STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of January 25, 1999 between
the persons listed as Sellers on the signature pages of this Agreement (the
"Sellers"), as the holders of all the outstanding shares of capital stock and
other equity interests of the entities listed on Exhibit A-1 (subject to the
exclusion noted therein) attached hereto (individually a "Company" and
collectively the "Companies") and SFX Entertainment, Inc., a Delaware
corporation (the "Buyer").
WHEREAS, the Sellers desire to sell to the Buyer all (and not
less than all) of the outstanding shares of capital stock and other equity
interests of the Companies (subject to the exclusion noted on Exhibit A-1) and
the Buyer desires to purchase such shares and interests from the Sellers, on
the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein set forth, the parties agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Action": any lawsuit, action, complaint, administrative
proceeding, arbitration, charge, claim, request for investigation,
report of alleged violation of law or regulation, criminal
prosecution, hearing, governmental or regulatory investigation,
governmental or regulatory charge or litigation, or legal proceeding
of any nature filed with or made to any court, Governmental Authority
or organization by any Person alleging potential Liability relating to
or affecting any Company, its assets (including, without limitation,
Contracts relating to a Company), its Business or the transactions
contemplated by this Agreement.
"Affiliate": with respect to any Person means (i) any other
Person directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person;
(ii) any officer, director, partner, employee, agent, or
representative or direct or indirect beneficial or legal owner of any
5% or greater equity or voting interest of such Person; or (iii) any
entity for which a Person described in (ii) above acts in any such
capacity.
"Agent": Xxxx X. Xxxxx, as agent for the Sellers.
this "Agreement": this Stock Purchase Agreement and all
Schedules and Exhibits hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Average Market Price": as of any date, the arithmetical
average Market Price of the Buyer's Class A Common Stock, $0.01 par
value, as reported in the
0
Xxxx Xxxxxx Journal for the 20 consecutive trading days ending
immediately prior to such date.
"Business": the music promotion, entertainment and other
business activities now carried on by each of the Companies.
"Business Day": any day other than a Saturday, Sunday or
other day on which banks in the State of New York are legally
authorized or required to be closed.
"CD Shares": shares of capital stock of or other equity
interests in the Companies.
"Closing": the closing of the transactions contemplated by
this Agreement.
"Closing Date": the date of the Closing.
"Code": the Internal Revenue Code of 1986, as amended.
"Consent": any consent, waiver, approval or authorization of,
notice to, or designation, registration, declaration or filing with,
any Person.
"Contract": any written or oral contract, agreement,
understanding, lease, license, note, plan, instrument, commitment,
restriction, arrangement, obligation, undertaking, practice or
authorization of any kind or character or other document to which a
Person is a party, or that is binding on such Person or its
securities, assets or business.
"Employment Agreement": as defined in Section 8.1(g).
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Financial Statements": the audited financial statements of
the Companies for the fiscal year ended December 31, 1997, and the
unaudited financial statements of the Companies for the nine-month
period ended September 30, 1998, copies of which are attached hereto
as Schedule 1.
"GAAP": generally accepted accounting principles consistently
applied.
"Governmental Authority" means any federal, state, county,
local, foreign or other governmental or public agency,
instrumentality, commission, authority, board or body.
"HSR Act": the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the regulations thereunder.
2
"knowledge" or "known": with respect to the Sellers means (i)
the actual knowledge of any of the Sellers, without having made any
inquiry, and (ii) the actual knowledge Xxxx X. Xxxxx would have after
due inquiry of the officers of the Companies responsible for the
matters as to which knowledge pertains.
"Laws": (i) all Federal, state, local or foreign laws, rules
and regulations; (ii) all Orders; (iii) all Permits; and (iv) all
agreements with Federal, state, local or foreign regulatory
authorities to which Buyer, any Seller or any Company are parties (as
the context may require).
"Liability": any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, expense (including,
without limitation, costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills and checks presented to banks for
collection or deposit in the ordinary course of business) of any type,
whether known, unknown, accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
"Lien": any mortgage, pledge, deed of trust, transfer
restriction, put option, purchase option, escrow, hypothecation, lien,
security interest, financing statement, lease, charge, encumbrance,
easement, rights of way, conditional sale or other title retention or
security agreement or any other similar restriction, claim or right of
others whether arising by Contract, operation of Law or otherwise.
"Litigation Expense": any expense incurred in connection with
investigating, defending or asserting any Action incident to any
matter indemnified against hereunder (including without limitation
rights to indemnification hereunder), including, without limitation,
court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals.
"Loss": any and all direct or indirect demands, claims,
payments, obligations, recoveries, deficiencies, fines, penalties,
interest, assessments, actions, causes of action, suits, losses, and
liabilities, and interest on any amount payable to a Third Party as a
result of the foregoing, other than Litigation Expense.
"Market Price" means as to any security the arithmetical
average of the closing sales prices of such security on such day on
all national domestic exchanges on which such security may at the time
be listed, or, if there shall have been no sales on any such exchange
on such day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on such day such
security shall not be so listed or trading thereon or on such exchange
shall be suspended, the closing price on such day of any such security
3
traded on the NASDAQ System or, if no such closing price is available,
(i) the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or (ii)
if on such day such security shall not be quoted in the NASDAQ System,
the average of the high and low bid and asked prices on such day in
the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization.
"Material Adverse Effect": as to any Person, any material
adverse change in or effect on (i) the business, operations, assets,
Liabilities, condition (financial or otherwise) or results of
operations of such Person, (ii) the ability of such Person to
consummate the transactions contemplated by this Agreement or any of
the other Transaction Documents to which it is or will be a party, or
(iii) the ability of such Person to perform any of its obligations
under this Agreement or any of the other Transaction Documents to
which it is or will be a party. Whenever reference is made in this
Agreement to a Material Adverse Effect on any Company or the
Companies, same shall refer to a Material Adverse Effect on the
Companies taken as a whole.
"Non-Competition Agreements": the Non-Competition and
Confidentiality Agreements to be executed and delivered pursuant to
Section 8.2(h).
"Order": any decree, injunction, judgment, order, ruling,
writ, quasi- judicial decision or award or administrative decision or
award of any federal, state, local, foreign or other court,
arbitrator, tribunal, administrative agency or Governmental Authority
to which a Person is a party or that is binding on such Person or its
securities, assets or business.
"Permits": all Federal, state, local or foreign permits,
licenses, approvals, franchises, notices, authorizations,
registrations, certifications and similar filings.
"Permitted Dividends": as defined in Section 6.5.
"Permitted Liens": (i) carriers', warehousemen's, workers',
materialmen's, brokers' or customs' or other like Liens (including tax
liens) arising in the ordinary course of business with respect to
obligations which are not due; (ii) deposits or pledges to secure
obligations under workers compensation, social security or similar
laws, or under unemployment insurance, or to secure bids, tenders,
contracts (other than contracts for the payment of money), leases,
statutory obligations, surety, performance and appeal bonds, and other
obligations of like nature arising in the ordinary course of business;
(iii) judgment liens that have been stayed or bonded; (iv) liens and
other title exceptions set forth on Schedule 3.9; (v) other liens
(other than securing or requiring the payment of money), encumbrances
and title exceptions of record with respect to real estate; and (vi)
4
other liens, easements, rights-of-way and title exceptions with
respect to real estate which do not materially adversely impair the
use or operation of the subject property for the business currently
conducted by the Companies thereon or thereat.
"Person": a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a business
association, corporation, general partnership, joint venture, limited
partnership, limited liability company, trust, or
any person acting in a representative capacity.
"Purchase Price": as defined in Section 2.3.
"SEC": the Securities and Exchange Commission.
"Securities Act": the Securities Act of 1933, as amended.
"SFX Shares": as defined in Section 2.3.
"Stock Option Agreement": as defined in Section 2.3.
"Subsidiary": with respect to any Person, (i) any corporation
of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors of such corporation is at the time, directly or indirectly
owned by such Person, or (ii) any partnership, limited liability
company or joint venture or other entity of which more than fifty
percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by such Person.
"Taxes": all taxes, charges, duties, fees, levies, penalties
or other assessments imposed by any taxing authority, including, but
not limited to, income, excise, property, sales or transfer taxes,
including any interest, penalties or additions attributable thereto.
"Tax Returns": all returns, reports, filings, declarations
and statements relating to Taxes that are required to be filed,
recorded, or deposited with any Governmental Authority, including any
attachment thereto or amendment thereof.
"Third Party" or "Third Parties": any Person that is not the
Buyer, a Company or a Seller or an Affiliate of the Buyer, a Company
or a Seller.
"Transaction Documents": this Agreement, the Non-Competition
Agreements, the Employment Agreement and the Stock Option Agreement.
2. Sale and Purchase of Stock.
5
2.1 Sale and Purchase. At the Closing, each Seller shall
sell, transfer, assign, convey and deliver all (and not less than all) of the
CD Shares owned by it to the Buyer or its designee(s), and the Buyer or its
designee(s) shall purchase, accept and acquire all (and not less than all) of
the CD Shares from the Sellers. Anything elsewhere contained in this Agreement
to the contrary notwithstanding, the CD Shares being sold hereunder do not
include the 1% general partner interest in JJJ Amphitheater Limited Partnership
which is owned by one of the Companies.
2.2 Closing Date. The Closing shall occur on February 10,
1999, or on such earlier date as may be designated by the Sellers upon
reasonable notice. The Closing will take place at the offices of Winston &
Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000. The time and place of the
Closing may be changed as the parties may mutually agree in writing.
2.3 Purchase Price.
(a) The aggregate purchase price payable by the Buyer for the
CD Shares (the "Purchase Price") shall be the sum of the following:
(i) $70,000,000, minus an amount equal to the principal
amount of, accrued unpaid interest (to the extent accrued through
January 4, 1999), and prepayment penalties or premiums, if any, on the
Companies' secured funded indebtedness and capitalized leases as of
the Closing Date, including without limitation the following types of
indebtedness included in the Companies' audited 1997 Financial
Statements:
(A) Indebtedness of Cellar Door Amphitheater, Inc.
to (1) First Union National Bank in respect of a construction loan and
a revolving line of credit, (2) GTE Leasing in respect of a
capitalized lease for a telephone system, (3) General Electric Capital
Corporation in respect of a capitalized lease for modular buildings,
(4) Chesapeake Leasing in respect of capitalized leases for stadium
seats and for spotlights, and (5) Standard Leasing in respect of a
capitalized lease for a stage, band shell, and VIP and orchestra
chairs;
(B) Indebtedness of Cellar Door Venues, Inc. to (1)
First Union National Bank in respect of a construction loan and
revolving line of credit, (2) Chesapeake Leasing in respect of
capitalized leases for stadium seats and miscellaneous equipment, and
for video equipment and storage building, (3) General Electric Capital
Corporation in respect of a capitalized lease for modular
buildings, and (4) Virginia Power in respect of construction
reimbursement relating to a power hookup;
(C) Indebtedness of CDC/SMT, Inc. to (1) City
National Bank in respect of a building mortgage, and (2) Xxxxx
Entertainment in respect of a business loan;
6
(D) Indebtedness of CDP, Inc. to Franklin National
Bank in respect of a revolving line of credit and a term loan; and
(E) Indebtedness of JJJ Amphitheater Limited
Partnership to Crestar Bank (to the extent outstanding on the Closing
Date), in respect of three mortgage loans;
(ii) $8,500,000, payable in cash by the Buyer to the Sellers,
in accordance with the written instructions of the Agent, in five (5)
equal annual installments of $1,700,000 each due on the first through
the fifth anniversaries of the Closing Date (provided that all
remaining installments shall become immediately due and payable,
without notice or demand, in the event that (A) such installments
become due and payable in accordance with Section 6.1(b) of the
Employment Agreement, or (B) the Buyer (i) admits in writing its
inability to pay generally its debts as they mature, or (ii) makes a
general assignment for the benefit of creditors, or (iii) is
adjudicated a bankrupt or insolvent, or (iv) files a voluntary
petition in bankruptcy, or (v) takes advantage, as against its
creditors generally, of any bankruptcy or insolvency law or statute of
the United States of America or any state or subdivision thereof,
which petition or proceeding is not dismissed within sixty (60) days
after the date of the commencement thereof, or (vii) has a receiver,
trustee, custodian, conservator, sequestrator or other such person
appointed by any court to take charge of its affairs or assets or
business and such appointment is not vacated or discharged within (60)
days thereafter);
(iii) $20,000,000, payable by delivery to the Sellers, in
accordance with the written instructions of the Agent, of shares (the
"SFX Shares") of Class A Common Stock, $0.01 par value, of the Buyer
having an aggregate Average Market Price equal to $20,000,000 on the
Closing Date, provided that, at the Buyer's option up to $15,000,000
of such amount may be paid to the Sellers in cash in lieu of SFX
Shares; and
(iv) options to acquire up to 100,000 SFX Shares to be
granted to the Sellers pursuant to a Stock Option Agreement in the
form attached hereto as Exhibit B (the "Stock Option Agreement").
(b) The Purchase Price shall be allocated as set forth in
Exhibit A-2 attached hereto.
2.4 Transactions at Closing.
(a) Delivery of CD Shares. At the Closing, each Seller shall
cause all of the CD Shares held by him, her or it to be transferred to the
Buyer or its designee(s) by delivering to the Buyer or its designee(s)
certificates representing such CD Shares, duly endorsed for transfer or
accompanied by duly executed forms of assignment.
7
(b) Payment of Purchase Price. At the Closing, the Buyer
shall (i) pay to the Sellers the cash portion of the Purchase Price for the CD
Shares payable at Closing (as determined in accordance with Section 2.3(a)(i)
above), by wire transfer of immediately available funds in accordance with the
written instructions of the Agent, (ii) deliver to the Sellers certificates
representing the SFX Shares, in accordance with the written instructions of the
Agent, and (iii) execute and deliver to the Sellers the Stock Option Agreement.
(c) Funded Indebtedness of the Companies. At the Closing, the
Buyer will pay or prepay or cause to be paid or prepaid all secured funded
indebtedness and capitalized leases taken into account in the calculation of
the cash portion of the Purchase Price under Section 2.3(a)(i).
2.5 Section 338(h)(10) Election. (a) The Buyer will prepare
and the Sellers shall join in the timely filing of a Section 338(h)(10)
election, providing for a deemed sale of the Companies' assets, to be made
under the Code in connection with the transactions contemplated by this
Agreement, and any comparable elections required or permitted under state or
local law. None of the Companies will be liable for any Taxes under Code
ss.1374 in connection with such deemed sale of assets (including the assets of
any qualified subchapter S subsidiary) caused by such Section 338(h)(10)
election. All such Taxes shall be paid by the Sellers, subject to the further
provisions of this Section 2.5.
(b) The Buyer shall indemnify each Seller for Transaction
Taxes (as hereinafter defined) paid or payable by each Seller. The Buyer agrees
to pay such amounts including a tax gross-up calculated to put the Sellers in
the same position on an after-tax basis as they would have been in had they
sold stock and no Section 338(h)(10) election were made, taking into account
any Taxes payable by the Sellers attributable to payments made to the Sellers
pursuant to this Section 2.5(b).
(c) As used herein, "Transaction Taxes" shall mean all
federal, state, and local income Taxes, including related interest and
penalties, payable by the Sellers, irrespective of when assessed and payable,
as a result of the Sellers' dispositions of their CD Shares in the event of any
elections under Section 338(h)(10) (and corresponding state tax law provisions)
contemplated herein, to the extent such Taxes exceed the amount of federal,
state and local income Taxes that would have been payable by the
Sellers on the disposition of their CD Shares had the Section 338(h)(10)
election(s) not been made.
(d) The Sellers shall submit to the Buyer a calculation of
any amounts due for Transaction Taxes, including the tax gross-up referred to
above. Unless the Buyer objects to such calculation, the Buyer shall pay such
amounts to the Sellers by wire transfer of immediately available funds on or
before the date such Transaction Taxes become due and payable. Where
practicable, the Sellers shall provide the Buyer with ten (10) Business Days to
review such calculations. In the event the Buyer disputes the Sellers'
calculation, the undisputed portion shall be paid to the Sellers by wire
transfer of
8
immediately available funds on or before the date such Transaction Taxes
become due and payable, and the disputed portion shall be submitted to a
mutually acceptable "Big Six" firm of certified public accountants for binding
resolution. The cost of such services shall be borne by the party whose
determination of the amount in question was further from the result determined
by the accounting firm selected. Any additional amount determined to be due to
the Sellers shall be paid by the Buyer to the Sellers by wire transfer of
immediately available funds within five (5) Business Days after receipt of the
accounting firm's determination, and shall include interest at an annually
compounded rate of 10% from the date such taxes were due and payable.
2.6 Repurchases of SFX Shares.
(a) During the period of thirty (30) days following the
second (2nd) anniversary of the Closing Date, Xxxx X. Xxxxx shall have the
option to require the Buyer to purchase from Xxxx X. Xxxxx a number of SFX
Shares equal to up to fifty percent (50%) of the total SFX Shares issued to the
Sellers (subject to appropriate arithmetic adjustment in the event of any stock
splits, stock dividends, combinations of shares, recapitalizations or other
such events relating to the common stock of the Buyer which may occur at any
time and from time to time from and after the Closing Date). An option pursuant
to this Section 2.6(a) may be exercised by written notice to the Buyer given at
any time and from time to time during such 30-day period.
(b) During the period of thirty (30) days following the
second (2nd) anniversary of the Closing Date, the Buyer shall have the option
to purchase from Xxxx X. Xxxxx a number of SFX Shares equal to up to fifty
percent (50%) of the total SFX Shares issued to the Sellers (subject to
appropriate arithmetic adjustment in the event of any stock splits, stock
dividends, combinations of shares, recapitalizations or other such events
relating to the common stock of the Buyer which may occur at any time and from
time to time from and after the Closing Date). An option pursuant to this
Section 2.6(b) may be exercised by written notice to a Seller given at any time
and from time to time during such 30-day period.
(c) The purchase price for each SFX Share repurchased
pursuant to Section 2.6(a) shall be ninety percent (90%) of the Average Market
Price thereof on the Closing Date (which Average Market Price shall be subject
to appropriate arithmetic adjustment in the event of any stock splits, stock
dividends, combinations of shares, recapitalizations or other such events
relating to the common stock of the Buyer which may occur at any time and from
time to time from and after the Closing Date). The purchase price for each SFX
Share repurchased pursuant to Section 2.6(b) shall be one hundred and twenty
percent (120%) of the Average Market Price thereof on the Closing Date (which
Average Market Price shall be subject to appropriate arithmetic adjustment in
the event of any stock splits, stock dividends, combinations of shares,
recapitalizations or other such events relating to the common stock of the
Buyer which may occur at any time and from time to time from and after the
Closing Date). Once exercised, any repurchase election under Section 2.6(a) or
(b) shall be irrevocable, and the Buyer and
9
Xxxx X. Xxxxx shall thereupon become irrevocably obligated to effect such
repurchase in accordance herewith. The purchase price shall be payable in cash
within 30 days after the exercise of an option to purchase or sell under
Section 2.6(a) or (b), against delivery of certificates for the SFX Shares to
be repurchased.
(d) In the event of any termination of the Employment
Agreement pursuant to Section 6.1(b) thereof, Xxxx X. Xxxxx shall be entitled,
upon any such termination, to exercise immediately (and thereafter until such
rights would otherwise expire) the rights granted under Section 2.6(a) above,
provided that the purchase price for each SFX Share shall be equal to 100%
(decreasing to 90% to the extent that such right is not exercised within three
(3) months after such termination) of the Average Market Price thereof on the
Closing Date (which Average Market Price shall be subject to appropriate
arithmetic adjustment in the event of any stock splits, stock dividends,
combinations of shares, recapitalizations or other such events relating to the
common stock of the Buyer which may occur at any time and from time to time
from and after the Closing Date).
2.7 Restrictions on Transfer. (a) Until the date immediately
preceding the first anniversary of the Closing Date, without the Buyer's prior
written consent, the Sellers shall not sell, assign, transfer, pledge, encumber
or otherwise dispose of any of the SFX Shares. After the first anniversary of
the Closing Date and until the thirtieth (30th) day following the second
anniversary of the Closing Date, without the Buyer's prior written consent, the
Sellers shall not sell, assign, transfer, pledge, encumber or otherwise dispose
of more than fifty percent (50%) of the SFX Shares, other than pursuant to the
exercise of a repurchase option under Section 2.6.
(b) Unless the resale of such SFX Shares shall then be
subject to an effective registration under the Securities Act, none of the
Sellers will sell or transfer any of the SFX Shares unless and until it shall
first have given notice to the Buyer describing such sale or transfer and
furnished it in writing such representations reasonably required in order for
the Buyer's counsel to render (at no cost to any of the Sellers) such counsel's
legal opinion confirming that the proposed sale or transfer of SFX Shares may
be made without registration under the Securities Act and will be in compliance
with applicable state securities ("blue sky") laws; and upon receipt of such
written information, the Buyer shall cause its counsel to issue immediately its
favorable opinion in order to permit such sale or transfer to be completed.
3. Representations and Warranties of the Sellers. The
Sellers, jointly and severally, represent and warrant to the Buyer as follows:
3.1 Businesses and Subsidiaries. The Companies listed on
Exhibit A-1 are all of the entities through which the Sellers conduct the
"Cellar Door" music promotion and entertainment business. Except through the
Companies, neither the Sellers nor their Affiliates have any equity, ownership
or other economic interests of any nature in the Nissan Pavilion at Stone Ridge
(or the land on which it is located), the Sunrise Musical Theatre, or the
Virginia Beach Amphitheater. Except for the general
10
partner interest in JJJ Amphitheater Limited Partnership held by Cellar Door
Amphitheater, Inc., none of the Companies owns, beneficially or of record, any
capital stock or other equity securities of any Subsidiary or any other
corporation or other entity, or has any direct or indirect equity, ownership or
voting interest in any other Person.
3.2 Organization; Good Standing. Each Company is a
corporation or limited partnership duly organized, validly existing and in good
standing under the laws of its state of incorporation or formation and has all
requisite corporate or partnership power and authority to own, operate and
lease its properties, and to carry on its business as now being conducted. Each
Company is duly qualified to do business and is in good standing as a foreign
corporation or limited partnership, as the case may be, in each jurisdiction
where the failure to be so qualified would have a Material Adverse Effect on
such Company. Each Company is duly qualified or licensed to transact business
as a foreign corporation or limited partnership, as the case may be, in good
standing in the jurisdictions listed on Schedule 3.2.
3.3 Authorization; Validity. Each of the Sellers has the full
power and capacity necessary to enter into and perform his or its obligations
under this Agreement and the other Transactions Documents to which he or it is
a party and to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and the other Transaction Documents to which any of
the Sellers is a party will be when executed and delivered, duly executed and
delivered by the Sellers and each such agreement constitutes, or will
constitute when executed and delivered, a legal, valid and binding obligation
of the Sellers that are parties thereto, except as enforceability thereof may
be limited by bankruptcy, insolvency, moratorium or other similar laws of
general application affecting the enforceability of creditors' rights generally
or by general principles of equity.
3.4 Title to CD Shares; Other Rights. Each of the Sellers is
the owner of all right, title and interest (record and beneficial) in and to
that number of CD Shares set forth next to his or her name on Schedule 3.4,
free and clear of all Liens, except as disclosed on Schedule 3.4. Except for
the restrictions on transfer contained in the Limited Partnership Agreement of
JJJ Amphitheater Limited Partnership (all of which restrictions have been
waived in respect of the transactions pursuant to this Agreement), no Person
has any Contract or any right or privilege (whether preemptive or contractual)
capable of becoming a Contract for the purchase from any of the Sellers of any
CD Shares, and none of the Sellers is a party to, or bound by, any other
agreement, instrument or understanding restricting the transfer of his or her
CD Shares.
3.5 No Conflict. Subject to obtaining the Consents and
Permits listed on Schedule 3.5, neither the execution nor the delivery of the
Transaction Documents by the Sellers nor the consummation or performance of the
transactions contemplated hereby will (a) conflict with or result in any
violation of or constitute a breach of or default under any terms, conditions
or provisions of (i) the organizational documents or by-laws of any
11
of the Companies, or (ii) any applicable Laws, or (b) result in the creation of
any Lien on any of the CD Shares or any of the assets of any Company.
3.6 Capitalization. The authorized, issued and outstanding
shares of capital stock or other equity interests of each Company, and the
record and beneficial holders thereof, are as set forth in Schedule 3.6
attached hereto. All of the CD Shares are duly authorized, validly issued,
fully paid and non-assessable, and were issued pursuant to a valid exemption
from registration under the Securities Act, and all applicable state securities
laws. Except as disclosed in Section 3.4 regarding JJJ Amphitheater Limited
Partnership, there are no outstanding rights of subscription, pre-emptive
rights, warrants, calls, options, conversion or exchange rights or other
Contracts with respect to any securities of the Companies or pursuant to which
any Person has an interest in a Company's capital or profits, and there are no
Contracts as to the voting of any Company's securities. There are no
outstanding rights to either demand registration of any CD Shares under the
Securities Act or to sell any CD Shares in connection with such registration of
shares.
3.7 No Material Adverse Change; Absence of Certain
Developments. Except as set forth on Schedule 3.7 or as contemplated by this
Agreement, since December 31, 1997 (a) there has not been any material adverse
change in the financial condition, operations, business, properties, assets or
liabilities of the Companies, (b) there has not been any event or occurrence
relating to any of the Companies, their assets, their Businesses, relations
with employees, relations with customers or suppliers, or governmental actions
or Laws directly applicable to their Businesses, which can reasonably be
expected to have a Material Adverse Effect, and (c) each Company has conducted
its Business only in the ordinary course and has not:
(i) made or committed to make any capital expenditures or
capital additions or betterments in any one instance more than
$100,000, or more than $500,000 in the aggregate;
(ii) encountered any labor union organizing activity with
respect to non-union workers, had any actual or, to the knowledge of
the Sellers, threatened employee strikes, or, to the knowledge of the
Sellers, any material work stoppages, slowdown or lock-outs related to
any labor union organizing activity or any actual or, to the knowledge
of the Sellers, threatened employee strikes;
(iii) instituted any litigation, action or proceeding before
any court, governmental body or arbitration tribunal relating to it or
its property, except for litigation, actions or proceedings instituted
in the ordinary course of business and consistent with prior practice;
(iv) acquired, or agreed to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the
12
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof;
(v) increased, or agreed or promised to increase, the
compensation of any officer, employee or agent, directly or
indirectly, including by means of any bonus, pension plan, profit
sharing, deferred compensation, savings, insurance, retirement, or any
other employee benefit plan, except in the ordinary course of business
and consistent with prior practice;
(vi) incurred any obligation or liability, whether due or to
become due, except liabilities or obligations incurred in the ordinary
course of business and consistent with prior practice;
(vii) declared or paid any dividends or made any other
distributions to its stockholders as such except out of 1998 Net
Income (as defined in Section 6.5 hereof); or made any redemption or
repurchase of its capital stock;
(viii) paid, discharged or settled any liabilities for Taxes,
other than payments required for the current year that are not in
dispute;
(ix) canceled or compromised any material debt or claim or
waived or released any material right, except for adjustments or
settlements made in the ordinary course of business consistent with
past practice; or
(x) made a loan to any person other than with respect to
accounts receivable created by unaffiliated third parties in the
ordinary course of business, with the exception of intercompany loans
among the Companies.
3.8 [Intentionally omitted]
3.9 Good Title; No Liens. Except as set forth on Schedule
3.9, each Company has good and marketable title to all personal properties and
assets, and to the Sellers' knowledge good and marketable title to all real
property (if any), purported to be owned by it (including all property and
assets reflected in the Financial Statements, except as disposed of after the
date thereof in the ordinary course of business), subject to no Liens other
than Permitted Liens and any Liens which would be disclosed in a title search
or a lien and judgment search conducted in a commercially reasonable manner.
Other than personal effects, no material item of the property used in a
Company's operations or Business is owned by a Seller or an Affiliate of a
Seller.
3.10 Litigation, etc.
(a) To the Sellers' knowledge, except as set forth on
Schedule 3.10 (i) there is no pending or threatened Action or governmental
investigation or inquiry against or involving any Company or its assets or
Business, and no event has occurred which
13
could reasonably be expected to result in an Action or governmental
investigation or inquiry against or involving the CD Shares, any Company or its
assets or operations, and (ii) there are no outstanding Orders binding upon the
CD Shares, any of the Companies or their assets or Businesses, which in any
instance has had or the Sellers reasonably expect will have a Material Adverse
Effect on the Companies taken as a whole or the Sellers' ability to consummate
the transactions contemplated by this Agreement.
(b) Except as disclosed on Schedule 3.10, none of the
Companies has been advised by any attorney representing it that there are any
material "loss contingencies" (as defined in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975 ("FASB No. 5")), which would be required by FASB No. 5 to be disclosed or
accrued in financial statements of the Companies, were such financial
statements prepared as of the date hereof.
3.11 Contracts, etc. To the Sellers' knowledge, set forth on
Schedule 3.11 are complete and accurate lists of the following:
(a) all bonus, incentive compensation, profit-sharing,
retirement, group insurance, death benefit or other fringe benefit plans,
deferred compensation and post-termination obligations or trust agreements of
the Companies in effect or under which any amounts remain unpaid on the date
hereof or which are to become effective after the date hereof;
(b) each Contract defining the terms on which indebtedness
for borrowed money, or other indebtedness evidenced by bonds, notes or similar
instruments, of the Companies or guarantees thereof by the Companies have been
or may be issued;
(c) all leases of real property to which each Company is a
party;
(d) all leases or other arrangements requiring payment of
$100,000 or more per year or $500,000 or more in the aggregate over the life of
the lease or arrangement, for the use of any item of personal property, to
which each Company is a party, either as lessor or lessee;
(e) all Contracts to which any Company is a party and in
which any Affiliate of the Company has any interest, direct or indirect;
(f) all bank accounts, safe deposit boxes, money market
funds, certificates of deposit, stocks, bonds, notes and other securities in
the name of or owned or controlled by any Company, and the names of the persons
having access thereto;
(g) all other Contracts to which any Company is a party,
except (i) Contracts that are terminable on less than 60 days' notice, (ii)
Contracts that do not require payments of $100,000 or more per year or $500,000
or more in the aggregate over the life of the Contract, and (iii) purchase and
sales orders for products and services of a
14
Company and Contracts with performing artists entered into in the ordinary
course of business.
Except as set forth on Schedule 3.11, none of the Companies or the Sellers has
given or received notice of, and the Sellers have no knowledge of, any material
breach, violation or default on the part of a Company or any other party in the
performance or payment of any obligation to be performed or paid under any
Contract listed on Schedule 3.11, or as a result of which the other party
thereto has the right to terminate the same.
3.12 Tenants and Occupants. There are no leases, licenses or
other occupancy agreements not terminable without penalty on 30 days or less
notice affecting any portion of the properties owned, leased or occupied by the
Sellers other than as disclosed on Schedule 3.12.
3.13 Investment Intent. Each of the Sellers is aware that the
SFX Shares such Seller is receiving hereunder are not registered under the
Securities Act or any state securities law. Each Seller is acquiring the SFX
Shares for investment purposes only, for its own account not with a view to, or
in connection with, the public distribution thereof in violation of the
Securities Act. Each Seller receiving SFX Shares is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act.
3.14 Disclosure. The Sellers have made available or caused to
be made available to the Buyer complete and correct copies of all agreements,
instruments and documents set forth or referred to in the Schedules hereto.
4. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Sellers as follows:
4.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power to own, operate and lease its properties
and assets, to carry on its business as now being conducted and to enter into
this Agreement and perform its obligations hereunder.
4.2 Authorization. The execution, delivery and performance of
this Agreement and the other Transaction Documents by the Buyer have been duly
authorized by all requisite corporate action on the part of the Buyer. This
Agreement has been and the other Transaction Documents when executed will be
duly executed and delivered by the Buyer, and constitute or when executed will
constitute the valid and binding obligations of the Buyer, enforceable in
accordance with the terms hereof and thereof, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws of general
application affecting the enforceability of creditors' rights generally or by
general principles of equity.
15
4.3 No Conflict. Neither the execution nor the delivery of
this Agreement by the Buyer nor the consummation or performance of the
transactions contemplated hereby will conflict with or result in any violation
of or constitute a breach of or default under any terms, conditions or
provisions of its organizational documents or by-laws or any Law or Contract by
which it is bound or to which it or its assets are subject.
4.4 Investment Intent. The Buyer is aware that the CD Shares
it is purchasing hereunder are not registered under the Securities Act of 1933,
as amended (the "Securities Act"), or any state securities law. The Buyer is
acquiring the CD Shares for investment purposes only, for its own account not
with a view to, or in connection with, the public distribution thereof in
violation of the Securities Act.
4.5 Issuance of SFX Shares. All of the SFX Shares when issued
will be duly authorized, validly issued, fully paid and non-assessable, and
based on the Sellers' representations in Section 3.14 will be issued pursuant
to a valid exemption from registration under the Securities Act and all
applicable state securities laws.
4.6 SEC Documents. The Buyer has outstanding securities
registered pursuant to Section 12(g) of the Exchange Act, and the Buyer has
timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act, including material filed pursuant to Section 13(a) or
15(d) (collectively, the "SEC Documents"). As of their respective dates, the
SEC Documents were true, correct and complete in all material respects in
accordance with the requirements of the Exchange Act and the SEC's
regulations thereunder, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Since the end
of the quarterly period covered by the most recent quarterly report included in
the SEC Documents, there has been no material adverse change in the financial
condition, operations, business, properties, assets or liabilities of the Buyer
and its subsidiaries (taken as a whole) from that set forth in such quarterly
report.
5. Indemnification.
5.1 Obligation of the Sellers. Subject to the limitations set
forth in Section 5.3, from and after the Closing Date, each of the Sellers
shall indemnify and save harmless the Buyer and its successors and assigns
from, against, for and in respect of:
(a) any Loss incurred or required to be paid which arises out
of or relates to (i) any inaccuracy in any representation or the breach of any
warranty made by the Sellers in this Agreement, or (ii) the breach of any
covenant or agreement made by the Sellers in this Agreement or any Transaction
Document;
16
(b) any Loss incurred or required to be paid for Taxes
payable by any Company as a result of its not having been an S Corporation, as
defined in the Code, or not qualifying for comparable income tax treatment
under applicable state or local law, for any of its tax years commencing prior
to the date hereof; and
(c) any Litigation Expense incurred or required to be paid by
the Buyer or any Company in connection with any Action incident to any matter
indemnified against in paragraph (a) or (b) above.
5.2 Obligation of the Buyer. Subject to the limitations set
forth in Section 5.3, from and after the Closing Date, the Buyer shall
indemnify and save harmless the Sellers from, against, for and in respect of:
(a) any Loss incurred or required to be paid which arises out
of or relates to (i) any inaccuracy in any representation or the breach of any
warranty made by the Buyer in this Agreement, or (ii) the breach of any
covenant or agreement made by the Buyer in this Agreement or in any Transaction
Document; and any Litigation Expense incurred or required to be paid by the
Sellers in connection with any Action incident to any Loss indemnified against
in this Section 5.2 (a); and
(b) any Loss incurred or required to be paid which arises out
of or relates to claims brought against any of the Companies or the Sellers by
or on behalf of A. Xxxxxxx Xxxx, Rising Tide Productions, Inc. and/or any of
their respective Affiliates in respect of those matters described in Schedule
5.2 (the "Xxxx Claims"), and any Litigation Expense incurred or required to be
paid by the Sellers in connection with any Action arising out of or relating to
the Xxxx Claims, provided that:
(i) the Companies shall be responsible for the costs and
expenses of defense of such claims (including legal fees and
disbursements) to the extent incurred, accrued or otherwise
attributable to any period preceding the Closing Date;
(ii) the costs and expenses of any appeal of a judgment or
award granted on the Xxxx Claims (including legal fees and
disbursements) shall be borne one-half by the Sellers and one-half by
the Companies; and
(iii) the responsibility for paying any final judgment,
order, award, verdict or settlement (to the extent requiring the
payment of money) on or with respect to the Xxxx Claims (collectively,
the "Xxxx Damages") shall be allocated (A) first, to the Companies, to
the extent of any Xxxx Damages up to $500,000, (B) next, to the
Sellers, to the extent of any Xxxx Damages in excess of $500,000 but
not exceeding $1,000,000, and (C) finally, one-half to the Sellers and
one-half to the Companies, to the extent of any Xxxx Damages in excess
of $1,000,000; provided that in no event shall the Companies be
responsible for more than a
17
maximum of $1,500,000 in the aggregate of the Xxxx Damages, and the
Sellers shall pay any amount thereof in excess of such maximum.
Notwithstanding anything to the contrary elsewhere in this Agreement, the
Sellers may control the defense and any appeal of the Xxxx Claims, with
independent counsel reasonably satisfactory to the Buyer (it being agreed that
Xxxxxxx X. Xxxxx of Christian & Xxxxxx is satisfactory). The Buyer shall have
the right to employ its own counsel (at Buyer's own expense) and such counsel
may observe such defense or appeal and shall be kept informed of all material
developments relating to such defense or appeal. No settlement or compromise of
the Xxxx Claims or any Action relating thereto shall be effected without the
prior written consent of the Buyer and the Agent, which consent shall not be
unreasonably withheld, delayed or conditioned by either of them. The Buyer and
the Agent, as the case may be, shall be kept fully informed of the progress of
any such Action or appeal at all stages thereof, including any discussions with
respect to settlement or compromise.
5.3 Limitations on Indemnity. The indemnification obligations
of the parties under Sections 5.1 and 5.2 shall be subject to the following:
(a) Time Bar.
(i) The Buyer shall not be entitled to make any claim against
the Sellers for any Loss or Litigation Expense unless a notice of such
claim shall have been given to the Agent or the Sellers in accordance
with Section 11.1 hereof
(A) on or before the 90th day following the Closing
Date, in the case of any claim for Loss arising under Section
5.1(a)(i) hereof (and any Litigation Expense under Section
5.1(c) hereof related to such Loss), other than a claim
relating to the inaccuracy of a representation or breach of
warranty under Sections 3.3, 3.4 or 3.6 of this Agreement;
and
(B) on or before the expiration of the applicable
statute of limitations, in the case of (1) any claim for Loss
arising under Section 5.1(a)(i) hereof (and any Litigation
Expense under Section 5.1(c) hereof related to such Loss)
because of the inaccuracy of a representation or breach of
warranty under Sections 3.3, 3.4 or 3.6 of this Agreement,
and (2) any claim for Loss arising under Section 5.1(a)(ii)
or Section 5.1(b) hereof (and any Litigation Expense under
Section 5.1(c) hereof related to such Loss).
(ii) The Sellers shall not be entitled to make a claim
against the Buyer for any Loss or Litigation Expense relating thereto
unless a notice of such claim shall have been given to the Buyer in
accordance with Section 11.1 hereof prior the date two (2) years and
one month following the Closing Date, except for
18
claims relating to any payment obligation of the Buyer under Section 2
(which claims shall be subject only to applicable statutes of
limitations).
(b) Threshold. The Buyer shall be entitled to indemnity for
Losses or Litigation Expenses with respect to any claim arising under Section
5.1(a)(i) only after the aggregate amount of its Losses and Litigation Expenses
(on an after-tax, after- insurance basis consistent with Section 5.3(c) below)
with respect to all such claims exceeds $500,000, and then such indemnity shall
also include all Losses and Litigation Expenses up to such amount with respect
to such claims.
(c) Insurance Proceeds; Tax Benefits. An indemnified party's
indemnifiable Loss hereunder shall be reduced by the amount of any insurance
proceeds recoverable by such indemnified party or its Affiliates with respect
to such Loss, and by the value of any tax benefits to the indemnified party or
its Affiliates from such Loss, and shall be increased by income taxes payable
by the indemnified party with respect to the indemnity payments to be received
in connection with such Loss.
(d) Exclusivity. Subject to Section 9 hereof, the sole and
exclusive remedy of the parties hereto for any claim resulting from a breach by
any of the parties hereto of its respective representations, warranties,
covenants or agreements made in this Agreement or the failure by any party to
perform its respective obligations under this Agreement shall be a claim under
this Section 5. The parties hereby waive any provision of law to the extent
that it would limit or restrict the agreement contained in this Section 5.3(d).
(e) Buyer's Knowledge. The Buyer shall not be entitled to
make any claim against the Sellers for any Loss under Section 5.1(a)(i) or
Litigation Expense relating to such Loss, based on inaccuracies in or breaches
of the Sellers' representations and warranties set forth in this Agreement, if
the Buyer had knowledge on the Closing Date of facts from which the Buyer could
reasonably conclude that such claim exists.
5.4 Notice and Defense of Claims. The obligations and
liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by another party or third parties
shall be subject to the following terms and conditions:
(a) Notice. The indemnified party shall give prompt written
notice to the indemnifying party of any claim or event known to it which does
or may give rise to a claim by the indemnified party against the indemnifying
party based on this Agreement, stating the nature and basis of said claims or
events and the amounts thereof, to the extent known or estimable, and in the
case of any Action brought by any third party, a copy of any documentation with
respect thereto promptly after any such documentation is received by the
indemnified party. The claims notice may be amended on one or more occasions
with respect to the amount or description of the asserted liability or the Loss
at any time prior to final resolution of the obligation to indemnify relating
to the asserted
19
liability or the Loss. If a claims notice is not provided promptly as required
by this Section 5.4(a), the indemnified party nonetheless shall be entitled to
indemnification by the indemnifying party to the extent that the indemnifying
party has not established that it has been prejudiced by such late receipt of
the claims notice.
(b) Third Party Claims or Actions.
(i) In the event any Action is brought by any third party
against an indemnified party, with respect to which an indemnifying party may
have liability under this Agreement, the indemnifying party shall be entitled
to participate in, and, to the extent that it shall wish, to assume the defense
thereof, with independent counsel reasonably satisfactory to such indemnified
party, provided that in assuming the defense of any such third party Action,
the indemnifying party acknowledges in writing to the indemnified party that
the indemnifying party shall thereafter be liable for any Loss and, to the
extent herein provided, any Litigation Expense with respect to such Action.
(ii) If the indemnifying party elects to assume the defense
of any such third-party Action, the indemnifying party shall have the right to
contest, pay, settle or compromise any such Action on such terms and conditions
as the indemnifying party may determine, with the indemnified party's written
consent (which shall not be unreasonably withheld); provided that the
indemnifying party shall not settle or compromise any Action or consent to the
entry of any judgment that does not include an unconditional term releasing the
indemnified party from all liability in respect of such asserted liability.
After notice from the indemnifying party to such indemnified party of
the indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses incurred by the indemnified party after the date of receipt
of such notice by the indemnified party. The indemnified party shall have the
right to employ its own counsel and such counsel may participate in such
Action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party, when and as incurred.
(iii) If the indemnifying party does not elect to assume the
defense of any such Action, the indemnified party may engage counsel selected
by the indemnified party to assume the defense and may contest and pay or
settle or compromise any such claim (provided that no settlement or compromise
shall be effected without the prior written consent of the indemnifying party,
which consent shall not be unreasonably withheld, delayed or conditioned). The
fees and disbursements of such counsel shall constitute Litigation Expense
hereunder.
(iv) The indemnified party and the indemnifying party, as the
case may be, shall be kept fully informed of such Action at all stages thereof
whether or not such party is represented by its own counsel.
5.5 Cooperation. The parties hereto agree to render to each
other such assistance as they may reasonably require of each other and to
cooperate in good faith
20
with each other in order to ensure the proper and adequate defense of any
Action brought by any third party.
5.6 Confidentiality. The parties agree to make reasonable
efforts to preserve in full the confidentiality of all proprietary or
confidential business records and the attorney-client and work product
privileges. In connection therewith, each party agrees that: (a) it will make
reasonable efforts, in any Action in which it has assumed or participated in
the defense, to avoid production of confidential business records; and (b) all
communications between any party hereto and counsel responsible for or
participating in the defense of any Action shall, to the extent possible, be
made so as to preserve any applicable attorney-client or work-product
privilege.
5.7 Survival of Representations and Warranties. All
covenants, representations and warranties and agreements made in this Agreement
or in any Exhibit, Schedule, certificate or document delivered herewith or at
the Closing shall survive the execution and delivery thereof and the Closing
hereunder; provided, however, that any claim for the breach of any such
covenant, representation, warranty or agreement shall be subject to the
applicable limitations set forth in this Section 5.
6. Other Agreements of the Parties.
6.1 Brokers. Each party represents and warrants that all
actions by it relative to this Agreement and the transactions contemplated
hereby were carried out in such manner as not to give rise to any valid claim
for finders fees, brokerage commissions or similar payments.
6.2 Further Assurances. Following the Closing, at the request
of any party, the other parties shall execute and deliver such further
documents, and take such other action, as may be necessary or appropriate to
give full effect to the transactions contemplated by this Agreement, including
without limitation to confirm the sale, transfer, assignment and conveyance of
the CD Shares hereunder and to vest in the Buyer all the Sellers' right, title
and interest in and to the CD Shares or as may otherwise be required to carry
out the provisions of this Agreement.
6.3 Covenants of the Buyer. The Buyer hereby covenants and
agrees with the Sellers that:
(a) Cooperation. Prior to the Closing or the earlier
termination of this Agreement, the Buyer shall use all commercially reasonable
efforts to cause the sale contemplated by this Agreement to be consummated and,
without limiting the generality of the foregoing, to obtain all Consents and
Permits which may be necessary or reasonably required in order for the Buyer to
effect the transactions contemplated hereby.
(b) Covenants Relating to Rule 144. During the three-year
period following the Closing Date, the Buyer will (to the extent legally
required to do so) file reports in compliance with the Exchange Act, and/or
will otherwise comply with all rules
21
and regulations of the SEC applicable in connection with the Sellers' use of
Rule 144 promulgated under the Securities Act and will take such other actions
and make publicly available and furnish each Seller with such other information
as such Seller may request in order to avail itself of such Rule allowing such
holder to sell any of its SFX Shares without registration, after applicable
holding periods under Rule 144, and will, at its expense, forthwith upon the
request of any Seller, deliver to such Seller a certificate stating (i) the
Buyer's name, address and telephone number, (ii) the Buyer's Internal Revenue
Service identification number, (iii) the Buyer's SEC file number, (iv) the
number of shares of each class of stock of the Buyer outstanding as shown by
the most recent report or statement published by the Buyer, and (v) that the
Buyer has filed the reports required to be filed under the Exchange Act for a
period of at least 90 days prior to the date of such certificate and in
addition has filed the most recent annual report required to be filed
thereunder.
(c) Notifications. From the date hereof through the Closing
Date, the Buyer shall notify the Agent promptly of (A) any material adverse
change in the financial condition, operations, business, properties, assets or
liabilities of the Buyer and its subsidiaries (taken as a whole) from that set
forth in the SEC Documents, and (B) any inaccuracy in the Buyer's
representations and warranties contained in this Agreement of which the Buyer
may become aware.
(d) Elections. Neither the Buyer nor any Affiliate of the
Buyer (including, after the Closing Date, each Company) shall, without the
prior written consent of the Agent, (i) make any election pursuant to the Code
that is inconsistent with any election made by a Company or any Affiliate of a
Company for the current or any prior year which would adversely affect the
Sellers, or file any amended Tax Return for a Company so as to adversely affect
the Sellers as to any taxable year ending on or before the Closing Date.
Without the Agent's prior written consent, such consent not to be unreasonably
withheld or delayed, the Buyer shall not agree to any extension of any statute
of limitations in respect of any Tax Return of any Company for any taxable year
ending on or before the Closing Date.
6.4 Covenants of the Sellers. The Sellers hereby severally
covenant and agree with the Buyer that:
(a) Release of Liens. On or prior to the Closing Date, the
Sellers shall cooperate (but without being required to incur any expense) with
the Buyer in obtaining the release of such Liens on the assets of the
Companies, as the Buyer may request, including without limitation assisting the
Buyer with obtaining payoff letters and release documents from secured
creditors whose liens are to be released by reason of the payments contemplated
by Section 2.4(c); provided, that the failure of the Buyer to obtain any such
release shall not constitute a breach of the Sellers' obligations under this
Agreement.
22
(b) Cooperation. The Sellers shall use all commercially
reasonable efforts to cause the sale contemplated by this Agreement to be
consummated and, without limiting the generality of the foregoing, to provide
reasonable assistance to the Buyer in obtaining all Consents and Permits which
may be necessary or reasonably required in order to effect the transactions
contemplated hereby. The Sellers will use all commercially reasonable efforts
to preserve the Companies' business organization intact, and to preserve
business relationships with employees, customers, suppliers, patrons and others
having business relations with any Company.
(c) Maintenance of Business and Assets. From the date hereof
through the Closing Date, the Sellers shall cause each Company:
(i) Maintenance of Properties, etc. To maintain all of its
assets and properties in customary repair, order and condition (taking
into consideration the age and condition thereof), reasonable wear and
tear and losses covered by insurance excepted, and maintain insurance
in amounts and of such kinds comparable to that in effect on the date
of this Agreement.
(ii) Compliance with Laws. To comply in all respects with all
Laws applicable to it and to the conduct of its Business, except where
any non-compliance would not have a Material Adverse Effect on the
Companies taken as a whole.
(iii) Access to Properties, etc. To provide the Buyer and its
counsel, accountants, investment advisors and other representatives
full access during normal business hours (upon at least two days'
prior notice) to all of its properties (including without limitation
real property, for environmental inspection and testing), books, tax
returns, Contracts, Permits, and records, and to furnish to the Buyer
all such documents and information with respect to the affairs of any
Company as the Buyer may from time to time reasonably request;
provided, that the Buyer shall promptly, at its expense, repair any
damage to any of the Companies' properties caused by any such
inspection or testing.
(iv) Notifications. To notify the Buyer promptly of (A) any
material adverse change in the financial condition or in the
operations, business, properties, assets or liabilities of the
Companies (taken as a whole) from that set forth in the Financial
Statements dated December 31, 1997, and (B) any inaccuracy in the
Sellers' representations and warranties contained in this Agreement of
which the Sellers may become aware.
(d) Certain Prohibited Transactions. From the date hereof
through the Closing Date, except with the prior written consent of the Buyer,
the Sellers will not cause or permit any of the Companies to:
(i) enter into any transaction out of the ordinary course
of business;
23
(ii) purchase or lease any real property, or sell, transfer
or otherwise dispose of any of its properties or assets, other than in
the ordinary course of business;
(iii) create or allow any new Lien on the assets of any
Company or any part thereof, other than Permitted Liens and other
Liens being contested in good faith by appropriate action;
(iv) violate any Law if the same would have a Material
Adverse Effect on the Companies taken as a whole;
(v) declare or pay any dividends other than Permitted
Dividends, repurchase any of its capital stock, or make any
distributions, other than Permitted Dividends, to its stockholders as
such;
(vi) amend its Certificate of Incorporation or by-laws; or
(vii) enter into any Contract with a value in excess of
$50,000 (except agreements with performing artists), or with a term in
excess of one (1) year, provided that the Buyer's approval shall not
be required in any instance in which the preservation or maintenance
of life, person or property makes it impracticable to obtain the
Buyer's approval, and further provided that the Buyer's approval shall
not be unreasonably withheld, delayed or conditioned with respect to
any such Contract, and any such Contract submitted for approval shall
be deemed approved unless expressly disapproved in writing by the
Buyer within three (3) Business Days after the Buyer receives the
request for approval.
(e) Real Estate-Related Matters. The Sellers shall cooperate
with the Buyer (but without being required to incur any expense) in all
reasonable respects in efforts to obtain and deliver to the Buyer on or before
the Closing Date each of the following:
(i) Non-Disturbance Agreements. A non-disturbance agreement
from (A) any mortgagee or deed of trust beneficiary of the fee
interest in properties leased by any of the Companies, and (B) the
holders of any other superior interests in properties leased by any of
the Companies.
(ii) Lessor Estoppel Certificates. Lessor estoppel
certificates, in form reasonably satisfactory to the Buyer, from each
lessor of real property to the Companies.
(iii) Concessionaire Estoppel Certificates. Concessionaire
estoppel certificates, in form reasonably satisfactory to the Buyer,
from each other party to any concession operating agreement with the
Companies.
24
The failure to obtain any of the items described in (i), (ii) or (iii) above
shall not constitute a breach of the Sellers' obligations under this Agreement.
6.5 Permitted Dividends. On or before the Closing Date, the
Sellers may cause the Companies to declare and pay to the Sellers dividends
("Permitted Dividends") in an aggregate amount which, when taken together with
previous dividends and distributions paid to the Sellers in respect of 1998 Net
Income, shall not exceed 1998 Net Income; provided that if such dividends paid
prior to the Closing Date would leave the Companies with less than $300,000 of
working capital or less than $200,000 of cash in the aggregate, payment of the
dividend amount equal to such deficiency shall be deferred until such time or
times after the Closing Date as the payment thereof would not result in either
the Companies' aggregate working capital being less than $300,000 or the
Companies' aggregate cash balance being less than $200,000 (each such amount to
be reduced by $60,000 for each completed calendar month after December 31,
1998), and the Buyer shall cause such deferred dividends to be declared and
paid from time to time as and when the Companies have cash flow (determined
prior to any extraordinary expenditures and prior to any dividends paid by the
Companies)reasonably sufficient to permit such payments after taking into
account the normal and reasonable needs of the Business. As used herein, "1998
Net Income" means the Companies' combined net income for the year 1998 (which,
if the Closing occurs prior to the end of the calendar year 1998, shall mean
that portion of the calendar year 1998 to the Closing Date), determined on an
accrual basis, taking into account an accrued expense for year-end bonuses and
other compensation payable to management employees of the Companies determined
in a manner consistent with the Companies' past practices, and otherwise
determined in accordance with GAAP consistently applied.
6.6 Closing Year Tax Returns. The parties hereby agree that
the Companies' taxes for the year in which the Closing occurs shall not be
determined by proration, but shall instead be determined based on the actual
income of the Companies for that portion of the subject calendar year to the
Closing Date (which income shall be allocable to the Sellers) and that portion
of such calendar year from and after the Closing Date (which income shall be
allocable to the Buyer). The parties hereby further agree that the Sellers
shall be responsible for preparing and filing the Tax Returns of the Companies
for all periods from January 1, 1998 to the Closing Date, and for paying (or
causing the Company to pay out of 1998 Net Income) all taxes which may be shown
to be due and payable on such Tax Returns.
6.7 Post-Closing Cooperation. After the Closing Date, the
Sellers and the Buyer shall provide each other timely access to information and
reasonable assistance and cooperation, during normal business hours, necessary
for the preparation of any tax returns or other filings or conducting or
responding to tax audit or other proceedings. All pertinent books of account,
papers, and records shall be retained by the parties until the statute of
limitations to which they relate has expired, by lapse of time or by the terms
of any agreement for extension of the period of limitations.
25
6.8 No Solicitation. From and after the date hereof and until
the Closing or the earlier termination of this Agreement pursuant to Section
9.1, the Sellers agree not to negotiate with or enter into any agreement with
anyone other than the Buyer relating to the acquisition of the assets or
business of any Company, the acquisition of their capital stock, or any
business combination relating to them, and will promptly notify the Buyer of
any written offer or proposal received by them or by a Company and known by
Xxxx X. Xxxxx with respect to any such proposed transaction. The Sellers
mentioning that the Companies are being sold, engaging in oral conversations
initiated by others, or receiving unsolicited offers, shall not, by themselves,
constitute a breach of this Section 6.8.
6.9 Post-Closing Name Changes. Within 30 days after the
Closing Date, the Sellers shall cause the name "Cellar Door" to be removed from
the names of any and all corporations, partnerships or other business entities
(other than the Companies) in which any of them has an ownership interest, and
shall provide written evidence of such name changes to the Buyer.
7. Fire, Casualty or Condemnation.
7.1. If Property is Restorable. In the case of any casualty
to or condemnation of any of the Sellers' three principal venues (GTE
Amphitheater, Nissan Amphitheater and Sunrise Musical Theater) (each a "Major
Property") prior to Closing, the result of which is that such Major Property
can be restored under then existing laws, rules, regulations, ordinances and
governing documentation (including the terms of the lease or sublease for such
property, if applicable), (a) the Sellers and the Buyer shall proceed to
Closing under this Agreement, (b) the Buyer or the subject Company shall be
entitled to receive (i) in the case of a casualty, any and all insurance awards
(including but not limited to casualty and business interruption insurance
awards), and (ii) in the case of a condemnation, an assignment of all
condemnation claims and proceeds and any business interruption insurance
awards, and (c) the Buyer shall be entitled to a credit against, or a reduction
of, the cash portion of the Purchase Price in an amount equal to (i) the lost
EBITDA from such Major Property (based on historical EBITDA for such Major
Property) for the estimated period of time it will take to restore such Major
Property (based upon the estimate of a mutually selected architectural firm
with experience in the construction and renovation of similar facilities),
minus (ii) the amount of the business interruption insurance award payable to
the Buyer or the Companies under the terms of this Section 7.1.
7.2 If Property is Not Restorable. In the case of any
casualty to or condemnation of a Major Property, the result of which is that
such Major Property cannot be restored under then existing laws, rules,
regulations, ordinances and governing documentation (including the terms of the
lease or sublease for such property, if applicable), (a) the Sellers and the
Buyer shall proceed to Closing under this Agreement and (b) the cash portion of
the Purchase Price shall be equitably reduced to reflect lost EBITDA due to the
loss of use or ownership of such Major Property (based on historical
26
EBITDA for such Major Property and taking into account, among other things,
cost differences between the use of such Major Property and, to the extent the
same exist and are available for the Buyer's use, the use of any comparable
facilities in the same locale), but in no event shall such reduction be less
than the casualty (or condemnation, as the case may be) and/or business
interruption proceeds payable with respect to such casualty (or condemnation).
Upon such reduction, there shall be assigned to the Sellers, and the Sellers
shall be entitled to receive and retain, the casualty and/or condemnation
awards only with respect to the affected Major Property.
7.3 EBITDA. For purposes of this Section 7, "EBITDA" shall
mean, for any period, net income before interest and provision for taxes and
without giving effect to any extraordinary gains or losses or gains or losses
from sales of assets, adjusted by adding thereto the amount of all amortization
of intangibles and depreciation that were otherwise deducted in determining net
income.
7.4. Cooperation. The Sellers shall cooperate with the Buyer
(at the Buyer's expense) following Closing in connection with the collection of
any insurance awards and/or condemnation claims and proceeds payable or
assigned to the Buyer in accordance with Section 7.1. The Buyer shall cause the
Companies to cooperate with the Sellers (at the Sellers' cost) after the
Closing Date in connection with the collection of any insurance awards and/or
condemnation claims and proceeds payable or assigned to the Sellers in
accordance with Section 7.2.
8. Conditions Precedent.
8.1 Conditions to Obligations of the Sellers. The obligations
of the Sellers to consummate the transactions contemplated by this Agreement
are subject to the fulfillment, unless waived in writing at the sole option of
the Agent, at or prior to the Closing Date, of each of the following conditions
precedent:
(a) Buyer's Representations and Warranties. The
representations and warranties of the Buyer herein contained shall be true on
and as of the Closing Date with the same force and effect as though made on and
as of said date, except as affected by the transactions contemplated or
permitted by this Agreement.
(b) Buyer's Covenants. The Buyer shall have performed all its
obligations and agreements and complied with all its covenants contained in
this Agreement to be performed and complied with by the Buyer at or prior to
the Closing Date.
(c) Buyer's Closing Certificate. The Sellers shall have
received a certificate of the Buyer, executed on behalf of the Buyer by any
duly authorized officer of the Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to the
27
Sellers, certifying as to the fulfillment of the matters mentioned in
paragraphs (a) and (b) of this Section 8.1.
(d) Buyer's Counsel's Opinion. Winston & Xxxxxx and Xxxxxxx
X. Xxxxx, counsel to the Buyer, shall have delivered to the Sellers opinions,
dated the Closing Date, substantially in the forms of Exhibit C-1 and Exhibit
C-2 hereto, and otherwise reasonably satisfactory to counsel for the Sellers.
In giving such opinions such counsel may rely, as to matters of fact, upon
certificates of duly authorized representatives of the Buyer and, as to matters
of law, upon the opinions of other counsel reasonably satisfactory to the
Sellers, provided that copies thereof are delivered to the Sellers at or prior
to the Closing.
(e) Consents and Approvals. The Sellers and the Companies
shall have received all approvals, consents, authorizations and waivers listed
on Schedule 3.5.
(f) Government Consents and Approval. All governmental
consents, authorizations, filings or registrations required in connection with
the Sellers' sale of the Companies shall have been obtained or made, including,
without limitation, any required under the HSR Act, and all applicable waiting
periods under the HSR Act or otherwise required by any other Governmental
Authority shall have expired or been terminated.
(g) Employment Agreements. (i) SFX shall have entered into an
Employment Agreement with Xxxx X. Xxxxx, in the form attached hereto as Exhibit
E (the "Employment Agreement"), and (ii) one or more of the Companies shall
have entered into five-year employment agreements with Xxxxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxx, each in form and substance reasonably satisfactory to the
Buyer and the Agent, and the parties to such agreements.
(h) Other Documents. The Sellers shall have received all
certificates, corporate documents, evidence of authorization, and other
agreements, instruments and documents in respect of the transactions
contemplated by this Agreement as the Agent may reasonably request, all of
which shall be in form and substance reasonably satisfactory to Agent.
(i) No Litigation. No Action before any court or any
governmental or regulatory authority shall have been commenced and still be
pending, no investigation by any governmental or regulatory authority shall
have been commenced and still be pending, and no Action by any governmental or
regulatory authority shall have been threatened, in any case against the
Sellers or the Buyer seeking to restrain, prevent or materially change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions.
28
8.2 Conditions to the Obligations of the Buyer. The
obligations of the Buyer to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, unless waived in writing at the sole
option of the Buyer, at or prior to the Closing Date, of each of the following
conditions precedent:
(a) Sellers' Representations and Warranties. The
representations and warranties of the Sellers herein contained shall be true in
all material respects on and as of the Closing Date with the same force and
effect as though made on and as of said date, except as affected by the
transactions contemplated or permitted by this Agreement.
(b) Sellers' Covenants. The Sellers shall have performed in
all material respects all of the obligations and agreements and complied in all
material respects with all of the covenants contained in this Agreement to be
performed and complied with by the Sellers on or prior to the Closing Date.
(c) Sellers' Closing Certificate. The Buyer shall have
received a certificate of the Sellers (which may be signed on their behalf by
the Agent), dated the Closing Date, in form and substance reasonably
satisfactory to the Buyer, certifying as to the fulfillment of the matters
mentioned in paragraphs (a) and (b) of this Section 8.2.
(d) Consents. The Buyer shall have received evidence,
satisfactory to the Buyer and its counsel, that all of the Consents disclosed
in Schedule 3.5 have been duly obtained.
(e) Sellers' Counsel's Opinion. Xxxxxxxxx Traurig, counsel
for the Sellers, shall have delivered to the Buyer an opinion, dated the
Closing Date, substantially in the form of Exhibit D hereto and otherwise
reasonably satisfactory to counsel for the Buyer. In giving such opinion such
counsel may rely, as to matters of fact, upon certificates of the Sellers, and,
as to matters of law, upon the opinions of other counsel reasonably
satisfactory to the Buyer, provided that copies thereof are delivered to the
Buyer prior to the Closing.
(f) Other Documents. The Buyer shall have received all
certificates, corporate documents, evidence of authorization, and other
agreements, instruments and documents in respect of the transactions
contemplated by this Agreement as the Buyer may reasonably request, all of
which shall be in form and substance reasonably satisfactory to the Buyer.
(g) No Litigation. No investigation by any governmental or
regulatory authority shall have been commenced and still be pending, and no
Action by any governmental or regulatory authority shall have been threatened,
in any case against the Sellers or the Buyer seeking to restrain, prevent or
materially change the transactions contemplated hereby or questioning the
validity or legality of any of such transactions. No other Action before any
court or any governmental or regulatory authority shall have been commenced and
still be pending, that shall have resulted in a final order restraining,
29
preventing or materially changing the transactions contemplated hereby, or
declaring the transactions contemplated hereby invalid or illegal.
(h) Non-Competition and Confidentiality. The Sellers shall
have executed and delivered non-competition and confidentiality agreements in
favor of the Buyer and the Companies, each in substantially the forms attached
hereto as Exhibits F-1 and F-2.
(i) Employment Agreements. Xxxx X. Xxxxx shall have entered
into the Employment Agreement.
(j) Xxxxxx and Xxxxxx Employment Agreements. Xxxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxx shall have entered into the employment agreements
referred to in Section 8.1(g).
(k) Government Consents and Approval. All governmental
consents, authorizations, filings or registrations required in connection with
the Buyer's acquisition of the Companies shall have been obtained or made,
including, without limitation, any required under the HSR Act, and all
applicable waiting periods under the HSR Act or otherwise required by any other
Governmental Authority shall have expired or been terminated.
(l) Title Commitments. The Buyer shall have received title
commitments, dated the date of the Closing, issued by Chicago Title Insurance
Company (the "Title Company") with respect to the properties, and subject only
to the exceptions, noted on Schedule 8.2, and/or other Permitted Liens existing
on the effective date of such commitments.
(m) Title Affidavits. The Buyer shall have received, dated
the date of the Closing, standard title affidavits from the Companies and
non-imputation title affidavits from the Sellers as the Buyer and the title
company issuing the commitments contemplated by Section 8.2(l) shall reasonably
request, in order to insure title to the real estate as of the Closing Date
without exclusions from coverage for imputation of knowledge of the Sellers and
to omit exceptions other than those which constitute Permitted Liens.
9. Termination.
9.1 Termination.
(a) This Agreement may be terminated prior to the Closing and
the transactions contemplated hereby may be abandoned:
30
(i) by the Sellers, upon written notice from the Agent to the
Buyer, if the Closing has not taken place on or before February 10,
1999, and the Sellers shall not then be in material breach of any of
their representations, warranties or covenants under this Agreement;
(ii) by the Buyer, upon written notice to the Agent, if the
Closing has not taken place on or before February 10, 1999, other than
by reason of a material default on the part of the Buyer; or
(iii) by either the Buyer or the Sellers, upon written notice
to the other(s) if at the time of such notice there shall be in effect
a non-appealable order of a court of competent jurisdiction
permanently prohibiting the consummation of the transactions
contemplated hereby.
9.2 Payments on Termination. In view of the substantial
legal, accounting and other expenses that the Sellers will be required to incur
in order to complete the transactions contemplated hereby, and the other
opportunities that will be forgone by the Sellers in attempting to complete the
transactions contemplated by this Agreement, the Buyer will pay the Sellers a
break-up fee in the amount of $10,000,000 if either:
(a) the Sellers terminate this Agreement pursuant to Section
9.1(a)(i),
or
(b) the Buyer fails or elects not to complete the
transactions contemplated by this Agreement for no reason or for any
reason other than (i) a material misrepresentation or material breach
of warranty by the Sellers under this Agreement, (ii) a material
breach by the Sellers of their obligations under this Agreement, or
(iii) the failure of any of the conditions precedent in Sections
8.2(c), (e), (h) or (i) above.
Any payment under this Section 9.2 shall be made, without requirement of notice
or demand, on February 10, 1999 (subject to extension consistent with Section
9.1(b) above).
9.3 Status of Agreement after Termination. Upon any
termination of this Agreement pursuant to Section 9.1, this Agreement shall
become void and shall have no effect, except that (subject to Section 9.4
below) such termination shall not affect any liability any party may have for
any loss, damage, liability, cost or expense alleged to have been incurred by
another as a consequence of the party's default under this Agreement.
9.4 Exclusive Remedy. The payment of the break-up fee
provided for in Section 9.2 shall be the sole, full and complete remedy of the
Sellers for any and all loss, damage, cost or expense alleged to have been
incurred by the Sellers as a
31
consequence of the Buyer's failure to consummate the transactions contemplated
by this Agreement.
10. Arbitration.
(a) Any controversy or claim arising out of or relating to
this Agreement or the breach hereof shall be settled by arbitration in
accordance with the Rules of Commercial Arbitration of the American Arbitration
Association (the "Rules"), and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof; provided,
however, that nothing herein contained shall be deemed to preclude or impair
any party from pursuing a judicial proceeding for specific performance or other
equitable relief.
(b) The arbitration tribunal shall consist of three
arbitrators, of whom one shall be nominated by Buyer, one shall be nominated by
the Seller, and the third, who shall serve as Chairman, shall be chosen by the
American Arbitration Association. Each of the arbitrators shall have
significant experience in the concert promotion business and shall not be
affiliated with or employed by the Buyer, the Sellers, the Companies or any of
their respective Affiliates.
(c) Any party to this Agreement is authorized to initiate
arbitration by providing written notice of arbitration, in accordance with the
Rules, to the Administrator of the American Arbitration Association and to the
party or parties against whom a claim is being made.
(d) The place of the arbitration shall be New York, New York.
(e) The award of the arbitrators shall be conclusive, final
and binding, may include an order of specific performance or other equitable
relief, and shall include reasonable attorneys' fees to the prevailing party in
the arbitration proceeding. The parties waive any right to appeal the award, to
the extent a right to appeal may be lawfully waived. Each party retains the
right to seek judicial assistance (i) to compel arbitration; (ii) to obtain
interim measures of protection pending arbitration; (iii) to enforce any
decision of the arbitrators, including the final award; and (iv) to obtain
specific performance or other equitable relief.
11. General Provisions.
11.1 Notices. All waivers, notices, consents, demands,
requests, approvals and other communications which are required or may be given
hereunder shall be in writing and shall be deemed to have been duly given (a)
when hand-delivered, (b) when sent by telecopier, (c) one (1) Business Day
after being sent by national overnight courier service, with charges prepaid or
billed to the account of the sender, or (d) three (3) Business Days after being
mailed by certified first class mail, return receipt requested, postage
prepaid; and in each case shall be addressed as follows:
32
if to the Buyer:
SFX Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
fax: (000) 000-0000
with a copy to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
fax: (000) 000-0000
if to the Sellers or the Agent:
Xxxx X. Xxxxx, as Agent
The Cellar Door Companies
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
fax: ( 000) 000-0000
with a copy to:
.
Xxxxxxxxx Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
fax: (000) 000-0000
or to such other address or addresses as may be designated by a party by
written notice to the other parties hereto.
11.2 Costs; Expenses. Whether or not the transactions are
consummated, the Buyer will bear its own costs and expenses incurred in
negotiating this Agreement and consummating the transactions contemplated
hereby, and the Sellers will bear the costs and expenses incurred by the
Sellers in negotiating this Agreement and consummating the transactions
contemplated hereby.
11.3 Binding Effect, Benefits. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors,
33
administrators, personal representatives, successors and assigns; provided,
however, that nothing in this Agreement shall be construed to confer any
rights, remedies, obligations or liabilities on any person other than the
parties hereto or their respective heirs, executors, administrators, personal
representatives, successors and assigns.
11.4 Public Announcements. The parties hereto shall advise
and consult with each other prior to the making of any public announcement with
respect to the transactions contemplated hereby and, in any event, shall not
issue any press releases, or make any public announcement or statement with
respect to the transactions contemplated hereby without the consent of the
other parties, except for (a) press releases in conformity with SEC disclosure
requirements and approved by the Agent, (b) filings or registrations which may
be required by Law, (c) communications with directors, employees, customers,
suppliers, franchisees, lenders, lessors, shareholders, partners and other
particular groups as may be legally required or necessary or appropriate and
not inconsistent with the best interests of the other parties for the proper
consummation of the transactions contemplated by this Agreement, or (d)
announcements or other communications otherwise required by Law.
11.5 Entire Agreement; Amendment. This Agreement, together
with its Schedules and Exhibits, and the confidentiality agreement dated May
20, 1998, embodies the entire agreement and understanding of the parties hereto
and supersedes any prior agreement or understanding between the parties with
respect to the subject matter of this Agreement. This Agreement cannot be
amended, waived or terminated orally, but only by a writing duly making
specific reference to this Agreement executed by the parties.
11.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
11.7 Headings. Headings of the Sections and paragraphs in
this Agreement are for reference purposes only and shall not be deemed to have
any substantive effect.
11.8 Assignment. This Agreement may not be assigned by any
party without the prior written consent of each other party. Notwithstanding
the foregoing, the Buyer may, without the consent of the other parties hereto,
assign and delegate its obligations and rights hereunder or any part thereof to
(i) any affiliated company of the Buyer and (ii) any lender of the Buyer as
collateral, but no such assignment shall relieve the Buyer of its obligations
hereunder.
11.9 Applicable Law. This Agreement shall be governed and
construed and interpreted in accordance with the laws of the State of New York,
without regard to choice of laws principles, and the federal laws of the United
States of America.
34
11.10 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validly or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
11.11 Waivers. Except as otherwise provided herein, no delay
on the part of a Seller or the Buyer in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of a Seller or the Buyer of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
11.12 Enforcement of Rights and Remedies. The rights and
remedies granted to the parties hereunder are cumulative of one another, and
may be exercised singly or concurrently, or in any order in which the subject
party may determine.
11.13 Rights of Agent. Each of the Sellers hereby authorizes
the Agent, as such Seller's representative and attorney-in-fact, to take any
and all action hereunder in the name, place and stead of such Seller, as fully
and to the same extent as such Seller could have done acting for itself and in
its own name. Such permitted actions shall include, without limitation, giving
any notices under this Agreement, entering into any amendments or modifications
of this Agreement, and granting any and all waivers and/or consents hereunder,
all on such terms and conditions as the Agent may determine in his sole and
absolute discretion.
[Signature Page Follows]
35
Counterpart Signature Page for the Stock Purchase Agreement dated as of
January 25, 1999 between the Sellers listed below and SFX Entertainment, Inc.
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Stock Purchase Agreement as of the date first set forth above.
BUYER:
SFX ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Title: Senior Vice President
SELLERS:
/s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx,
individually and as Agent
/s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx, as Trustee of
Xxxx Xxxxx XxXxxxxx S Trust
/s/ Xxxx X. Xxxxx III
-------------------------------------
Xxxx X. Xxxxx III, as Trustee of
Xxxxxx Xxxxxxxx S Trust
/s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxx X. Xxxxx III
-------------------------------------
Xxxx X. Xxxxx III
36
