services
are being provided thereunder.
(v) Except as set forth on Schedule 7(w), 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 any of the Companies
is a party or any extension thereof. With respect to any and all such brokerage
commissions, each of the Companies covenants and agrees to pay any such
brokerage commissions or compensation at or prior to the Closing Date and shall
hold SFX and Acquisition Sub harmless and defend each of SFX and Acquisition
Sub in regard to any and all claims for brokerage commissions or other
compensation relating to any leasing activity prior to the Closing Date,
including without limitation, reasonable attorney's fees and expenses
(notwithstanding anything to the contrary contained in this Agreement, such
indemnity obligation shall survive the Closing Date).
(vi) Except as set forth on Schedule 7(w), none of
the Companies have received any written notice of (a) any violation of any
federal, state or local laws, codes, regulations or ordinances affecting the
Real Property including, without limitation, zoning, building or similar laws
or ordinances, nor do they have any actual knowledge of any of the foregoing,
(b) any covenant, restriction, condition or agreement contained in any
instrument affecting the Real Property or (c) any default from any third party
who shall be benefitted by any such restriction, condition or agreement
referred to in subparagraph (b) hereof.
(vii) Except as set forth on Schedule 7(w), there
are no charges, complaints, actions, proceedings or investigations pending or
(to the actual knowledge of the Companies) threatened against or involving any
of the Companies or the Real Property.
(viii) 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 (except for work performed in the ordinary
course of business or such other work which may be performed with the prior
written consent of SFX) which are the responsibility of any of the Companies to
remove.
(ix) Schedule 7(w) contains a list of all parking
agreements to which any of the Companies or, to the knowledge of the Members,
CEA or Associates, is a party. Except as set forth on Schedule 7(w), all
parking for the Venues is either located within the Real Property or is
provided pursuant to the parking agreements and none of the Companies has
received written notice of any violation of any material federal, state or
municipal laws or ordinances with respect to such agreements, all such
agreements are in full, force and effect, and, to the actual knowledge of the
Members: (a) no material default has occurred and is continuing under and any
such agreements and no event has occurred which, with the giving of notice or
the lapse of time, has occurred and is continuing which would constitute a
material default under any such agreements and
23
(b) the current and continued use of the parking provided to the Venues
pursuant to such agreements does not violate any applicable legal requirements.
(x) None of the Companies has received any written
notice from any insurance company that 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.
(x) Outstanding Indebtedness. The Arena Bank Debt and certain
indebtedness in favor of the National Bank of Detroit (which shall be released
as of the Closing), none of the Companies has any outstanding indebtedness for
borrowed money (excluding leases).
8. REPRESENTATIONS AND WARRANTIES OF EACH MEMBER
Each Member represents and warrants for itself and not with
respect to any other Member to SFX as follows:
(a) Authorization of Transaction. Such Member has full power
and authority to execute and deliver this Agreement and to perform his, her or
its obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of each Member, enforceable in accordance with its terms and
conditions. Such Member if 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 or her behalf or with respect to any of his or her property. If such Member
is not a natural person: such Member is a corporation, limited liability
company or other entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization; the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate or other action; no other corporate or other proceeding on the part
of such Member is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby; and this Agreement has been duly delivered by
such Member.
(b) Noncontravention. Neither the execution and the delivery
of this Agreement nor the consummation of the transactions contemplated hereby,
will (A) violate the certificate of formation and limited liability company
agreement or other organizational documents of such Member 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 such Member is a party, by
which it is bound or to which any of its assets is subject.
(c) The Membership Interests. Except as set forth on Schedule
A, such Member holds of record and owns beneficially the number of Membership
Interests set forth next to its name on Schedule A or Schedule 7(b), 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, contracts, commitments and equities. Such Member is
not a party to any option, warrant, purchase right, or other contract or
commitment that could require such Member to sell, transfer, or otherwise
dispose of any membership interest in any of the Companies (other than this
24
Agreement).
9. REPRESENTATIONS AND WARRANTIES OF SFX AND ACQUISITION SUB
SFX and Acquisition Sub represent and warrant to the Members
as follows:
(a) Organization, Standing and Power. Each of SFX and
Acquisition Sub is a duly organized and validly existing corporation in good
standing under the laws of its state of incorporation and has full power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted in the manner of and in the places in which such
business is now being conducted. Each of SFX and Acquisition Sub is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which it is required to be so qualified, except such
jurisdictions where the failure so to qualify would not result in a Material
Adverse Effect with respect to SFX or Acquisition Sub.
(b) Due Authorization; Legal Authority; Binding Effect. The
execution and delivery of this Agreement and all other agreements, consents and
documents relating hereto to be executed and delivered by SFX and Acquisition
Sub (collectively, the "SFX Closing Documents"), and the consummation by SFX
and Acquisition Sub of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action by SFX and Acquisition
Sub. SFX and Acquisition Sub have, and will on the Closing Date have, full
legal right, power and authority to execute, deliver and perform this Agreement
and the SFX Closing Documents, and to consummate the transactions contemplated
hereunder and thereunder. This Agreement and the SFX Closing Documents, when
executed by SFX and Acquisition Sub, on the one hand, and the Members, on the
other hand, shall constitute legal, valid and binding obligations of SFX and
Acquisition Sub enforceable in accordance with their respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
liquidation, reorganization, moratorium and other laws affecting the rights of
creditors generally and subject to the exercise of judicial discretion in
accordance with general principles of equity (whether applied by a court of law
or equity).
(c) No Conflicts, Etc. Except as set forth on Schedule 9(c),
the execution and delivery of this Agreement, nor any of the other SFX Closing
Documents, nor the consummation by SFX and Acquisition Sub of the transactions
contemplated hereby or thereby, nor compliance with any of the provisions
hereof or thereof, will: (i) conflict with or result in a breach of the
Certificate of Incorporation or By-laws of SFX or Acquisition Sub, (ii) to the
knowledge of SFX, violate any statute, law, rule or regulation applicable to
SFX or any order, writ, injunction or decree of any court or governmental
authority presently in effect; (iii) violate or conflict with, result in any
breach of, constitute a default under, give rise to any right of termination or
acceleration of any mortgage, indenture, or other agreement or writing of any
nature to which SFX or Acquisition Sub is a party or by which they or their
assets or properties may be bound. No consent or approval of, or notification
to any person, party, court, governmental authority or other entity is required
to be obtained by SFX or Acquisition Sub in connection with the execution and
delivery of this Agreement or the performance of the terms hereof or the
consummation of the transactions provided for herein, other than under the HSR
Act.
(d) Litigation. Except as disclosed in the reports,
registration statements,
25
definitive proxy statements and other documents filed by SFX with the SEC since
January 1, 1997, together with any amendments thereto, to the knowledge of SFX
and Acquisition Sub, there are no actions, suits, claims, proceedings or
investigations pending or threatened against SFX or Acquisition Sub at law or
in equity, before or by any court, commission, board, bureau, agency or other
federal, state, local or other governmental authority that would result,
individually or in the aggregate, in a Material Adverse Effect or otherwise
prevent, delay or materially impact the performance of SFX or Acquisition Sub
under this Agreement or with respect to the transactions contemplated hereby.
There is no outstanding order, injunction or decree of any court or
governmental agency against SFX or Acquisition Sub which would result,
individually or in the aggregate, in a Material Adverse Effect with respect to
SFX or Acquisition Sub or otherwise prevent, delay or materially impact the
performance of SFX or Acquisition Sub under this Agreement or with respect to
the transactions contemplated hereby.
(e) Compliance; Governmental Authorizations. SFX and its
properties and assets are in substantial compliance with all federal, state and
local laws, statutes, ordinances, rules, regulations and orders applicable to
the operation, conduct or ownership of its business or properties, except as
set forth on Schedule 9(e). SFX has all material Permits necessary in the
conduct of its business, and such material Permits are in full force and
effect, no material violations are or have been recorded in respect of any
thereof, and no proceeding is pending or, to the knowledge of SFX, threatened
to revoke or limit any thereof, except as set forth on Schedule 9(e).
(f) No Required Stockholder Vote or Consent. The affirmative
vote or consent of the holders of a majority of the outstanding shares of
common stock of SFX or Acquisition Sub is not required to adopt this Agreement
and approve the transaction contemplated hereby. No other vote or consent of
the holders of any class or series of capital stock is required by law, the
Certificate of Incorporation or By-Laws of SFX or Acquisition Sub or otherwise
to adopt this Agreement and approve the other transactions contemplated hereby.
(g) No Brokers or Finders. No person or entity is entitled to
any brokerage commission, finder's fees, advisory or other like payment from
SFX or Acquisition Sub in connection with this Agreement or the transactions
contemplated hereby except Bear Xxxxxxx & Co., Inc., whose fee shall be paid by
SFX.
(h) Investment Intent. On the Closing Date, SFX or
Acquisition Sub is acquiring the Membership Interests for investment purposes
and not with a view to or in connection with a distribution within the meaning
of the Securities Act. Each of SFX and Acquisition Sub is an accredited
investor as defined in Regulation D of the Securities Act with such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of entering into the transactions contemplated by this
Agreement. The provisions of this Section 9(h) shall survive the Closing.
(i) Financial Capacity. Each of SFX and Acquisition Sub will
have sufficient funds readily available to satisfy all of its obligations under
this Agreement to be performed at Closing. Consummation of the transactions
contemplated under this Agreement will not result in SFX or Acquisition Sub
being deemed insolvent.
26
(j) Intentionally omitted.
(k) Due Diligence. Each of SFX and Acquisition Sub has had
the full opportunity to review all requested documents from the Members
concerning the Companies and/or the transactions contemplated by this
Agreement, including, without limitation, the documents listed on
Schedule 9(k). Each of SFX and Acquisition Sub has undertaken such due diligence
regarding such documents as SFX and Acquisition Sub deems adequate.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Except for the representation set forth in Section 7(r),
which shall survive for the applicable statute of limitations with respect
thereto, or any voluntary extensions thereof, all representations and
warranties made by any party to this Agreement or pursuant hereto are made as
of the date hereof and shall survive the Closing for a period of 15 months and
upon the expiration of such period shall lapse and be of no further force and
effect.
11. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
(a) By the Members.
(i) Access to Records and Properties of the
Companies. From and after the date hereof until the Closing Date, upon
the prior consent of the Members, which shall not be uneasonably
withheld, the Members shall afford and, with respect to clause (B)
below, shall use reasonable efforts to cause the Companies'
independent accountants to afford, (A) to the officers, independent
accountants, counsel and other representatives of SFX, access at all
reasonable times to the offices, properties, contracts, books and
records of the Companies, and to such additional financial and
operating data and other information about the business of the
Companies, as SFX shall from time to time reasonably request; and (B)
to SFX's independent accountants, confidential access to work papers
and other records of the Companies' independent accountants.
(ii) Operation of the Business of the Companies.
From the date hereof to the Closing Date, except as consented to or
approved by an officer of SFX in writing or as required by this
Agreement, the business of the Companies shall be operated and
conducted in the ordinary course of business consistent with present
practices.
12. ADDITIONAL COVENANTS
(a) Cooperation.
(i) Subject to Section 16, SFX and the Members shall
cooperate with one another in order to lift any injunctions
or remove any other impediment to the consummation of the
transactions contemplated herein.
(ii) After the Closing, each of SFX and the Members
shall allow, and SFX and the Members shall cause their
respective Affiliates to allow, each of their
27
respective counsel, accountants and other representatives,
such reasonable access to data and records of or relating to
the Companies as each of SFX and the Members shall reasonably
request.
(iii) Each of SFX and Acquisition Sub agrees that it
shall preserve and keep the records of the Companies
delivered to it hereunder for a period of five (5) years from
the Closing, or for any longer period as may be required by
any government agency or as identified by SFX and the Members
as being required for claims or litigation matters, and each
of SFX and Acquisition Sub shall cause the Companies to make
such records available to the Members as may be reasonably
required in connection with any legal proceedings by or
against the Members or governmental investigations or tax
examination of the Members. In the event that SFX and
Acquisition Sub wishes to destroy such records after the
appropriate time periods, SFX shall give 180 days' prior
written notice to the Members which shall have the right at
its option and expense to take possession of said records
within such 180-day period.
(b) Intentionally omitted.
(c) CEA/Arena Debt. It is expressly understood by and among
the parties that, prior to Closing, Arena has used, or shall use, certain
advance payments made under the Coke Sponsorship Agreement and the Ticketmaster
Agreement to repay certain loans owing by Arena to certain of the Members in
the amount of $500,000 plus accrued interest on such amount. As of Closing, the
corresponding debt owed by CEA to Arena shall remain outstanding.
(d) No License; Name Change; Subsequent Filings. Neither SFX
nor Acquisition Sub shall have any license or right to use in any manner the
trademarks, tradenames, service marks, service names, copyrights, patents,
trade secrets, know-how, or any applications relating to any of the foregoing,
or other intellectual property rights, directly or indirectly, owned by,
licensed to or relating to the Members, their Affiliates or otherwise
incorporating or relating to the name "Nederlander" or any derivation or
combination thereof in any form. As soon as practicable and in any event within
five business days after the Closing Date, SFX or Acquisition Sub shall file
with the Secretary of State or other appropriate official of each state or
county in which any of the Companies is incorporated or qualified to transact
business such documents, notices or certificates as are necessary to change the
name of each of the Companies to a name that does not include the word
"Nederlander," and shall promptly deliver written confirmation of such filing
to the Members. As promptly as practicable and in any event within 45 days
after the Closing Date, SFX or Acquisition Sub shall cause the Companies to
cease using and shall use its best efforts to remove from all assets and
property of the Companies the name "Nederlander," all related logos and
trademarks and all derivatives thereof. SFX hereby indemnifies and holds the
Members and their Affiliates harmless from and against any and all Losses in
connection with SFX's or Acquisition Sub's breach or alleged breach of this
Section 12(d), including, but not limited to legal, investigative and other
professional fees and expenses.
(e) Release of Guaranties, Etc. SFX shall use commercially
reasonable efforts to obtain the release of the Members or any Affiliate of the
Members from those guaranties, bonds,
28
letters of credit or similar contingent obligations set forth in Schedule 12(e)
hereto prior to the Closing, and shall indemnify and hold the Members and their
Affiliates harmless from and against, and shall on demand reimburse them for,
any Losses incurred by the Members and their Affiliates following Closing as a
result of the failure by SFX to obtain any such release or to provide a
replacement guaranty, bond, letter of credit or similar item. In no event shall
SFX be liable to the Members and their Affiliates for any nonperformance by the
Members and their Affiliates with respect to any of the obligations of the
Members and their Affiliates covered by any guaranty, bond, letter of credit or
similar item prior to Closing.
(f) Intentionally Omitted.
(g) Notice of Events. From time to time prior to the Closing
Date, each party shall notify the others if it becomes aware of any matters or
events arising or discovered subsequent to the date hereof that, if existing or
known on the date hereof, would have rendered any statement, representation or
warranty made by the other party (including any information contained in any
schedule hereto) inaccurate or incomplete.
(h) Filings and Governmental Consents. Subject to Section
12(j), after the execution and delivery of this Agreement, the Members and SFX
each shall use their commercially reasonable efforts to cooperate in obtaining
any consent, approval, authorization or order of, or in making any registration
or filing with, any governmental agency or body required in connection with the
execution, delivery or performance of this Agreement or in connection with the
transactions contemplated hereby.
(i) Xxxx-Xxxxx Xxxxxx Filing. On February 10, 1999, SFX and
the Members shall file with the United States Department of Justice and the
Federal Trade Commission a Notification and Report Form in accordance with the
notification requirements of the HSR Act and shall use their reasonable best
efforts to achieve the prompt termination or expiration of the waiting period
or any extension thereto provided for under the HSR Act as a prerequisite to
the consummation of the transaction provided for herein.
(j) Confidentiality.
(i) Except for disclosure to accountants, attorneys,
financial advisors and other consultants or advisors, each of SFX and
Acquisition Sub and their Subsidiaries agrees that they shall, and
shall cause their officers, employees and authorized representatives
to, hold in strict confidence the terms of this Agreement and all data
and information obtained by them from the Members (unless such
information is a matter of public knowledge or has heretofore been or
is hereafter published or filed as public information through no
action or fault of SFX, Acquisition Sub, their Subsidiaries or persons
under their control, or becomes readily ascertainable from public or
published information or trade sources) and shall ensure that such
officers, employees and authorized representatives do not, disclose
such terms or information to others without the prior written consent
of the Members, except if required by a Court of competent
jurisdiction or otherwise required by law. If any party hereto, or any
officer, employee or authorized representative thereof, is requested
in any proceeding to disclose any information described in the
immediately preceding sentence, such party shall
29
give the other parties prompt notice of such request so they may seek
an appropriate protective order. If, in the absence of such a
protective order, a party hereto, or any officer, employee or
authorized representative thereof, is nonetheless compelled to
disclose any information described in the first sentence of this
Section 12(j)(i), such person or entity may disclose such information
provided, however, that such person shall use his, her or its best
efforts to obtain assurances that confidential treatment will be
accorded to such information.
(ii) Except for disclosure to accountants,
attorneys, financial advisors and other consultants or advisors, the
Members each agree that they shall, and shall cause their officers,
employees and authorized representatives to, hold in strict confidence
the terms of this Agreement and all data and information obtained by
them from SFX (unless such information is a matter of public knowledge
or has heretofore been or is hereafter published or filed as public
information through no action or fault of the Members or becomes
readily ascertainable from public or published information or trade
sources) and shall ensure that such officers, employees and authorized
representatives do not disclose such terms or information to others
without the prior written consent of SFX, except if required by a
Court of competent jurisdiction or otherwise required by law. If any
party hereto, or any officer, employee or authorized representative
thereof, is requested in any proceeding to disclose any information
described in the immediately preceding sentence, such party shall give
the other parties prompt notice of such request so they may seek an
appropriate protective order. If, in the absence of such a protective
order, a party hereto, or any officer, employee or authorized
representative thereof, is nonetheless compelled to disclose any
information described in the first sentence of this Section 12(j)(ii),
such person or entity may disclose such information provided, however,
that such person shall use his, her or its best efforts to obtain
assurances that confidential treatment will be accorded to such
information.
(iii) In the event this Agreement is terminated, the
Members, on the one hand, and SFX on the other, each agree if so
requested by the other party, to return promptly or to destroy every
document furnished to either of them by the other party or any
division, associate or affiliate of such other party and any copies
thereof which may have been made, and which is in its possession or
under its control, in connection with the transactions contemplated
hereby, and to cause its representatives, and any representative of
financial institutions, partnerships and others to whom such documents
were furnished, promptly to return such documents and any copies
thereof any of them may have made, other than documents filed with the
SEC or otherwise publicly available.
(k) "As Is, Where Is" Acquisition. Notwithstanding anything
in this Agreement to the contrary, it is expressly understood by and among the
parties, that there are no representations, warranties or covenants, express or
implied, made with respect to the condition of any real or personal property or
other assets, tangible and intangible, which become property of SFX by virtue
of the Transaction, except as expressly set forth herein. Furthermore, there
are no representations, warranties or covenants, express or implied, being made
with respect to any obligations, liabilities or potential liabilities
associated with any of such assets except as expressly set forth herein.
Finally, there are no representations, warranties or covenants made, express or
implied, with respect to any information, projections, budgets or other
financial information provided to SFX except as expressly set forth herein.
30
(l) Further Actions. Except as provided in Section 12(i),
each of the parties hereto agrees to use its commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using its commercially
reasonable efforts: (i) to obtain all necessary waivers, consents and
approvals, to give all notices and to effect all necessary registrations and
filings, and (ii) to defend any lawsuits or other legal proceedings, whether
judicial or administrative and whether brought derivatively or on behalf of
third parties (including governmental agencies or officials), challenging this
Agreement or the consummation of the transactions contemplated hereby.
(m) Intentionally Omitted.
(n) Intentionally Omitted.
(o) Termination of Certain Agreements. The Agreements set
forth on Schedule 12(o) shall have been terminated.
(p) Intentionally Omitted.
(q) Increased Down Payment. In the event that, following the
submission of the Xxxx-Xxxxx-Xxxxxx Filing, either the U.S. Department of
Justice or the U.S. Federal Trade Commission serves a "second request" on one
or more of the parties to this Agreement, then SFX shall promptly deposit with
the Members an additional $1,650,000. The parties agree that such amount shall
be added to the Down Payment such that the aggregate amount of the Down Payment
shall become $4,125,000. In such event, all references to the Down Payment in
this Agreement shall mean the Down Payment as so increased.
13. INDEMNIFICATION OF PURCHASER
Subject to Sections 10 and 16, the Members, jointly and
severally, hereby agree that they will indemnify, save harmless and defend SFX
and each of its Subsidiaries, Affiliates, officers and directors, from and
against any and all Losses incurred by any of them by reason of, or arising out
of:
(i) any claims of any broker or finder engaged by
the Members or the Companies;
(ii) any breach of any representation or warranty by
the Members or the Companies contained in this Agreement (including
the schedules hereto);
(iii) any breach by the Members or the Companies of
any covenant of this Agreement (or any other agreements entered into
pursuant hereto); and
(iv) any personal injury or property damage claim
attributable to the period prior to Closing up to an amount equal to
the amount paid by SFX in respect of any such
31
claim (but in no event to exceed an amount equal to the deductible
under the applicable insurance policy); provided, however, that the
Basket Amount (as defined below, shall not apply to any Losses
incurred by SFX or its Subsidiaries under this Section 13 (iv) and
shall not be counted toward determining any limitation on the Sellers'
indemnity obligations under the Agreements.
14. INDEMNIFICATION OF THE MEMBERS
Subject to the provisions of Sections 10 and 16, SFX and
Acquisition Sub, jointly and severally, shall indemnify, save harmless and
defend the Members and their respective shareholders, Subsidiaries, parents,
Affiliates, officers and directors from and against any and all Losses incurred
by any of them by reason of, or arising out of:
(i) any claims of any broker or finder engaged by
SFX or Acquisition Sub;
(ii) any breach of any representation or warranty by
SFX or Acquisition Sub contained in this Agreement (including the
schedules hereto);
(iii) any breach by SFX or Acquisition Sub of any
covenant of this Agreement (or any other agreements entered into
pursuant hereto); and
(iv) any claim asserted against the Members under
the Non-Imputation Affidavit (collectively, the "Non-Imputation
Losses") (a) up to an amount equal to the Basket Amount (as
hereinafter defined) (which amount shall be reduced by the aggregate
amount of any Deductible Losses suffered by SFX or Acquisition Sub for
which they have been indemnified by the Members under Section 13(ii)
or 13(iii) of all of the Agreements) and SFX shall reimburse the
Members on demand for any such Non-Imputation Losses covered by this
Section 14(iv)(a), provided, however, if Deductible Losses under all
of the Agreements in the aggregate exceed the Basket Amount, the
Members shall promptly reimburse SFX for any amounts paid to the
Members by SFX under this Section 14(iv)(a), and (b) which exceed the
sum of $6,500,000 (which amount shall be reduced by the amount of all
Deductible Losses suffered by SFX or Acquisition Sub for which they
have been indemnified by the Members under Section 13(ii) or 13(iii)
of all of the Agreements) and the amount of any such Non-Imputation
Losses shall be paid by SFX to the Members upon demand.
15. RULES REGARDING INDEMNIFICATION
(a) The rights and obligations of each party claiming a right
to indemnification hereunder ("Indemnitee") from the other party ("Indemnitor")
shall be governed by the following rules:
(i) The Indemnitee shall give prompt written notice
to the Indemnitor of any state of facts which Indemnitee determines
will give rise to a claim by the Indemnitee against the Indemnitor
based on the indemnity agreements contained in Sections 13 and 14,
32
stating the nature and basis of said claims and the amount thereof, to
the extent known; provided, however, that any claim for
indemnification hereunder must be received by the Indemnitor within
six months after the Closing Date.
(ii) In the event any action, suit or proceeding is
brought against the Indemnitee, with respect to which the Indemnitor
may have liability under the indemnity agreements contained in Section
13 and 14, the Indemnitor shall have thirty (30) days after receipt of
notice of such action, suit or proceeding to undertake, conduct and
control, through counsel of its own choosing and at its own expense,
the settlement or defense thereof (including all proceedings on appeal
or for review which counsel for the Indemnitee shall deem
appropriate), and the Indemnitee shall cooperate with it in connection
therewith. The Indemnitor shall permit the Indemnitee to participate
in such settlement or defense through counsel chosen by such
Indemnitee. If the Indemnitee elects to so participate, the fees and
expenses of such counsel shall be borne by the Indemnitee. So long as
the Indemnitor, at Indemnitor's cost and expense, (1) has undertaken
the defense of, and assumed full responsibility for all indemnified
liabilities with respect to, such claim, (2) is reasonably contesting
such claim in good faith, by appropriate proceedings, and (3) has
taken such action (including the posting of a bond, deposit or other
security) as may be necessary to prevent any action to foreclose a
lien against or attachment of the property of the Indemnitee for
payment of such claim, the Indemnitee shall not pay or settle any such
claim. Notwithstanding compliance by the Indemnitor with the preceding
sentence, the Indemnitee shall have the right to pay or settle any
such claim, provided that in such event it shall waive any right to
indemnity therefor by the Indemnitor for such claim. If, within thirty
(30) days after the receipt of a notice of a claim of indemnity
hereunder, the Indemnitor does not notify the Indemnitee that it
elects, at Indemnitor's cost and expense, to undertake the defense
thereof and assume full responsibility for all indemnified liabilities
with respect thereto, or gives such notice and thereafter fails to
contest such claim in good faith or to prevent action to foreclose a
lien against or attachment of the Indemnitee's property as
contemplated above, the Indemnitee shall have the right to contest,
settle and/or compromise the claim and, to the extent the actions, if
any, taken by the Indemnitee in settling or compromising such claim
are reasonable and in good faith, the Indemnitee shall not thereby
waive any right to indemnity therefor pursuant to this Agreement.
(iii) The Indemnitee shall be kept fully informed by
the Indemnitor of such action, suit or proceeding at all stages
thereof, whether or not it is represented by counsel. The parties
hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and
adequate defense of any such action, suit or proceeding.
(b) The Indemnitor shall make no settlement of any claims
which Indemnitor has undertaken to defend without Indemnitee's consent unless
the Indemnitor fully indemnifies the Indemnitee for all Losses and such
settlement does not involve (i) the entry of injunctive or other equitable
relief against the Indemnitee or (ii) an admission of guilt or wrongdoing.
(c) Subject to Section 15(d), the Members in the aggregate
shall not be responsible for Losses indemnifiable under Sections 13(ii) or
(iii) ("Deductible Losses") unless and
33
until such Deductible Losses in the aggregate exceed an amount equal to
$450,000 (the "Basket Amount"), as reduced by any Non-Imputation Losses
theretofore reimbursed by SFX to the Members. In the event that the aggregate
of such Deductible Losses exceeds the Basket Amount, the Members in the
aggregate shall indemnify SFX and all other indemnified parties for all
Deductible Losses including the Basket Amount. For purposes of this
Section 15(c), Deductible Losses shall be comprised of the aggregate amount of
such Deductible Losses under each of the Agreements. In no event shall the
collective indemnity obligations of the Members, the Shareholders, the Seller
and or the Sellers (as each such term is defined herein and in the Stock
Purchase Agreement, the Asset Purchase Agreement and the Albuquerque/Festivals
Agreement, respectively) for Deductible Losses under Section 13 in all of the
Agreements plus an amount equal to all Non-Imputation Losses in the aggregate
exceed $6.5 million, provided, however, that the Basket Amount shall not apply
to any breach of the representation and warranty set forth in Section 7(x) and
such Losses shall not be counted toward determining whether the aggregate
Deductible Losses or Non-Imputation Losses exceed $6.5 million. Deductible
Losses subject to indemnification under Section 15(c) shall not include
Compliance Losses (defined below) subject to indemnification under Section
15(d).
(d) Notwithstanding the first two sentences of Section 15(c)
and solely with respect to the representations and warranties contained in
Section 7(k) and Section 7(o) of this Agreement (and, for the purposes of
determining whether or not a breach of such representations and warranties has
occurred, without giving effect to whether such representations are limited to
the actual knowledge of the Members), the Members shall indemnify SFX and all
other indemnified parties for all actual out-of-pocket expenditures by such
parties with respect to Compliance Losses (as defined below) in the aggregate
in excess of $700,000 (the "Special Basket Amount") which are incurred by SFX
or any such other indemnified parties as a result of: (x) any structural
repairs to any Real Property which SFX or any such indemnified parties shall
commence on or before the date which is fifteen months following the Closing
Date, but only to the extent that such structural repairs are required to be
performed by the tenant pursuant to the express provisions of the applicable
Lease for such Real Property or, if the applicable Lease is silent as to
whether the landlord or the tenant is required to perform such work, as
required by law solely because of such party's status as a tenant under such
applicable Lease, and (y) SFX or any such indemnified parties being required to
remediate, and commencing such remediation, on or before the date which is
fifteen months following the Closing Date, with respect to any hazardous
substances on any of the Real Property which hazardous substances were
released, discharged or disposed of by the Companies on such Real Property and
the remediation of which is (a) required to be performed in order to comply
with an Environmental Law and (b) is required to be performed by the tenant
under the applicable Lease for such Real Property or, if the applicable Lease
is silent as to whether the landlord or the tenant is required to perform such
work, as required by law solely because of such party's status as a tenant
under such applicable Lease (collectively, the "Compliance Losses"). For
purposes of this Section 15(d), Compliance Losses shall be comprised of the
aggregate amount of such Compliance Losses under all of the Agreements.
Notwithstanding the limitation on the aggregate amount of the indemnity
obligations of the Members, the Shareholders, the Seller and the Sellers under
Section 13 contained in the last sentence of Section 15(c), in the event that
the amount of the Compliance Losses, when added to the total amount of
Deductible Losses subject to indemnification under Section 13 with respect to
all Agreements, shall cause the aggregate Deductible Losses and Compliance
Losses to exceed the sum of $6,500,000, then, solely to the extent of the
amount of the
34
Compliance Losses, such limitation shall be increased to the sum of $8,500,000
with respect to all such Compliance Losses in the aggregate. By way of example,
(A) in the event that all Deductible Losses under Section 13 shall equal the sum
of $6,000,000 in the aggregate and the Compliance Losses shall equal the sum of
$3,000,000 in the aggregate, SFX shall be entitled to recover the amount of
$6,000,000 in respect of such Deductible Losses and the amount of $2,300,000 in
respect of such Compliance Losses, and (B) in the event that all Deductible
Losses under Section 13 shall equal the sum of $8,000,000 and Compliance Losses
shall equal the sum of $1,200,000, SFX shall be entitled to recover the
aggregate sum of $7,000,000 representing $6,500,000 of Deductible Losses and
$500,000 of Compliance Losses. Any breach of the representations and warranties
set forth in Section 7(o) which is not subject to this Section 15(d) shall be
subject to Section 15(c).
(e) If any Indemnitee shall have actual knowledge as of the
Closing Date that any of the representations or warranties of any other party
hereto contained herein are false or inaccurate or that an Indemnitor is in
breach of any covenant or obligation under this Agreement, then the Indemnitor
shall have no liability for any loss resulting from or arising out of the
falsity or inaccuracy of such representations or warranties, or the breach of
such covenant or obligation.
(f) Any indemnifiable Loss hereunder shall be calculated on a
net after tax basis and shall be reduced by the amounts actually recovered by
the Indemnitee from its insurance carriers and any amounts recovered by such
party subsequent to the payment by the Indemnitor with respect to the same
claim shall be remitted to the Indemnitor; provided that such remittance shall
not exceed the amount of the indemnification payment made by such Indemnitor.
(g) The remedies provided in Sections 13, 14 and 15 shall be
the sole and exclusive remedies of the parties with respect to any breach of a
representation, warranty or covenant by another party under this Agreement,
except as set forth elsewhere in this Agreement.
(h) All indemnification payments shall be treated by the
parties as adjustments to the Purchase Price.
16. TERMINATION
(a) This Agreement may be terminated at any time prior to the
Expiration Date:
(i) by mutual consent of all of the parties; or
(ii) by either SFX or the Members if there has been
a breach of this Agreement on the part of the other party which has or
could reasonably be expected to have a Material Adverse Effect on such
other party and its Subsidiaries and Affiliates taken as a whole, and
such other party has failed to cure such breach after not less than 10
days' notice thereof; or
(iii) by SFX during the period between May 17, 1999
and May 21, 1999, if the Members have provided SFX with ten business
days prior written notice that, notwithstanding their commercially
reasonable efforts, the Members will be unable to obtain one or more
of the consents, waivers or amendments listed on Schedule 7(e) prior
to the
35
Closing Date; provided that if SFX does not terminate the Agreement
during such period then the requirement to obtain the consents,
waivers and amendments specified in the Members' notice to SFX shall
be deemed waived; or
(iv) by either SFX or the Members if the
transactions contemplated herein have not been consummated by
August 31, 1999 (the "Expiration Date").
(b) If this Agreement is terminated by the Members pursuant
to Section 16(a)(iv) and as of such date (i) the condition set forth in Section
6(f) has not been fulfilled and (ii) each of the conditions in Section 5 other
than the condition set forth in Section 5(f) have been satisfied or are readily
capable of being satisfied and the Members shall have delivered to SFX a
certificate signed by each of them to such effect, then (x) $2,475,000 of the
Down Payment shall become non-refundable liquidated damages (the "Termination
Fee") and (y) the Members shall promptly (and in no event later than five
business days from the date of termination) refund the remaining $1,650,000 of
the Down Payment, together with all accrued interest thereon; provided,
however, that the Termination Fee shall be increased by $1,650,000 such that
the entire Down Payment shall become non-refundable liquidated damages if SFX
failed to use its best efforts to obtain HSR Clearance.
(c) If this Agreement is terminated by SFX pursuant to
Section 16(a)(iv) and as of such date the condition set forth in Section 6(f)
has not been fulfilled, then the Members shall be entitled to retain the entire
Down Payment as liquidated damages.
(d) If this Agreement is terminated by the Members under
Section 16(a)(ii), then the Members shall be entitled to the Termination Fee as
liquidated damages, provided that there has not been a breach on the part of
the Members which gives SFX the right to terminate this Agreement under Section
16(a)(ii). If the Members retain the Termination Fee pursuant to this Section
16(d), then the Members promptly shall refund the remaining $2,500,000 of the
Down Payment together with all accrued interest thereon, if such amount has
theretofore been deposited with the Members under Section 12(q). If this
Agreement is terminated by SFX under Section 16(a)(ii), then the Members
promptly shall refund the Down Payment together with all accrued interest
thereon, provided that there has not been a breach on the part of SFX which
gives the Members the right to terminate this Agreement under
Section 16(a)(ii).
(e) Notwithstanding any other provision of this Agreement, if
each of the conditions set forth in Section 5 have been satisfied or are
readily capable of being satisfied and the Members have delivered to SFX a
certificate signed by each of them to such effect and SFX refuses to effect the
transactions contemplated by this Agreement, then the Members shall be entitled
to retain the entire Down Payment as liquidated damages.
(f) The parties agree that the amounts payable pursuant to
paragraphs (b), (c), (d) and (e) above are reasonable liquidated damages
considering all of the actual damages reasonably expected to result from the
termination of this Agreement as described therein. The parties further agree
that, to the fullest extent permitted by law, the payment of such liquidated
damages as provided therein shall be its sole and exclusive remedy if the
Closing does not occur because of a termination of this Agreement under the
circumstances described therein.
36
(g) If this Agreement is terminated pursuant to this
Section 16, notwithstanding any provision in the Confidentiality Agreement to
the contrary, SFX's obligations under the Confidentiality Agreement shall
continue for 18 months from the date of termination.
17. MISCELLANEOUS
(a) Expenses, Etc. Except for all real property transfer
taxes, if any, which shall be paid by the Members, all costs, fees or expenses
(including, without limitation, legal and accounting fees), incurred by the
parties hereto, shall be borne by such party incurring such costs, fees or
expenses.
(b) Parties in Interest; Assignment. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the Members and
their respective successors and permitted assigns, and SFX and its successors
and permitted assigns. No third party rights shall attach to any parties other
than the parties hereto. This Agreement shall not be assignable without the
written consent of the other parties, except that SFX may assign its rights and
obligations hereunder to any direct or indirect Subsidiary, provided that SFX
remains a party to this Agreement and shall be primarily responsible for all
obligations of any Subsidiary of SFX hereunder.
(c) Appointment of Agent for Members. Each Member hereby
appoints and authorizes Xxxxxx Xxxxxxxxxxx to act as agent on its behalf and to
exercise those powers and discretion under the terms of this Agreement as are
delegated to the Members, together with such powers and discretion as are
reasonably incidental thereto, including, without limitation, those powers
necessary to carry out this Agreement. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or refrain from
acting (and shall be fully protected by the Members in so acting or refraining
from acting) on the instructions of the Members and such instructions shall be
binding on the Members. The Agent shall not be liable to the Members for any
action taken or omitted to be taken by him under or in connection with this
Agreement except for gross negligence, willful misconduct or fraud.
(d) Specific Performance. The parties hereto recognize that,
in the event the Members refuse to perform the provisions of this Agreement,
monetary damages will not be adequate. SFX shall therefore be entitled in such
event to obtain specific performance of the terms of this Agreement. In any
action to enforce the provisions of this Agreement by SFX, the Members shall
waive the defense that there is an adequate remedy at law or equity and shall
agree that SFX has the right to obtain specific performance of the terms of
this Agreement without being required to prove actual damages, post bond or
furnish other security.
(e) Mutual Release. Effective as of the Closing, each of the
Members and each of the Companies, for themselves and their respective
representatives, Affiliates, immediate family members, successors and assigns
(collectively, "Releasors"), hereby forever release and discharge the other and
their respective Affiliates, immediate family members, predecessors,
successors, and assigns and their respective stockholders, members, principals,
partners, directors, officers, agents, employees and representatives, past,
present or future, and their respective successors and assigns (collectively,
"Releasees"), from and against any and all claims (including, without
limitation, claims
37
for indemnification or contribution), causes of action, liabilities,
obligations, costs, expenses (inclusive of attorneys fees and expenses), suits,
debts, sums of money, account, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, vacancies,
trespasses, damages, judgments, executions and demands whatsoever, in law or in
equity, whether known or unknown, of any kind or nature whatsoever, that
Releasors, or any of them, ever had, now have or may have in the future,
against Releasees, or any of them by reason of any actual or alleged act,
omission, transaction, practice, conduct, occurrence or other matter prior to
the Closing Date, whether the same be in administrative proceedings, at law, in
equity or mixed, in the United States of America or in any other jurisdiction.
Nothing contained in this Section 17(e) shall effect a release, modification,
waiver or amendment of the indemnification obligations set forth in Sections
13, 14 and 15 of this Agreement or the obligations in Section 12.
(f) Entire Agreement; Amendments. This Agreement, including
all schedules, exhibits and other writings referred to herein or delivered in
connection herewith contain the entire understanding of the parties with
respect to its subject matter, except that the terms and conditions of the
Confidentiality Agreement dated as of August 10, 1998, by and between SFX, on
the one hand, and GDT, Arena, Xxx Cincinnati, Nederlander of Ohio, Inc. and Xxx
Club, on the other hand, as amended pursuant to that certain amendment dated
August 17, 1998, shall remain in full force and effect. This Agreement may be
amended, modified or terminated only by a written instrument duly executed by
all of the parties hereto.
(g) Interpretation. When a reference is made in this
Agreement to a Section or Schedule, such reference will be to a Section of, or
a Schedule to, this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to "knowledge" or "actual knowledge" in
this Agreement with respect to the entities which are parties hereto shall
refer to the actual knowledge of the signatories for such parties and such
officers, responsible employees, members or managers, as the case may be, of
the parties reasonably necessary to assure the material accuracy of the
representations and warranties. The terms used in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to any
person are also to its permitted successors and assigns.
(h) Notices. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement ("notice") shall be sufficiently given or made
if in writing and delivered in person with receipt acknowledged, sent by
registered or certified mail, return receipt requested, postage prepaid, sent
by overnight courier with guaranteed next day delivery or sent by telex or
facsimile to the party to
38
whom directed at the following address:
If to the Members to:
Xxxxxx Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxxx LLP
1900 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
and
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to SFX, to:
SFX Entertainment, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxx, Esq.
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice shall be deemed to
have been duly given or served on the date on which personally delivered, with
receipt acknowledged, three business days after the same shall have been
deposited in the United States mail, one business day after sent by overnight
courier or on the day telexed or faxed.
(i) Materiality/Schedules. Inclusion of information on any
schedule or other writing annexed to or delivered pursuant to this Agreement
does not constitute an admission or acknowledgment of the materiality of such
information. Information disclosed in any particular schedule annexed hereto
shall, for the purposes of all representations and warranties made herein,
39
be deemed included in all other schedules annexed hereto.
(j) Further Assurances. After the Closing Date, without
further consideration, the Members and SFX shall take such further action and
shall execute and deliver such further documents as either party shall
reasonably request in order to carry out the provisions and purposes of this
Agreement.
(k) Waivers. No waiver of any breach or default hereunder
shall be considered valid unless in writing and signed by the party giving such
waiver. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent, same
or different breach.
(l) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(m) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED SOLELY WITHIN SUCH STATE. THE
PARTIES EXPRESSLY AGREE THAT ANY CONTROVERSY, DISPUTE OR CLAIM WITH RESPECT TO
ANY PROVISION OF THIS AGREEMENT BROUGHT BY ANY PARTY HERETO SHALL BE
ADJUDICATED SOLELY BY THE FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, APPLYING NEW YORK LAW WITHOUT REGARD TO THE RULES OF CONFLICTS OF LAW
AND THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SAID
COURT AND WAIVE ANY OBJECTION THEY MAY HAVE TO THE DESIGNATION OF A FORUM OR
VENUE OF SUCH COURT SET FORTH HEREIN AND FURTHER WAIVE ANY RIGHTS TO A JURY
TRIAL.
(n) Severability. To the extent possible, each provision of
this Agreement shall be interpreted in a manner as to be valid, legal and
enforceable. Any determination that any provision of this Agreement or any
application thereof is invalid, illegal or unenforceable in any respect or in
any instance shall be effective only to the extent of such invalidity,
illegality or unenforceability and shall not affect the validity, legality or
enforceability of any other provision of this Agreement.
40
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first set forth above.
NEDERLANDER ARENA MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Member and Chief Financial
Officer
NEDERLANDER CINCINNATI, LLC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Member, Secretary and
Treasurer
NEDERLANDER CLUB MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Member and Chief Financial
Officer
OHIO ARENA PARTNERS LLC
By: RER Ohio Corp.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxxx
Title: President
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
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XXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxx
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XXXXX X. XXXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxxx
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XXXXX X. XXXXXXXXXXX
/s/ XXXXXXX X. XXXXXX as Attorney-in-fact
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SFX ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
CONCERT ACQUISITION SUB, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President
TABLE OF CONTENTS
Page
1. Definitions..............................................................................................2
2. Purchase and Sale of Membership Interests................................................................2
3. Closing..................................................................................................2
(a) Time and Place of Closing.......................................................................2
(b) Down Payment....................................................................................2
(c) Purchase Price..................................................................................2
(d) Adjusted Closing Cash Payment. ................................................................3
(e) Closing Transactions............................................................................3
(f) Apportionments..................................................................................5
(g) Arena Option. ..................................................................................8
4. Post-Closing Adjustments.................................................................................8
(a) Crown Arena.....................................................................................8
(b) Crown Earnout...................................................................................9
(c) Arbitration....................................................................................10
(d) Xxxx Clawback..................................................................................10
5. Conditions to Obligations of SFX........................................................................12
(a) Representations and Warranties.................................................................12
(b) Performance of Agreements......................................................................12
(c) Litigation; Consents...........................................................................12
(d) Intentionally Omitted..........................................................................12
(e) Closing Deliveries.............................................................................12
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period. ............................................................12
6. Conditions to Obligations of the Members................................................................13
(a) Representations and Warranties.................................................................13
(b) Performance of Agreements......................................................................13
(c) Litigation; Consents...........................................................................13
(d) Intentionally Omitted..........................................................................13
(e) Closing Deliveries.............................................................................13
(f) Xxxx-Xxxxx-Xxxxxx Waiting Period. ............................................................13
7. Representations and Warranties of the Companies.........................................................14
(a) Organization, Standing and Power...............................................................14
(b) Capitalization.................................................................................14
(c) Crown Ownership Interests......................................................................14
(d) Due Authorization; Legal Authority, Binding Effect.............................................14
(e) No Conflicts; Consents.........................................................................15
(f) Organizational Documents.......................................................................15
(g) Financial Statements...........................................................................15
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(h) Liabilities....................................................................................16
(i) Absence of Changes.............................................................................16
(j) Foreign Person.................................................................................17
(k) Environmental Matters..........................................................................17
(l) Insurance......................................................................................17
(m) Litigation, Etc................................................................................18
(n) Material Contracts.............................................................................18
(o) Compliance; Governmental Authorizations........................................................18
(p) Employee Benefit Plans.........................................................................18
(q) Employees......................................................................................20
(r) Taxes..........................................................................................21
(s) No Brokers or Finders..........................................................................22
(t) Title to Properties............................................................................22
(u) Intellectual Property..........................................................................22
(v) Transactions With Affiliates...................................................................22
(w) Real Property..................................................................................23
(x) Outstanding Indebtedness.......................................................................24
8. Representations And Warranties Of Each Member...........................................................25
(a) Authorization of Transaction...................................................................25
(b) Noncontravention...............................................................................25
(c) The Membership Interests.......................................................................25
9. Representations and Warranties of SFX and Acquisition Sub...............................................25
(a) Organization, Standing and Power...............................................................25
(b) Due Authorization; Legal Authority; Binding Effect.............................................26
(c) No Conflicts, Etc..............................................................................26
(d) Litigation.....................................................................................26
(e) Compliance; Governmental Authorizations........................................................27
(f) No Required Stockholder Vote or Consent........................................................27
(g) No Brokers or Finders..........................................................................27
(h) Investment Intent..............................................................................27
(i) Financial Capacity.............................................................................27
(j) Intentionally omitted..........................................................................27
(k) Due Diligence..................................................................................27
10. Survival of Representations and Warranties..............................................................28
11. Conduct and Transactions Prior to Closing...............................................................28
(a) By the Members.................................................................................28
(i) Access to Records and Properties of the Companies.....................................28
(ii) Operation of the Business of the Companies............................................28
12. Additional Covenants....................................................................................28
(a) Cooperation....................................................................................28
(b) Intentionally omitted..........................................................................29
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(c) CEA/Arena Debt.................................................................................29
(d) No License; Name Change; Subsequent Filings....................................................29
(e) Release of Guaranties, Etc.....................................................................29
(f) Intentionally Omitted..........................................................................30
(g) Notice of Events...............................................................................30
(h) Filings and Governmental Consents..............................................................30
(i) Xxxx-Xxxxx Xxxxxx Filing.......................................................................30
(j) Confidentiality................................................................................30
(k) "As Is, Where Is" Acquisition..................................................................31
(l) Further Actions................................................................................31
(m) Intentionally Omitted..........................................................................32
(n) Intentionally Omitted..........................................................................32
(o) Termination of Certain Agreements..............................................................32
(p) Intentionally Omitted..........................................................................32
(q) Increased Down Payment.........................................................................32
13. Indemnification of Purchaser............................................................................32
14. Indemnification of the Members..........................................................................33
15. Rules Regarding Indemnification.........................................................................33
16. Termination.............................................................................................36
17. Miscellaneous...........................................................................................38
(a) Expenses, Etc..................................................................................38
(b) Parties in Interest; Assignment................................................................38
(c) Appointment of Agent for Members...............................................................38
(d) Specific Performance...........................................................................38
(e) Mutual Release.................................................................................38
(f) Entire Agreement; Amendments...................................................................39
(g) Interpretation.................................................................................39
(h) Notices........................................................................................40
(i) Materiality/Schedules..........................................................................41
(j) Further Assurances.............................................................................41
(k) Waivers........................................................................................41
(l) Counterparts...................................................................................41
(m) GOVERNING LAW..................................................................................41
(n) Severability...................................................................................41
LIST OF SCHEDULES AND EXHIBITS...................................................................................iv
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LIST OF SCHEDULES AND EXHIBITS
Exhibit 1 Definitions
Schedule A Membership Interests
Schedule 3(c)(iii) Allocation of Purchase Price
Exhibit 3(e)(i)(E) Form of Opinion of Counsel to the Members
Schedule 3(e)(i)(G) Estoppel Certificates
Exhibit 3(e)(i)(I) Form of Non-Imputation Affidavit
Exhibit 3(e)(ii)(D) Form of Opinion of Counsel to SFX
Schedule 5(b) Performance of Agreements
Schedule 7(a) Jurisdictions Qualified
Schedule 7(b) Outstanding Securities and Commitments
Schedule 7(c) Crown Arena Organization Chart and Liens
Schedule 7(e) Violations, Conflicts and Required Consents
Schedule 7(g) Financial Statements
Schedule 7(h) Outstanding Financial Liabilities
Schedule 7(i) Material Changes in Operations
Schedule 7(k) Environmental Law Violations
Schedule 7(k)(ii) Material Environmental Permits
Schedule 7(l) Insurance Policies and Unresolved Claims Thereunder
Schedule 7(m) Pending and Threatened Litigation
Schedule 7(n) Material Contracts
Schedule 7(o) Compliance and Governmental Authorizations of the Companies
Schedule 7(p) Employee Benefit Plans
Schedule 7(q) Employee Information
Schedule 7(r) Tax Returns Not Filed
Schedule 7(t) Exceptions to Title
Schedule 7(v) Transactions with Affiliates
Schedule 7(w) Real Property
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Schedule 9(c) Violations and Conflicts
Schedule 9(e) Compliance and Governmental Authorizations of SFX
Schedule 9(k) Documents Provided to SFX and Acquisition Sub
Schedule 12(e) Release of Guaranties
Schedule 12(o) Agreements to be Terminated
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EXHIBIT 1
DEFINITIONS
As used in the Agreement, the following terms have the following definitions:
"Adjusted Closing Cash Payment" has the meaning set forth in Section 3(d) of the Agreement.
"Affiliate" means, with respect to any person, any other person that directly or
indirectly through one or more intermediaries controls, is
controlled by or is under common control with such person.
"Agreement" means this Membership Interest Purchase Agreement,
including Exhibits and Schedules attached hereto.
"Agreements" means this Membership Interest Purchase Agreement, the
Stock Purchase Agreement, the Asset Purchase Agreement
and the Albuquerque/Festivals Agreement.
"Apportionment Arbitration" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"Arena" Nederlander Arena Management Co., LLC.
"Arena Management Agreement" has the meaning set forth in the Recitals to the Agreement.
"Balance Sheets" has the meaning set forth in Section 7(h) of the Agreement.
"Basket Amount" has the meaning set forth in Section 15(c) of the Agreement.
"Benefit Plans" has the meaning set forth in Section 7(p)(i) of the Agreement.
"Call Option" has the meaning set forth in Section 3(g) of the Agreement.
"Cincinnati Adjustment" has the meaning set forth in Section 3(d) of the Agreement.
"Closing" means the consummation of the transactions contemplated by
the Agreement.
"Closing Date" has the meaning set forth in Section 3(a) of the Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, and any regulations promulgated
thereunder.
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"Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Coke Sponsorship Agreement" has the meaning set forth in Section 3(f)(i)(B)(2) of the
Agreement.
"Confidentiality Agreement" means the Confidentiality Agreement dated as of August 10,
1998, by and between SFX, on the one hand, and GDT,
Arena, Nederlander Cincinnati LLC, Nederlander of Ohio,
Inc. and Nederlander Club Management LLC, on the other
hand, as amended pursuant to that certain amendment dated
August 17, 1998.
"Crown Interests" has the meaning set forth in the Recitals to the Agreement.
"Deductible Losses" has the meaning set forth in Section 15(c) of the Agreement.
"Disputed Apportionments" has the meaning set forth in Section 3(f)(iii) of the
Agreement.
"Down Payment" has the meaning set forth in Section 3 of the Agreement, and
as may be modified by Section 12(q) of the Agreement.
"Encumbrances" means any security interests, liens, pledges, claims of third
parties of any nature whatsoever, leases, charges, escrows,
encumbrances, options, rights of first refusal, transfer
restrictions, mortgages, hypothecations, indentures,
security agreements or other similar agreements, arrangements,
contracts, commitments, understandings or obligations.
"Environmental Laws" means any federal, state, or local statute, rule, regulation,
ordinance, code, order or judgment (including any judicial or
administrative interpretations, guidances, directives, policy
statements, opinions, injunctions, or orders) relating to the
injury to, or the pollution or protection of, the environment or
to human health or safety.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulations promulgated
thereunder.
"Escrow Agent" has the meaning set forth in Section 4(d) of the Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Expiration Date" has the meaning set forth in Section 16(c)(iii) of the
Agreement.
"Final Schedule" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"Financials" means the separate financial statements of each of the
Companies as of and for the periods indicated therein as set
forth on Schedule 7(g).
"GDT" has the meaning set forth in the Preamble of the Agreement.
"Governmental Authority" means any federal, state or local government, or political
subdivision thereof and any person exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government.
"Xxxx-Xxxxx Xxxxxx Filing" means the Notification and Report Form[s] filed by SFX and the Members with
the United States Department of Justice and the Federal Trade Commission in
accordance with the notification requirements of the HSR Act.
"Xxxx-Xxxxx-Xxxxxx Waiting Period" means all applicable waiting periods in respect of the
transactions contemplated by this Agreement under the HSR Act.
"Hazardous Substances" means petroleum, petroleum products, petroleum-derived
substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, radon, urea
formaldehyde, asbestos or any materials containing asbestos,
and any materials or substances regulated or defined as or
included in the definition of "hazardous substances,"
"hazardous materials," "hazardous constituents," "toxic
substances," "pollutants," "contaminants" or any similar
denomination intended to classify or regulate substances by
reason of toxicity, carcinogenicity, ignitability, corrosivity or
reactivity under any Environmental Law.
"Health Plans" has the meaning set forth in Section 12(b)(iii) of the
Agreement.
HSR Act means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and any regulations promulgated therein.
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"HSR Clearance" means the expiration or termination of the Xxxx-Xxxxx-Xxxxxx
Waiting Period.
"Indemnitee" has the meaning set forth in Section 15(a) of the Agreement.
"Indemnitor" has the meaning set forth in Section 15(a) of the Agreement.
"IRS" the Internal Revenue Service
"Law" means any federal, foreign, state, or local statute, rule, regulation,
ordinance, code, order or judgment (including any judicial or
administrative interpretations, guidances, directives, policy
statements, opinions, injunctions, or orders).
"Lease Termination Notice" has the meaning set forth in Section 4(d) of the Agreement.
"Leases" means any of the real property, leases, royalty interests, net
profits interests, licenses, concessions or other interests in
real property of Arena.
"Legal Requirement" means an action which an individual or entity is required
to take, or to refrain from taking, by any Law.
"Liens" means 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.
"Losses" means all claims, damages, liabilities, losses, costs, and
expenses, including without limitation attorneys' fees and
expenses.
"Material Adverse Effect" means an event, loss, damage, condition or state of facts of
any character which materially adversely affects or can
reasonably be expected in the ordinary course of events to
materially adversely affect the business, financial condition,
results of operations, assets or liabilities of an entity as a
whole; provided, however, that any loss or damage shall be
disregarded to the extent it is caused by or attributable to a
change in the economic or political conditions or events
affecting an entity's industry generally (whether general or
regional in nature or limited to any area where any assets of
an entity are located); and provided further that in no event
shall any occurrence, event, loss, damage, condition or state
of facts of any character affecting SFX or its business be
construed to be a Material Adverse Effect with respect to the
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Members.
"Material Contract" means a written contract or other legally binding obligation of
a contractual nature to which any of the Companies is a party
that (i) is an agreement for the lease of personal property to or
from any person providing for lease payments in excess of
$50,000 per year; (ii) is an agreement for the purchase or sale
of raw materials, commodities, supplies or other personal
property, or for the furnishing or receipt of services, the
performance of which has a remaining term of more than 12
months or involves unpaid consideration in excess of
$50,000; (iii) is a 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; (iv) is a contract for
the employment of any current or former director or officer of
any of the Companies; (v) involves a transaction with an
Affiliate of the Members that is not arms-length or on terms
that are less than fair market, (vi) is an indenture, note, loan
or credit agreement or other contract relating to the borrowing
of money or the issuance of letters of credit by any of the
Companies or (vii) otherwise involves the payment or receipt
by any of the Companies of a net amount of $100,000 or more
within a one-year period.
"Members" means the individuals and/or entities listed on Schedule A.
"Membership Interests" has the meaning set forth in Section 2 of the Agreement.
"Nederlander Closing Documents has the meaning set forth in Section 7(d) of the Agreement.
"Net Xxxx Earnings" has the meaning set forth in Section 4(d) of the Agreement.
"Notice of Dispute" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"Option Interest" has the meaning set forth in Section 3(g) of the Agreement.
"Participant" has the meaning set forth in Section 12(b)(i) of the
Agreement.
"Permits" means any permit, license, order, approval or other authorization
which is required under applicable Laws.
"Preamble" means the introductory paragraph and recitals and other text
of the Agreement preceding Section 1.
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"Pre-Closing Termination Notice" has the meaning set forth in Section 4(d) of the Agreement.
"Purchase Price" has the meaning set forth in Section 3(c) of the Agreement.
"Put Option" has the meaning set forth in Section 3(g) of the Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"SFX" SFX Entertainment, Inc.
"SFX Shares" has the meaning set forth in Section 3(c)(iii) of the Agreement.
"SFX 401(k) Plan" has the meaning set forth in Section 12(b)(i) of the
Agreement.
"SFX Amount" has the meaning set forth in Section 3(f)(iv) of the
Agreement.
"SFX Benefit Plans" means (A) each employee benefit plan, as defined in Section
3(3) of ERISA, and (B) to the extent not covered under (A)
above, each material stock option, bonus, deferred
compensation, excess, supplemental executive compensation,
employee stock purchase, vacation, sickness, disability,
severance, restricted stock or other material employee benefit
plan, policy or arrangement, sponsored, maintained or
contributed to by SFX or by a SFX ERISA Affiliate for the
benefit of employees or former employees of SFX and under
which SFX currently has an obligation or a liability.
"SFX Closing Documents" has the meaning set forth in Section 9(b) of the Agreement.
"SFX Contribution" has the meaning set forth in Section 3(d) of the Agreement.
"SFX ERISA Affiliate" means any entity that would be deemed a "single
employer" with SFX under Section 414(b), (c), (m), or (o) of the
Code or Section 4001 of ERISA.
"Subsidiary" means, with respect to any person, any corporation, limited
liability company, partnership, association or other business
entity of which securities or other ownership interests
representing more than 50% of the ordinary voting power are,
at the time as of which any determination is being made,
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owned or controlled, directly or indirectly, by the parent of
such person or one or more subsidiaries of the parent of such
person.
"Xxxx Escrow Agreement" has the meaning set forth in Section 4(d) of the Agreement.
"Xxxx Purchase Price" has the meaning set forth in Section 4(d) of the Agreement.
"Tax" has the meaning set forth in Section 7(r)(iii)(A) of the
Agreement.
"Tax Returns" has the meaning set forth in Section 7(r)(iii)(B) of the
Agreement.
"Taxes" has the meaning set forth in Section 7(r)(iii)(A) of the
Agreement.
"Ticketmaster Agreement" has the meaning set forth in Section 3(f)(i)(B)(3) of the
Agreement.
"401(k) Plan" has the meaning set forth in Section 12(b)(i) of the
Agreement.
"Termination Fee" has the meaning set forth in Section 16(c)(iii) of the
Agreement.
"Venues" has the meaning set forth in the Preamble of the Agreement.
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