DISTRIBUTION AGREEMENT
DATED AS OF , 1998
AMONG
SFX BROADCASTING, INC.,
SFX ENTERTAINMENT, INC.
AND
SBI HOLDING CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS ........................................... F-2
SECTION 1.1 General.................................... F-2
ARTICLE II
REORGANIZATION AND RELATED TRANSACTIONS ............... F-3
SECTION 2.1 The Reorganization......................... F-3
SECTION 2.2 Working Capital Adjustment................. F-4
SECTION 2.3 SFX Approval............................... F-7
ARTICLE III
ASSUMPTION AND RETENTION OF LIABILITIES ............... F-7
SECTION 3.1 Assumed Liabilities........................ F-7
SECTION 3.2 Retained Liabilities....................... F-7
SECTION 3.3 Construction of Agreements................. F-7
ARTICLE IV
THE DISTRIBUTION ...................................... F-7
SECTION 4.1 The Distribution........................... F-7
SECTION 4.2 Fractional Shares.......................... F-8
SECTION 4.3 SFX Employees.............................. F-8
SECTION 4.4 SFX Board Action........................... F-8
SECTION 4.5 Registration and Listing; SEC Filings ..... F-9
SECTION 4.6 Third Party Consents....................... F-9
SECTION 4.7 Waivers.................................... F-9
SECTION 4.8 Termination of Merger Agreement. .......... F-9
ARTICLE V
SURVIVAL; MUTUAL RELEASE AND INDEMNIFICATION ......... F-10
SECTION 5.1 Survival and Indemnification............... F-10
SECTION 5.2 Mutual Release, Etc. ...................... F-10
SECTION 5.3 Indemnification............................ F-11
SECTION 5.4 Procedure for Indemnification.............. F-11
ARTICLE VI
TAX MATTERS ........................................... F-
SECTION 6.1 Prior Tax Sharing Agreements............... F-
SECTION 6.2 Tax Sharing Agreement...................... F-12
ARTICLE VII
CERTAIN ADDITIONAL MATTERS ............................ F-13
SECTION 7.1 Conveyancing and Assumption Instruments ... F-13
SECTION 7.2 No Representations or Warranties .......... F-13
SECTION 7.3 Further Assurances; Subsequent Transfers .. F-13
SECTION 7.4 Entertainment Board........................ F-14
F-1
PAGE
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SECTION 7.5 Resignations............................... F-
SECTION 7.6 Sales and Transfer Taxes................... F-
SECTION 7.7 Change of Name............................. F-14
ARTICLE VIII
ACCESS TO INFORMATION AND SERVICES .................... F-14
SECTION 8.1 Provision of Corporate Records............. F-14
SECTION 8.2 Access to Information...................... F-14
SECTION 8.3 Retention of Records....................... F-14
SECTION 8.4 Confidentiality............................ F-14
SECTION 8.5 Privileged Matters......................... F-15
ARTICLE IX
INSURANCE ............................................. F-15
SECTION 9.1 General.................................... F-15
SECTION 9.2 Certain Insured Claims..................... F-15
ARTICLE X
CONDITIONS ............................................ F-16
SECTION 10.1 Conditions................................ F-16
ARTICLE XI
MEDIATION ............................................. F-16
SECTION 11.1 Mediation and Binding Arbitration ........ F-16
SECTION 11.2 Initiation................................ F-17
SECTION 11.3 Submission to Mediation................... F-17
SECTION 11.4 Selection of Mediator..................... F-17
SECTION 11.5 Mediation................................. F-17
SECTION 11.6 Selection of Arbitrator................... F-17
SECTION 11.7 Cost of Arbitration....................... F-17
ARTICLE XII
MISCELLANEOUS ......................................... F-17
SECTION 12.1 Complete Agreement........................ F-17
SECTION 12.2 Governing Law............................. F-17
SECTION 12.3 Notices................................... F-17
SECTION 12.4 Amendment and Modification................ F-18
SECTION 12.5 Termination............................... F-18
SECTION 12.6 Successor and Assigns..................... F-18
SECTION 12.7 No Third Party Beneficiaries.............. F-18
SECTION 12.8 Counterparts.............................. F-19
SECTION 12.9 Interpretation............................ F-19
SECTION 12.10 Annexes, Etc. ........................... F-19
SECTION 12.11 Legal Enforceability..................... F-19
Annex I Assumed Liabilities.......................... I-1
Annex II Transferred Assets........................... II-1
F-2
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of , 1997, by and between
SFX Broadcasting, Inc., a Delaware corporation ("SFX"), and SFX
Entertainment, Inc., a Delaware corporation and a wholly-owned subsidiary of
SFX ("Entertainment"). Capitalized terms used and not defined herein have the
respective meanings ascribed them in the Merger Agreement. Unless the context
requires otherwise, "SFX" refers to SFX and its subsidiaries (other than
Entertainment and its subsidiaries) and "Entertainment" refers to
Entertainment and its subsidiaries.
WHEREAS, SFX has entered into that Agreement and Plan of Merger dated as
of August 24, 1997, among SBI Holding Corporation, a Delaware corporation
("Parent"), SBI Radio Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and SFX pursuant to which SFX will
become a wholly-owned subsidiary of Parent (the "Merger Agreement");
WHEREAS, Entertainment has, among other endeavors, been engaged in the
business of venue ownership, operation and management and the booking,
promotion and/or production of entertainment events, including, without
limitation, related merchandising, concession management and Internet-based
marketing through its wholly owned subsidiary SFX Concerts, Inc., formerly
known as Delsener/▇▇▇▇▇▇ Enterprises, Inc., and its Subsidiaries and
Affiliates (the "Transferred Businesses"), which Transferred Businesses are
principally outside the scope of SFX's core radio broadcasting business;
WHEREAS, the Board of Directors of SFX has determined that the interests
of SFX's stockholders would be best served by restructuring the ownership of
the Transferred Businesses and ownership of the core radio broadcasting
business prior to the Merger as contemplated by Section 5.07 of the Merger
Agreement;
WHEREAS, SFX wishes to transfer and assign to Entertainment all of the
Transferred Assets as specified in this Agreement in exchange for the
assumption by Entertainment of the Assumed Liabilities as specified in this
Agreement;
WHEREAS, Entertainment is willing to assume such Assumed Liabilities;
WHEREAS, SFX intends to distribute all of the outstanding shares of the
Class A Common Stock, par value $.01 per share, of Entertainment (the
"Entertainment Class A Common Stock") and the Class B Common Stock of
Entertainment, par value $.01 per share (the "Entertainment Class B Common
Stock" and, together with the Entertainment Class A Common Stock, the
"Entertainment Common Stock"), owned by SFX to the holders of (i) the common
stock of SFX (the "SFX Common Stock"), (ii) the 6 1/2% Series D Cumulative
Convertible Exchangeable Preferred Stock due May 31, 2007 of SFX (the "Series
D Preferred Stock"), (iii) interests in the SFX Director Deferred Stock
Ownership Plan dated as of January 1, 1997 (the "SFX Director Deferred Stock
Ownership Plan") and (iv) certain warrants of SFX, with the holders of the
Class A Common Stock, par value $.01 per share, of SFX (the "SFX Class A
Common Stock"), the Series D Preferred Stock, interests in the SFX Director
Deferred Stock Ownership Plan and certain warrants of SFX receiving
Entertainment Class A Common Stock and the holders of the Class B Common
Stock, par value $.01 per share, of SFX (the "SFX Class B Common Stock")
receiving Entertainment Class B Common Stock (such distribution hereinafter
referred to as the "Distribution") on the Distribution Date (as hereinafter
defined);
WHEREAS, SFX and Entertainment have determined that it is necessary and
desirable to set forth the principal corporate transactions required to
effect the Distribution and to set forth other agreements that will govern
certain other matters in connection with the Distribution; and
WHEREAS, Parent has joined as a signatory and a party to this Agreement in
order to preserve and protect its rights under the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and intending to be legally bound hereby, SFX
and Entertainment hereby agree as follows:
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ARTICLE 1
DEFINITIONS
SECTION 1.1 General. As used in this Agreement, capitalized terms defined
immediately after their use shall have the respective meanings thereby
provided and the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the terms defined):
Action: any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Affiliate: with respect to any specified person, a person that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such specified person; provided,
however, that SFX and Entertainment shall not be deemed to be Affiliates of
each other for purposes of this Agreement.
Agent: ChaseMellon Shareholder Services, LLC, the distribution agent
appointed by SFX to distribute shares of Entertainment Common Stock pursuant
to the Distribution.
Assumed Liabilities: collectively, all of the Liabilities and other
obligations of SFX listed on Annex I hereto.
Books and Records: the books and records of SFX (or true and complete
copies thereof), including all computerized books and records owned by SFX,
which relate principally to the Transferred Businesses and are necessary for
Entertainment to operate the Transferred Businesses, including, without
limitation, all such books and records relating to Employees, the purchase of
materials, supplies and services, the sale of products by the Transferred
Businesses or dealings with customers of the Transferred Businesses and all
litigation files relating to any Action being assumed by Entertainment as
part of the Assumed Liabilities.
Code: the Internal Revenue Code of 1986, as amended.
Consent Solicitation Documents. The Consent Solicitation Statements mailed
to the holders of SFX's 12 5/8% Cumulative Exchangeable Series E Preferred
Stock and 10 3/4% Senior Subordinated Notes due 2006 on January 7, 1998 and
the Information Statement related thereto.
Conveyancing and Assumption Instruments: collectively, the various
agreements, instruments and other documents to be entered into in order to
effect the transfer to Entertainment of Transferred Assets, and the
assumption by Entertainment of the Assumed Liabilities in the manner
contemplated by this Agreement, each of which shall be in a form reasonably
satisfactory to Parent.
Distribution Date: the date as of which the Distribution shall be effected
as determined by the SFX Board of Directors which, in any event, shall be a
date on or prior to the Closing Date.
Distribution Employees: the employees of SFX listed on Section 5.07(h) of
the Company Disclosure Schedule to the Merger Agreement.
Employee: the Distribution Employees and any employee shown on the records
of SFX as being employed by SFX and assigned to the Transferred Businesses as
of the Distribution Date, including any laid-off Employee or any Employee on
leave of absence.
Exchange Act: the Securities Exchange Act of 1934, as amended.
Form 8-A: the registration statement on Form 8-A to be filed by
Entertainment with the SEC to effect the registration of the Entertainment
Class A Common Stock pursuant to the Exchange Act.
Guarantees: the guarantees provided by SFX in connection with the
following agreements: (i) Agreement and Plan of Merger and Asset Purchase
Agreement, dated as of December 10, 1997 by and among SFX Entertainment,
Inc., Contemporary Investments Corporation, Contemporary Investments of
Kansas, Inc., Contemporary International Productions Corporation, ▇▇▇▇▇▇ ▇.
Schanman Living Trust,
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Living Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (ii) Stock and Asset Purchase Agreement, dated December 2, 1997,
by and among SFX Network Group, L.L.C. and SFX Entertainment, Inc., and ▇▇▇▇▇
▇. ▇▇▇▇, individually and as Trustee under the Bird Family Trust, ▇▇▇▇ ▇.
▇▇▇▇, individually and as Trustee under the ▇▇▇▇ ▇. ▇▇▇▇ Corporation Trust,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, individually and as Trustee under the ▇▇▇▇▇ Family Trust,
June ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and The Network 40, Inc. and (iii) Stock
Purchase Agreement, dated as of December 12, 1997 by and among Pace
Entertainment Corporation and SFX Entertainment, Inc.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
indemnification authorized pursuant to this Agreement, all losses,
Liabilities, claims, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all
Actions, demands, assessments, judgments, settlements and compromises
relating thereto and reasonable attorneys' fees and expenses in connection
therewith) suffered by such Indemnitee with respect to such claim.
Indemnifying Party: any party who is required to indemnify any other
person pursuant to this Agreement hereof.
Indemnitee: any party who is entitled to receive indemnification from an
Indemnifying Party pursuant to this Agreement hereof.
Indemnity Payment: the amount an Indemnifying Party is required to pay an
Indemnitee pursuant to this Agreement hereof.
Insurance Program: collectively, the series of property and casualty
policies pursuant to which various insurance carriers provide insurance
coverage to SFX (including Entertainment and its subsidiaries) in respect of
claims or occurrences relating to, without limitation, property damage,
business interruption, transit, fire, extended coverage, fiduciary, fidelity,
environmental impairment, employee crime, general liability, products'
liability, automobile liability and employer's liability. The term Insurance
Program shall not include any SFX Welfare Plan as such term is defined in the
Employee Benefits Agreement.
Liabilities: any and all debts, liabilities and obligations, whether or
not accrued, contingent, known or unknown, or reflected on a balance sheet,
including, without limitation, those arising under any law, rule, regulation,
Action, order or consent decree of any governmental entity or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Record Date: the date determined by the Board of Directors of SFX as the
record date for the Distribution.
Registration Statement: the registration statement on Form S-1 (Reg. No.
333-43287) filed by Entertainment with the SEC on December 24, 1997, as
amended, to effect the registration of the Entertainment Class A Common Stock
and Class B Common Stock pursuant to the Securities Act of 1933, as amended.
Related Agreements: the Tax Sharing Agreement and the Employee Benefits
Agreement.
Retained Liabilities: all Liabilities and obligations of SFX other than
the Assumed Liabilities.
SEC: the Securities and Exchange Commission.
Transferred Assets: collectively, all of the assets and properties of SFX
identified on Annex II hereto.
ARTICLE 2
REORGANIZATION AND RELATED TRANSACTIONS
SECTION 2.1 The Reorganization. Subject to the terms and conditions of
this Agreement, SFX and Entertainment shall use their respective best efforts
to cause, prior to the Distribution Date, all of SFX's right, title and
interest in and to the Transferred Assets to be conveyed, assigned,
transferred and delivered to Entertainment, free and clear of all liens or
encumbrances in favor of SFX or its subsidiaries,
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and all of SFX's duties, obligations and responsibilities under the Assumed
Liabilities to be assumed by Entertainment (the "Asset and Liability
Transfer"). Such transfer and assumption shall be effected by means of the
Conveyancing and Assumption Instruments which shall be executed and delivered
by each of SFX and Entertainment prior to the Distribution Date. Subject to
Section 7.3 hereof, to the extent that any such conveyances, assignments,
transfers and deliveries shall not have been so consummated on the
Distribution Date, SFX and Entertainment shall cooperate to effect such
consummation as promptly thereafter as shall be practicable, it nonetheless
being understood and agreed by SFX and Entertainment that neither shall be
liable in any manner to any person who is not a party to this Agreement for
any failure of any of the transfers contemplated by this Article 2 to be
consummated on or subsequent to the Distribution Date. Whether or not all of
the Transferred Assets or the Assumed Liabilities shall have been legally
transferred to, or assumed by, Entertainment as of the Distribution Date, SFX
and Entertainment agree that, as of the Distribution Date, Entertainment
shall have, and shall be deemed to have acquired, complete and sole
beneficial ownership over all of the Transferred Assets, together with all of
SFX's and its subsidiaries' rights, powers and privileges incident thereto,
and shall be deemed to have assumed all of the Assumed Liabilities and all of
SFX's and its subsidiaries' duties, obligations and responsibilities incident
thereto in accordance with the terms of this Agreement.
SECTION 2.2 Working Capital Adjustment.
(a) In the event that the Distribution occurs prior to the Closing Date,
then on the Distribution Date, the management of SFX shall make an allocation
of working capital between Entertainment and SFX, consistent with the proper
operation of SFX in its usual, regular and ordinary course and, immediately
after the effective time of the Distribution, SFX shall deliver to
Entertainment, in immediately available funds by wire transfer to such bank
account as Entertainment shall specify, any positive amount allocated to
Entertainment.
(b) Not less than five business days prior to the Closing Date, SFX shall
deliver to Entertainment and Parent a good faith estimate of Working Capital
(as defined in Section 2.3(d)) as of the Closing Date (the "Estimated Working
Capital") accompanied by a certificate by the Chief Executive Officer and
Chief Financial Officer of SFX certifying that the Estimated Working Capital
has been calculated in accordance with the Merger Agreement and this
Agreement. If the Estimated Working Capital is a positive number, then at the
Closing SFX shall deliver to Entertainment, in immediately available funds by
wire transfer to such bank account as Entertainment shall specify, an amount
of cash equal to the Estimated Working Capital. If the Estimated Working
Capital is a negative number, then at the Closing SFX shall cause
Entertainment to deliver, and Entertainment shall deliver to SFX, in
immediately available funds by wire transfer to such bank account as SFX
shall specify, an amount of cash equal to the Estimated Working Capital.
(c)(i) As soon as practicable after the Closing Date, SFX will prepare a
statement of Working Capital as of the Closing Date, which will be audited by
Ernst & Young LLP (the "Company's Working Capital Statement") at the expense
of SFX. SFX will deliver SFX's Working Capital Statement to Entertainment as
soon as practicable and in any event within ninety days after the Closing
Date. If within fifteen days following delivery of SFX's Working Capital
Statement to Entertainment, Entertainment has not given SFX notice of its
objection to SFX's Working Capital Statement (such notice must contain a
statement of the basis of such objection), then the Working Capital reflected
on SFX's Working Capital Statement shall be deemed final and conclusive and
shall be the "Final Working Capital." If Entertainment gives such notice of
objection within the fifteen day period, then the issues in dispute will be
submitted to a "big six" accounting firm (other than Ernst & Young LLP) to be
selected jointly by Entertainment and Parent within the following fifteen
days or, if they fail to agree, such accounting firm shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(Chicago office) (it being understood that the Chicago office of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ was chosen because of representations made that neither Parent and
its Affiliates, SFX and its Affiliates nor Entertainment and its Affiliates
have a material relationship with such office and if any of such parties
prior to the calculation of the Final Working Capital develops a material
relationship with such office, the party having such a relationship shall
promptly notify the other party of such relationship and the parties will
select another office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or another "big six" accounting firm
with which none of such parties has a material relationship to serve as the
accountants) (the "Accountants"),
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for resolution and the Accountants shall determine the "Final Working
Capital" within thirty days after the dispute is submitted to them. If issues
in dispute are submitted to the Accountants for resolution, (A) each party
will furnish to the Accountants such work papers and other documents and
information relating to the disputed issues as the Accountants may request
and are available to that party or its Subsidiaries (or its independent
public accountants), and will be afforded the opportunity to present to the
Accountants any material relating to the determination and to discuss the
determination with the Accountants; (B) the determination by the Accountants
of Final Working Capital, as set forth in a notice delivered to both parties
by the Accountants, will be binding and conclusive on the parties; and (C)
Entertainment and SFX will each bear one-half of the fees and expenses of the
Accountants for such determination. SFX shall make its employees and books
and records available to Entertainment for purposes of verifying Final
Working Capital and shall cause Ernst & Young LLP to make its work papers
used in determining Final Working Capital available to Entertainment.
(ii) On the third business day following the determination of the Final
Working Capital (the "Payment Date"), (A) if the Working Capital Adjustment
Amount (as defined below) is a positive number, then SFX will pay such amount
to Entertainment in immediately available funds by wire transfer to such bank
account as Entertainment shall specify and (B) if the Working Capital
Adjustment Amount is a negative number, then Entertainment will pay such
amount to SFX in immediately available funds by wire transfer to a bank
account specified by SFX. Notwithstanding the foregoing, if Entertainment has
notified SFX in writing prior to the Payment Date that it wishes to have all
or any portion of the Final Working Capital (such amount, the "Consideration
Adjustment") treated as an adjustment to the Class A Common Stock Merger
Consideration and the Class B Common Stock Merger Consideration, the Class A
Common Stock Merger Consideration and the Class B Common Stock Merger
Consideration shall be increased by an amount equal to the quotient of the
Consideration Adjustment divided by the fully diluted number of shares of SFX
Common Stock outstanding immediately prior to the Effective Time, and SFX
shall (X) promptly distribute the appropriate amount to the appropriate
holders, immediately prior to the Effective Time, of SFX Common Stock and
Series D Preferred Stock, (Y) promptly distribute upon exercise the
appropriate amount to holders of Options, Warrants and Unit Purchase Options
unexercised immediately prior to the Effective Time, and (Z) promptly
distribute the appropriate amount to holders of Options, Warrants, and Unit
Purchase Options who exercised such securities on and after the Effective
Time and prior to the Payment Date; provided that as a condition precedent to
SFX's obligations under this sentence, Entertainment shall have paid to SFX
in immediately available funds by wire transfer to an account specified by
SFX the difference, if any, between the Consideration Adjustment and the
Working Capital Adjustment Amount so that the aggregate net amount to be paid
or received by SFX, as the case may be, pursuant to this sentence is equal to
the amount that would have been paid or received, as the case may be,
pursuant to the first sentence of this paragraph had the Consideration
Adjustment not been made.
(d) The term "Working Capital" shall mean, as of the point in time
immediately prior to the Effective Time, the sum of all current assets of SFX
and its consolidated Subsidiaries minus the sum of all current liabilities of
SFX and its consolidated Subsidiaries, each as determined in accordance with
GAAP applied on a basis consistent with the balance sheet of SFX as of June
30, 1997 included in Company SEC Documents (as defined in the Merger
Agreement) (provided that no liabilities or reserves reflected on such
balance sheet shall be reduced or eliminated except by reason of a payment or
credit occurring in the ordinary course of business and consistent with past
practices).
Notwithstanding the foregoing, Working Capital shall, without duplication
either in this computation or as between this computation and the computation
of Excess Debt, (i) be increased by the lesser of (A) 50% of all fees and
expenses incurred by SFX in connection with acquiring consents from holders
of the Series E Preferred Stock and the 2006 Notes in connection with the
transactions contemplated by the Merger Agreement and (B) $1,000,000, (ii) be
increased by, if a positive number, or decreased by, if a negative number,
the product of (A) the Class A Common Stock Merger Consideration and (B) the
difference between 15,589,083 less the sum of the fully diluted number of
shares of SFX Common Stock outstanding immediately prior to the Effective
Time (excluding the ▇▇▇▇▇▇▇ Shares (as defined below)) (calculated in a
manner consistent with Section 3.01(c)(i) of the Company Disclosure Schedule,
such
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calculation to include, without limitation, derivative securities that will
become issuable upon consummation of the transactions contemplated by the
Merger Agreement), (iii) be reduced by the difference between $84,554,649
less the sum of (A) the aggregate exercise price of all Options, Warrants and
Unit Purchase Options outstanding immediately prior to the Effective Time
plus (B) the aggregate exercise price of all Unit Purchase Option Warrants
underlying Unit Purchase Options outstanding immediately prior to the
Effective Time plus (C) the aggregate base price of all SARs outstanding
immediately prior to the Effective Time, (iv) be reduced by the product of
(A) $42 and (B) the aggregate number of shares of SFX Common Stock subject to
a right of repurchase in favor of SFX (the "▇▇▇▇▇▇▇ Shares") granted pursuant
to that certain Agreement of Merger dated February 12, 1997 among SFX,
Nederlander of Connecticut, Inc. and the other parties thereto outstanding
immediately prior to the Effective Time, (v) be increased by all capital
expenditures paid by SFX and its Subsidiaries after June 30, 1997 and
immediately prior to the Effective Time permitted by Section 4.01(a)(vii) of
the Merger Agreement, (vi) be decreased by all accrued capital expenditures
of SFX as of immediately prior to the Effective Time (to the extent not
reflected in current liabilities), (vii) be increased by dividends that have
been accrued immediately prior to the Effective Date whose regularly
scheduled payment date has not then yet occurred, (viii) except as required
by clause (xi) below, exclude any liabilities attributable to Indebtedness,
(ix) exclude any liabilities included in clauses (i) through (v) of the
following sentence, (x) be decreased by unpaid costs, fees and expenses of
SFX arising out of, based upon or that will arise from the transactions
contemplated by the Merger Agreement (other than as a result of actions taken
by Sub) (including, without limitation, amounts related to the termination of
any employees, broker fees, legal, accounting and advisory fees and fees
incurred in connection with third party consents, waivers and amendments of
creditors or holders of Preferred Stock), and (xi) be reduced by the amount
of the Excess Debt, if a positive number, or be increased by the amount of
the Excess Debt, if a negative number, and (xii) be reduced by the amount of
the Series E Premium (as defined below).
The term "Series E Premium" shall mean the difference between (i) the
Average Trading Price times 142,032 and (ii) 14,203,200. The term "Average
Trading Price" shall mean the highest of the following averages: (i) the
average of the last sales price of the Series E Preferred Stock during the 15
consecutive business days ending on the Closing Date, or (ii) the average of
the last sales price of the Series E Preferred Stock during the 15
consecutive business days immediately preceding February 9, 1998.
(e) The term "Excess Debt" shall mean, as of immediately prior to the
Effective Time, the difference between the sum of the following and
$899,700,000: (i) the difference between (A) Indebtedness of SFX and its
consolidated Subsidiaries less (B) the difference between $70,000,000 and any
amounts (other than the reimbursement of expenses) actually received by SFX
and its consolidated subsidiaries after August 24, 1997 under agreements
relating to the sale or LMA (such LMA payments not to exceed $30,000 per
month) of its WVGO-FM and the sale or LMA of its ▇▇▇▇▇▇▇/Biloxi radio
stations, less (C) any Indebtedness incurred to finance acquisitions approved
by Parent of stock of or substantially all of the assets of radio stations,
less (D) interest accrued as of immediately prior to the Effective Time that
is not then due and payable, (ii) the Series B Merger Consideration, (iii)
the Series C Merger Consideration, (iv) the liquidation preference amount of
the Series E Preferred Stock, and (v) Environmental Costs or Liabilities
accrued and not paid after June 30, 1997 to the extent they exceed $100,000
in the aggregate. "Working Capital Adjustment Amount" shall mean an amount
equal to the Final Working Capital, less the Estimated Working Capital,
together with interest on the absolute value of the difference at 10% per
annum beginning on the Closing Date and ending on the date of payment of the
Working Capital Adjustment Amount as provided in Section 2.02(c)(ii) hereof.
Notwithstanding the foregoing, Working Capital shall not include any asset
transferred to Entertainment or any of its Subsidiaries, any Liability
assumed by Entertainment, or any Liability to which none of SFX or any of its
Subsidiaries is a party immediately after the Effective Time and any such
computation shall assume that the Distribution has been consummated.
(f) All amounts loaned to Entertainment by SFX to (i) acquire (whether by
merger, stock or asset acquisition or otherwise) additional businesses
engaged in the business in which Entertainment is engaged or (ii) make
capital improvements on assets owned or leased by Entertainment, shall be
paid by Entertainment to SFX by wire transfer of immediately available funds
to a bank account specified by SFX on the Distribution Date and shall not be
considered for purposes of computing Working Capital under clause (b) of this
Section 2.3.
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(g) If the Merger Agreement is terminated for any reason in accordance
with its terms, than the working capital shall be allocated in accordance
with Section 2.3(a) above, and no further adjustments to working capital
shall be made.
SECTION 2.3 SFX Approval. Prior to the Distribution Date, SFX shall
cooperate with Entertainment in effecting, and if so requested by
Entertainment, SFX shall, as the sole stockholder of Entertainment, ratify
any actions which are reasonably necessary or desirable to be taken by
Entertainment to effectuate the transactions contemplated by this Agreement
in a manner consistent with the terms of this Agreement, including, without
limitation, the following: (a) the election or appointment of directors and
officers of Entertainment to serve in such capacities following the
Distribution Date, and (b) the preparation and implementation of appropriate
plans, agreements and arrangements for Employees (including, without
limitation, plans, agreements or arrangements pursuant to which Entertainment
Common Stock would be acquired by Employees).
ARTICLE 3
ASSUMPTION AND RETENTION OF LIABILITIES
SECTION 3.1 Assumed Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement and in addition to any other
Liabilities otherwise expressly assumed by Entertainment pursuant to this
Agreement, the Related Agreements or any other agreement contemplated by this
Agreement, Entertainment assumes all Assumed Liabilities and agrees with SFX
to pay, perform and discharge in due course any and all Assumed Liabilities.
SFX shall use its commercially reasonable efforts to cause Entertainment and
its Subsidiaries to be released from all debt and accrued liabilities other
than the Assumed Liabilities, prior to the Effective Time.
SECTION 3.2 Retained Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement and in addition to any other
Liabilities otherwise expressly retained by SFX pursuant to this Agreement,
the Related Agreements or any other agreement contemplated by this Agreement,
SFX hereby agrees with Entertainment that SFX shall pay, perform and
discharge in due course any and all Retained Liabilities.
SECTION 3.3 Construction of Agreements. Notwithstanding any other
provisions in this Agreement to the contrary, in the event and to the extent
there shall be a conflict between the provisions of this Agreement and the
Related Agreements (or any Conveyancing and Assumption Instrument or other
instrument of assumption entered into pursuant to this Agreement) and (a) the
provisions of the Merger Agreement then (i) prior to the Effective Time, the
provisions of the Merger Agreement shall control and (ii) subsequent to the
Effective Time, the provisions of this Agreement and the Related Agreements
(or any Conveyancing and Assumption Instrument or other instrument of
assumption entered into pursuant to this Agreement) shall control and (b) the
provisions of any other agreement entered into by SFX or Entertainment, the
provisions of this Agreement and the Related Agreements (and any Conveyancing
and Assumption Instrument or other instrument of assumption entered into
pursuant to this Agreement) shall control. In the event and to the extent
there shall be a conflict between the provisions of this Agreement and the
provisions of the Related Agreements, the provisions of the Related
Agreements shall control.
ARTICLE 4
THE DISTRIBUTION
SECTION 4.1 The Distribution.
(a) On or prior to the Distribution Date, SFX shall deliver to the Agent
for the benefit of holders of record of SFX Common Stock, Series D Preferred
Stock and interests in the SFX Director Deferred Stock Ownership Plan on the
Record Date, (i) certificates representing, in the aggregate, the number of
Entertainment Class A Common Stock equal to the sum of (A) the number of SFX
Class A Common Stock outstanding on the Record Date (B) the aggregate number
of shares of SFX Class A Common Stock credited pursuant to the SFX Director
Deferred Stock Ownership Plan and (C) the product of the number of Series D
Preferred Stock outstanding on the Record date multiplied by the Conversion
Rate (as defined in the certificate of designations governing the Series D
Preferred Stock) and (ii) certificates representing, in the aggregate, the
number of Entertainment Class B Common Stock equal to the number
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of SFX Class B Common Stock outstanding on the Record Date. SFX shall
instruct the Agent to distribute as promptly as practicable following the
Distribution Date to holders of the SFX Common Stock, Series D Preferred
Stock and interests in the SFX Director Deferred Stock Ownership Plan on the
Record Date (i) one share of Entertainment Class A Common Stock for every one
share of SFX Class A Common Stock, (ii) one share of Entertainment Class A
Common Stock for every one share of SFX Class A Common Stock credited
pursuant to the SFX Director Deferred Stock Ownership Plan, (iii) the number
of shares of Entertainment Class A Common Stock equal to the Conversion Rate
(as defined in the Certificate of Designations governing the Series D
Preferred Stock) for every one share of Series D Preferred Stock and (iv) one
share of Entertainment Class B Common Stock for every one share of SFX Class
B Common Stock. Simultaneously with the Distribution, SFX shall place that
number of shares of the Entertainment Class A Common in an escrow account
with an escrow agent selected by SFX and governed by an escrow agreement
reasonably acceptable to SFX and Parent for delivery to the holders of the
IPO Warrants, ▇▇▇▇ Warrants and SCMC Warrants upon exercise of such warrants
that equals the number of shares of Entertainment Class A Common Stock that
the holders of such warrants would have been entitled to receive if they had
exercised all of their IPO Warrants, ▇▇▇▇ Warrants and SCMC Warrants
immediately prior to the Record Date. SFX and Entertainment agree to provide
to the Agent sufficient certificates in such denominations as the Agent may
request in order to effect the Distribution. All of the shares of
Entertainment Common Stock issued in the Distribution shall be fully paid,
nonassessable and free of preemptive rights.
(b) The Distribution shall be deemed to be effective on the Distribution
Date.
SECTION 4.2 Fractional Shares. No certificate or scrip representing
fractional shares of Entertainment Common Stock shall be issued as part of
the Distribution and in lieu of receiving fractional shares, each holder of a
warrant who would otherwise be entitled to receive a fractional share of
Entertainment Common Stock upon exercise of such warrant, after aggregating
all shares of Entertainment Common Stock which such holder would be entitled
to receive under Section 4.1, will receive cash for such fractional share.
SFX and Entertainment agree that Entertainment shall instruct the Agent to
determine the number of whole shares and fractional shares of Entertainment
Common Stock allocable to each holder of record of such warrant as of the
date of exercise, to aggregate all such fractional shares into whole shares
and sell the whole shares obtained thereby in the open market at the then
prevailing prices on behalf of holders who otherwise would be entitled to
receive fractional shares interests and to distribute to each such holder
such holder's ratable share of the total proceeds of such sale promptly after
the date of exercise. SFX shall bear the costs of commissions incurred in
connection with such sale.
SECTION 4.3 SFX Employees. If the Distribution occurs prior to the Closing
Date, the Distribution Employees shall continue to be employed by SFX (at
SFX's expense), but shall devote such time as deemed reasonably necessary to,
consistent with their obligations to SFX, in support of the conduct of the
Entertainment Business by Entertainment on a basis consistent with the time
and scope of services that such employees devoted and provided to the
Entertainment Business prior to the Distribution. Effective immediately prior
to the Effective Time, Entertainment shall assume all obligations arising
under any employment agreement or arrangement (written or oral) between SFX
or any of its Subsidiaries and the Distribution Employees other than the
rights, if any, of the Distribution Employees to receive the options upon
termination following a change of control as defined in their respective
employment agreements (the "Termination Options") immediately prior to the
Effective Time (with such Termination Options being deemed granted as of such
time) and all existing rights to indemnification. SFX and its Subsidiaries,
effective as of the Effective Time (or effective as of the Distribution Date
as to any member of the Distribution Employees that devotes substantially all
of his or her business time to the Entertainment Business), shall be
indemnified by Entertainment in accordance with Article 5 hereof from all
obligations arising under such employment agreements or arrangements (except
in respect of the Termination Options and all existing rights to
indemnification). Neither party shall, directly or indirectly, solicit the
employment of any employees of the other party or its subsidiaries (other
than as a result of a general solicitation for employment); provided however
that Entertainment may offer to employ the Distribution Employees.
SECTION 4.4 SFX Board Action. The Board of Directors of SFX, in its
discretion, shall establish the Record Date and the Distribution Date and all
appropriate procedures in connection with the Distribution, subject to the
satisfaction or waiver of the conditions contained in Article 10.
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SECTION 4.5 Registration and Listing; SEC Filings.
(a) Prior to the Distribution Date:
(i) SFX and Entertainment shall register the Distribution under
applicable federal and state securities laws if such registration is
either required under applicable law or would otherwise be required to
cause the securities issued in connection with the Distribution to be
freely transferable by Persons not Affiliates with Entertainment. SFX and
Entertainment shall use reasonable efforts to cause the Registration
Statement to become effective under the Securities Act as promptly as
reasonably practicable. In connection with such registration,
Entertainment shall file a Form 8-A, if necessary, with the SEC.
(ii) The parties hereto shall use reasonable efforts to take all such
action as may be necessary or appropriate under state securities and blue
sky laws in connection with the transactions contemplated by this
Agreement.
(iii) Entertainment shall prepare, and Entertainment shall file and seek
to make effective, an application for the listing of the Entertainment
Class A Common Stock on the a national exchange, subject to official
notice of issuance, or for the inclusion of quotations for the
Entertainment Class A Common Stock on the Nasdaq Stock Market.
(iv) The parties hereto shall cooperate in preparing, filing with the SEC
and causing to become effective any registration statements or amendments
thereto which are necessary or appropriate in order to effect the
transactions contemplated hereby.
(b) Entertainment hereby represents and warrants to SFX that each of the
Registration Statement and the Consent Solicitation Documents and each
amendment or supplement thereto did not, at the time it became effective or
was mailed, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing shall not apply to the
extent that any such untrue statement or material omission was made by
Entertainment in reliance upon and in conformity with written information
furnished by Parent, its representatives or affiliates to Entertainment
specifically for use in such filing.
SECTION 4.6 Third Party Consents. SFX shall obtain all necessary third
party consents to the Distribution except where the failure to obtain such
consents, in the aggregate, would not (a) have a Material Adverse Effect on
SFX, (b) impair the ability of SFX to perform its obligations under the
Transaction Documents in any material respect or (c) delay in any material
respect or prevent the consummation of any of the transactions contemplated
by the Transaction Documents. The Distribution shall be effected in
compliance with SFX's certificate of incorporation and by-laws and in
material compliance with all applicable laws and shall be subject to
obtaining all applicable consents of Governmental Entities.
SECTION 4.7 Waivers. Prior to the Distribution Date, SFX and Entertainment
shall obtain from ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ a release or waiver of any
rights that either of them may have to purchase or acquire all of part of the
Delsener/▇▇▇▇▇▇ Group.
SECTION 4.8 Termination of Merger Agreement. If the Merger Agreement is
terminated for any reason in accordance with its terms, the Boards of
Directors of SFX and Entertainment shall appoint committees (the "Independent
Committees") composed solely of independent directors (none of whom shall
serve on both Boards of Directors) and shall authorize the Independent
Committees to negotiate with each other in good faith with respect to (a) the
Distribution Employees, (b) a lease arrangement for the office space of
Entertainment utilized by SFX and (c) any other matters which the Boards deem
necessary to effectuate the separation of the affairs of SFX and
Entertainment.
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ARTICLE 5
SURVIVAL; MUTUAL RELEASE AND INDEMNIFICATION
SECTION 5.1 Survival and Indemnification.
(a) Except as specifically provided herein to the contrary, all covenants
and agreements of the parties contained in this Agreement shall survive the
Distribution Date.
(b) Except as specifically provided herein, the indemnification provisions
of this Article 5 shall terminate and be of no further force and effect on
the sixth (6th) anniversary of the Distribution Date; provided, however, that
such provisions shall survive thereafter as to any claims for indemnification
asserted prior to the sixth (6th) anniversary of the Distribution Date. Such
termination shall in no way limit the obligations of Entertainment with
respect to the Assumed Liabilities or the obligations of SFX with respect to
the Retained Liabilities and related indemnification rights under this
Agreement, which shall survive indefinitely.
(c) The obligations of Entertainment and SFX under this Article 5 shall
survive the sale or other transfer by either of them of any assets or
businesses or the assignment by either of them of any Liabilities. To the
extent that SFX assigns any of its Retained Liabilities (except for such
amounts of Retained Liabilities which are not material individually or in the
aggregate), SFX shall cause such transferee of such Retained Liabilities to
assume specifically its obligations with respect thereto under this Agreement
and to fulfill its obligations related to such Retained Liabilities. To the
extent Entertainment transfers to another party other than a Subsidiary of
Entertainment any of the Assumed Liabilities (except for such amounts of
Assumed Liabilities which are not material individually or in the aggregate),
Entertainment will cause the transferee of such Assumed Liabilities to assume
specifically its obligations with respect thereto under this Agreement and
will cause such transferee to fulfill its obligations related to such Assumed
Liabilities. In the event the transferee of the Retained Liabilities or
Assumed Liabilities does not fulfill its obligations with respect thereto,
SFX and Entertainment, respectively, shall fulfill their obligations with
respect thereto.
SECTION 5.2 Mutual Release, Etc.
(a) Effective on the Distribution Date, and except for Claims arising from
or attributable to the transactions contemplated by the Transaction
Documents, this Agreement, the Related Agreements or Claims otherwise
asserted prior to the Effective Time, SFX does hereby, for itself and its
Subsidiaries (other than the Delsener/▇▇▇▇▇▇ Group), and anyone claiming
through SFX or its Subsidiaries, remise, release and forever discharge the
Delsener/▇▇▇▇▇▇ Group, their respective Affiliates (other than SFX and its
Subsidiaries), successors and assigns, the Executive Group, and all Persons
who at any time prior to the Distribution Date have been shareholders,
directors or agents or employees of any member of the Delsener/▇▇▇▇▇▇ Group
(in each case, in their respective capacities as such), and their respective
heirs, executors, administrators, successors and assigns, from any and all
Claims whatsoever, whether in law or in equity (including any right of
contribution), whether arising under any contract or arrangement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur aor alleged to have occurred or to have failed
to occur or any conditions existing or alleged to have existed on or before
the Distribution Date.
(b) Effective on the Distribution Date, and except for Claims arising from
or attributable to the transactions contemplated by the Transaction
Documents, this Agreement, the Related Agreements or Claims otherwise
asserted prior to the Effective Time, Entertainment does hereby, for itself
and its Subsidiaries, and anyone claiming through Entertainment or its
Subsidiaries, remise, release and forever discharge SFX, their respective
Affiliates (other than the Delsener/▇▇▇▇▇▇ Group), successors and assigns and
all Persons who at any time prior to the Distribution Date have been
shareholders, directors or agents or employees of any member of the SFX and
its Subsidiaries (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns,
from any and all Claims whatsoever, whether in law or in equity (including
any right of contribution), whether arising
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under any contract or arrangement, by operation of law or otherwise, existing
or arising from any acts or events occurring or failing to occur or alleged
to have occurred or to have failed to occur or any conditions existing or
alleged to have existed on or before the Distribution Date.
SECTION 5.3 Indemnification.
(a) SFX shall indemnify, defend and hold harmless the Delsener/▇▇▇▇▇▇
Group from and against any and all Indemnifiable Losses (other than income
tax liabilities) to which the Delsener/▇▇▇▇▇▇ Group may be or become subject
that (i) relate to the Retained Liabilities, assets, business, operations,
debts or Liabilities of SFX or its Subsidiaries (other than the
Delsener/▇▇▇▇▇▇ Group) whether arising prior to, concurrent with or after the
Distribution or (ii) result from a breach by SFX or its Subsidiaries (other
than the Delsener/▇▇▇▇▇▇ Group) of any representation, warranty or covenant
contained in this Agreement or any Related Agreement. The rights of the
directors, officers and employees of the Delsener/▇▇▇▇▇▇ Group to seek
indemnity from SFX shall continue to be governed by the Merger Agreement or
any other existing agreement addressing such matter.
(b) Entertainment shall indemnify, defend and hold harmless SFX and its
Subsidiaries (other than the Delsener/▇▇▇▇▇▇ Group from and against any and
all Indemnifiable Losses (other than income tax liabilities) to which SFX or
any of its Subsidiaries (other than the Delsener/▇▇▇▇▇▇ Group) may be or
become subject that (i) relate to the Transferred Businesses, Transferred
Assets, assets, business, operations, debts or Liabilities of the
Delsener/▇▇▇▇▇▇ Group including, without limitation, Liabilities arising
under the Guarantees and Liabilities to be assumed by any member of the
Delsener/▇▇▇▇▇▇ Group as contemplated herein, whether arising prior to,
concurrent with or after the Distribution or as a result of the failure to
obtain all necessary third party consents to the Distribution or (ii) result
from a breach by a member of the Delsener/▇▇▇▇▇▇ Group of any representation,
warranty or covenant contained in this Agreement or any Related Agreement.
(c) The amount which any party (an "Indemnifying Party") is required to
pay to any other party (an "Indemnitee") pursuant to Section 5.3(a) or
Section 5.3(b) shall be reduced (including, without limitation,
retroactively) by any insurance proceeds and other amounts actually recovered
by such Indemnitee in reduction of the related Indemnifiable Loss. Amounts
required to be paid are hereafter sometimes collectively called "Indemnity
Payments" and are individually called an "Indemnity Payment." If an
Indemnitee shall have received an Indemnity Payment in respect of an
Indemnifiable Loss and shall subsequently actually receive insurance proceeds
or other amounts in respect of such Indemnifiable Loss, then such Indemnitee
shall pay to such Indemnifying Party a sum equal to the lesser of the amount
of such insurance proceeds or other amounts actually received or the net
amount of Indemnity Payments actually received previously. The Indemnitee
agrees that the Indemnifying Party shall be subrogated to such Indemnitee
under any insurance policy and that the Indemnitee shall not waive any right
of subrogation.
SECTION 5.4 Procedure for Indemnification.
(a) If an Indemnitee shall receive notice of the assertion by a person who
is not a party to this Agreement of any claim or of the commencement by any
such person of any Action (a "Third Party Claim") with respect to which an
Indemnifying Party is or may be obligated to make an Indemnity Payment, such
Indemnitee shall give such Indemnifying Party prompt notice thereof after
becoming aware of such Third Party Claim, specifying in reasonable detail the
nature of such Third Party Claim and the amount or estimated amount thereof
to the extent then feasible (which estimate shall not be conclusive of the
final amount of such claim); provided, however, that the failure of any
Indemnitee to give notice as provided in this Section 5.4 shall not relieve
the related Indemnifying Party of its obligations under this Article 5,
except to the extent that such Indemnifying Party is actually prejudiced by
such failure to give notice.
(b) An Indemnifying Party may elect to defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel (which
counsel shall be reasonably satisfactory to the Indemnitee), any Third Party
Claim. If an Indemnifying Party elects to defend a Third Party Claim, it
shall, within 10 days of notice of such Third Party Claim (or sooner, if the
nature of such Third Party Claim so requires), notify the related Indemnitee
of its intent to do so, and such Indemnitee shall cooperate in the
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defense of such Third Party Claim. such Indemnifying Party shall pay such
Indemnitee's actual out-of-pocket expenses (other than officers' or
employees' salaries) reasonably incurred in connection with such cooperation.
After notice from an Indemnifying Party to an Indemnitee of its election to
assume the defense of a Third Party Claim, such Indemnifying Party shall not
be liable to such Indemnitee under this Article 5 for any legal or other
expenses subsequently incurred by such Indemnitee in connection with the
defense thereof; provided, however, that such Indemnitee shall have the right
to employ separate counsel to represent such Indemnitee if, in such
Indemnitee's reasonable judgment, a conflict of interest between such
Indemnitee and such Indemnifying Party exists in respect of such claim, and
in that event the reasonable fees and expenses of such separate counsel shall
be paid by such Indemnifying Party. Except as so provided, if an Indemnitee
desires to participate in the defense of a Third Party Claim, it may do so
but it shall not control the defense and such participation shall be at its
sole cost and expense. If an Indemnifying Party elects not to defend against
a Third Party Claim, or fails to notify an Indemnitee of its election as
provided in this Section 5.4, such Indemnitee may defend, compromise and
settle such Third Party Claim; provided, however, that no such Indemnitee may
compromise or settle any such Third Party Claim without prior written notice
to such Indemnifying Party and except by payment of monetary damages or other
money payments. No Indemnifying Party shall consent to entry of any judgment
or enter into any compromise or settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all Liability in respect to such Third Party
claim.
(c) If an Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to such Indemnifying Party any personnel or any books,
records or other documents within its control that are necessary or
appropriate for such defense (the cost of copying thereof to be paid by the
Indemnifying Party).
(d) Notwithstanding the foregoing provisions of this Section 5.4, there
may be Third Party Claims which reasonably could result in both SFX and
Entertainment being liable to the other under indemnification provisions of
this Agreement. In any such events, the parties shall endeavor, acting
reasonably and in good faith, to agree upon a manner of conducting the
defense of or settlement of the Third Party Claim with a view to minimizing
the legal expenses and associated costs that might otherwise be incurred by
the parties, including to the use of the same legal counsel for the defense
of such claim.
(e) Except to the extent expressly provided otherwise in this Section 5.4,
the indemnification provided for by this Section 5.4 shall not inure to the
benefit of any third party or parties and shall not relieve any insurer who
would otherwise be obligated to pay any claim of the responsibility with
respect thereto or, solely by virtue of the indemnification provisions
hereof, provided any subrogation rights with respect thereto.
(f) Any claim on account of an Indemnifiable Loss which does not result
from a Third Party Claim shall be asserted by written notice given by the
related Indemnitee to the related Indemnifying Party. Such Indemnifying Party
shall have a period of 60 days within which to respond thereto. If such
Indemnifying Party does not respond within such 60-day period, such
Indemnifying Party shall be deemed to have accepted responsibility to make
payment and shall have no further right to contest the validity of such
claim. If such Indemnifying Party does respond within such 60-day period and
rejects such claim in whole or in party, such Indemnitee shall be free to
pursue mediation as provided in Article 10 hereof.
ARTICLE 6
RELATED AGREEMENTS
SECTION 6.1 Tax Sharing Agreement. Except as contemplated in this Section
6.1 hereof, any tax sharing agreement between any of the Delsener/▇▇▇▇▇▇
Group and any of SFX and its Subsidiaries shall be terminated as of the
Distribution Date and will have no further effect for any taxable year
(whether the current year, a future year, or a past year). On or prior to the
Distribution Date, SFX and the Delsener/▇▇▇▇▇▇ Group shall enter into a Tax
Sharing Agreement in the form attached hereto as Exhibit A.
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SECTION 6.2 Employee Benefits Agreement. On or prior to the Distribution
Date, SFX and the Delsener/▇▇▇▇▇▇ Group shall enter into a Employee Benefits
Agreement in the form attached hereto as Exhibit B.
ARTICLE 7
CERTAIN ADDITIONAL MATTERS
SECTION 7.1 Conveyancing and Assumption Instruments. In connection with
the transfer, conveyance, assignment and delivery of the Transferred Assets
and the assumption of Liabilities contemplated by this Agreement, SFX and
Entertainment agree to execute or cause to be executed by the appropriate
parties and to deliver to each other, as appropriate, the Conveyancing and
Assumption Instruments.
SECTION 7.2 No Representations or Warranties. Entertainment understands
and agrees that SFX is not in this Agreement or in any other agreement or
document contemplated by this Agreement, nor shall SFX be deemed or implied
to be, representing or warranting in any way as to the value or freedom from
encumbrance of, or any other matter concerning, any Transferred Assets or the
Transferred Businesses or as to the legal sufficiency to convey title to any
Transferred Assets of the execution, delivery and filing of the Conveyancing
and Assumption Instruments, IT BEING AGREED AND UNDERSTOOD THAT ALL SUCH
ASSETS ARE BEING TRANSFERRED "AS IS, WHERE IS" and that Entertainment shall
bear the economic and legal risk that any conveyances of such assets shall
prove to be insufficient or that Entertainment's title to any such assets
shall be other than good and marketable and free from encumbrances.
SECTION 7.3 Further Assurances; Subsequent Transfers.
(a) Each of SFX and Entertainment will execute and deliver such further
instruments of conveyance, transfer and assignment and will take such other
actions as each of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and to carry out the terms hereof.
Without limiting the generality of the foregoing, at any time and from time
to time after the Distribution Date, at the request of Entertainment, SFX
will execute and deliver to Entertainment such other instruments of transfer,
conveyance, assignment and confirmation and take such action as Entertainment
may reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign to Entertainment and to confirm Entertainment's
title to all of the Transferred Assets, to put Entertainment in actual
possession and operating control thereof and to permit Entertainment to
exercise all rights with respect thereto (including, without limitation,
rights under contracts and other arrangements as to which the consent of any
third party to the transfer thereof shall not have previously been obtained)
and SFX will take such actions as Entertainment may reasonably request in
order to prepare and implement appropriate plans, agreements and arrangements
for the Employees and Entertainment will execute and deliver to SFX all
instruments, undertakings or other documents and take such other action as
SFX may reasonably request in order to have Entertainment properly assume and
discharge the Assumed Liabilities and relieve SFX of any Liability or
obligations with respect thereto and evidence the same to third parties.
Notwithstanding the foregoing, SFX and Entertainment shall not be obligated,
in connection with the foregoing, to expend monies other than reasonable
out-of-pocket expenses and attorneys' fees (which expenses and fees shall be
reimbursed by the requesting party).
(b) SFX and Entertainment will use their commercially reasonable efforts
to obtain any consent required to assign all agreements, leases, permits,
licenses and other rights of any nature whatsoever relating to the
Transferred Assets to Entertainment; provided, however, that SFX shall not be
obligated to pay any consideration therefor (except as provided in Section
2.2 and except for filing fees and other administrative charges) to the third
party from whom such consents, approvals and amendments are requested. In the
event and to the extent that SFX is unable to obtain any such required
consent, SFX shall continue to be bound thereby and unless not permitted by
law or the terms thereof, Entertainment shall pay, perform and discharge
fully all the obligations of SFX thereunder from and after the Distribution
Date and indemnify SFX for all Indemnifiable Losses arising out of such
performance by Entertainment in accordance with Article 5. SFX shall, without
further consideration therefor, pay, assign
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and remit to Entertainment promptly all monies, rights and other
considerations received in respect of such performance. SFX shall exercise or
exploit its rights and options under all such agreements, leases, licenses
and other rights and commitments referred to in this Section 7.3(b) only as
reasonably directed by Entertainment and at Entertainment's expense. If and
when any such consent shall be obtained or such agreement, lease, license or
other right shall otherwise become assignable or able to be novated, SFX
shall promptly assign and novate all its rights and obligations thereunder to
Entertainment without payment of further consideration and Entertainment
shall, without the payment of any further consideration therefore, assume
such rights and obligations.
SECTION 7.4 Sales and Transfer Taxes. Entertainment and SFX agree to
cooperate to determine the amount of sales, transfer or other taxes or fees
(including, without limitation, all real estate, patent, copyright and
trademark transfer taxes and recording fees) payable in connection with the
transactions contemplated by this Agreement (the "Transaction Taxes"). SFX
agrees to file promptly and timely the returns for such Transaction Taxes
with the appropriate taxing authorities and remit payment of the Transaction
Taxes, and Entertainment will join in the execution of any such tax returns
or other documentation.
SECTION 7.5 Change of Name. Within 10 business days after the consummation
of the Merger, SFX and each of its Subsidiaries, if necessary, shall file
certificates of amendment with the appropriate Secretary of State, amending
such company's certificate of incorporation to change the name of such
Company to any name which does not include the letters "SFX". At the closing
of the Merger, SFX will assign to Entertainment or its designee all right,
title and interest, including all the good will related thereto, in and to
the name "SFX" together with all causes of action and the right to recover
for past infringements of the name "SFX." As soon as commercially
practicable, but in no event later than six months from the consummation of
the Merger, SFX shall cease all use of the name "SFX" or other trademarks,
trade names or their identifiers owned by, licensed to, or transferred
pursuant to this Agreement to, Entertainment in all modes.
ARTICLE 8
ACCESS TO INFORMATION AND SERVICES
SECTION 8.1 Provision of Corporate Records. As soon as practicable after
the Distribution Date, SFX shall deliver to Entertainment all Books and
Records in its possession. Such Books and Records shall be the property of
Entertainment, but shall be retained and made available to SFX for review and
duplication until the earlier of notice from SFX that such records are no
longer needed by SFX or the 20th anniversary of the Distribution Date.
SECTION 8.2 Access to Information. From and after the Distribution Date,
SFX and Entertainment shall afford to each other and to each other's
authorized accountants, counsel and other designated representatives
reasonable access and duplicating rights (with copying costs to be borne by
the requesting party) during normal business hours to all Books and Records
and other data and information (collectively, "Information") within each
other's possession relating to the Transferred Assets, the Transferred
Businesses and the Employees, insofar as such access is reasonably required
by SFX or Entertainment, as the case may be (and shall use reasonable efforts
to cause persons or firms possessing relevant Information to give similar
access). Information may be requested under this Article 8 for, without
limitation, audit, accounting, claims, litigation and tax purposes, as well
as for purposes of fulfilling disclosure and reporting obligations.
SECTION 8.3 Retention of Records. Except as otherwise required for a
longer period by law or agreed to in writing, SFX and Entertainment shall
retain, for a period of at least 20 years following the Distribution Date,
all material Information relating to the Transferred Businesses.
Notwithstanding the foregoing, in lieu of retaining any specific Information,
SFX or Entertainment may offer in writing to deliver such Information to the
other and, if such offer is not accepted within 90 days, the offered
Information may be destroyed or otherwise disposed of at any time. If a
recipient of such offer shall request in writing prior to the scheduled date
for such destruction or disposal that any of the Information
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proposed to be destroyed or disposed of be delivered to such requesting
party, the party proposing the destruction or disposal shall promptly arrange
for delivery of such of the Information as was requested (at cost of
requesting party).
SECTION 8.4 Confidentiality. Each of SFX and Entertainment shall hold, and
shall cause its officers, employees, agents, consultants and advisors to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its legal counsel, by other
requirements of law (including, without limitation, any requirements imposed
under state and federal securities laws and stock exchange rules), all
non-public Information concerning the other party furnished it by such other
party or its representatives pursuant to this Agreement (except to the extent
that such Information can be shown to have been available to such party on a
non-confidential basis prior to this disclosure by the other party, in the
public domain through no fault of such party or later lawfully acquired from
other sources by the party to which it was furnished), and each party shall
not release or disclose such Information to any other person, except its
auditors, attorneys, financial advisors, bankers and other consultants and
advisors who shall be bound by the provisions of this Section 8.4. Each party
shall be deemed to have satisfied its obligation to hold confidential
Information concerning or supplied by the other party if its exercises the
same care as it takes to preserve confidentiality for its own similar
Information. SFX and Entertainment agree with each other that each will
maintain, preserve and assert, unless waived in writing by the other, all
attorney-client and work product privileges applicable to documents and other
Information which relates, directly or indirectly, to the Transferred
Businesses for any period prior to the Distribution Date.
SECTION 8.5 Privileged Matters. Anything herein or in the Merger Agreement
notwithstanding, the transactions contemplated hereby and by the Merger
Agreement shall not be deemed to transfer to or vest in SFX any right to
waive, nor shall they be deemed to waive, any attorney-client privilege
between SFX and its legal counsel, with respect to legal advice concerning
the business or operations of Entertainment including, without limitation,
the transactions contemplated by the Merger Agreement, this Agreement and the
Related Agreements, in either case, concerning privileged communications (or
work product related thereto) at any time prior to the Closing Date. SFX
shall assign to Entertainment SFX's rights (if any) to any attorney-client
privilege with respect to legal advice concerning the business or operations
of Entertainment including, without limitation, the transactions contemplated
by the Merger Agreement, this Agreement and the Related Agreements,
concerning privileged communications (or work product related thereto) at any
time prior to the Closing Date. SFX and its successors and assigns shall not
be entitled to waive or have access, nor shall they attempt to waive or seek
access, to any privileged communications (or work product related thereto)
between Entertainment and its legal counsel with respect to legal advice
concerning the business or operations of Entertainment.
ARTICLE 9
INSURANCE
SECTION 9.1 General. SFX shall keep in effect all policies under its
Insurance Program in effect as of the date hereof insuring the Transferred
Assets and operations of the Transferred Businesses until the earlier of (i)
the Effective Time and (ii) 12:00 midnight on the Distribution Date, unless
Entertainment shall have earlier obtained appropriate coverage and notified
SFX in writing to that effect. In so far as any claims made or accrued under
policies under the Insurance Program prior to the Distribution Date relate to
Entertainment, SFX shall use its reasonable efforts to assure that
Entertainment can continue to make and/or pursue such claims under the
policies, or that SFX can continue to make and/or pursue such claims on
behalf of Entertainment, notwithstanding assignment or transfer of the
policies (provided that Entertainment shall reimburse SFX for any reasonable
out-of-pocket expenses incurred by SFX in connection therewith). From and
after the Distribution Date, Entertainment shall be responsible for obtaining
and maintaining insurance coverage for its own account. SFX shall, if so
requested by Entertainment, use reasonable efforts to assist Entertainment in
obtaining such initial insurance coverage for Entertainment from and after
the Distribution Date in such amounts as are agreed upon by SFX and
Entertainment. Following the Distribution Date, each of SFX and Entertainment
shall cooperate with and assist the other party in the prevention of
conflicts or gaps in insurance coverage and/or collection proceeds.
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SECTION 9.2 Certain Insured Claims. SFX will assert and pursue, for the
benefit of Entertainment, claims against the Insurance Program for any losses
resulting, directly or indirectly, from claims made or deemed made under the
applicable Insurance Program which relate to the Transferred Business and
which arise from or relate to events or occurrences prior to the Distribution
Date. Entertainment shall pay all costs incurred by SFX after the
Distribution Date in defending or pursuing any such claims under an insurance
policy relating to the Transferred Businesses, including the salaries of
employees based on the portion of time spent on such claims and Entertainment
shall make available to SFX such of its employees as SFX may reasonably
request as witnesses or deponents in connection with SFX's defense or pursuit
of any such claims, at Entertainment's sole cost and expense.
ARTICLE 10
CONDITIONS
SECTION 10.1 Conditions. The obligations of SFX and Entertainment to
consummate the Distribution shall be subject to the fulfillment or waiver of
each of the following conditions:
(a) the Board of Directors of SFX shall be satisfied that SFX's surplus
would be sufficient to permit under Delaware law the Distribution and shall
have formally approved the Distribution;
(b) the Registration Statement shall have been declared effective by the
SEC and no stop order shall have been issued or be pending with respect
thereto;
(c) the Entertainment Class A Common Stock shall have been accepted for
listing or trading, subject to official notice of issuance, on a national
exchange or the Nasdaq Stock Market;
(d) all necessary third party consents to the Distribution shall have been
obtained;
(e) the necessary stockholder approvals shall have been obtained to
consummate the Distribution as presently contemplated;
(f) no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Distribution
shall be in effect;
(g) SFX and Entertainment shall have entered into the Related Agreements;
and
(h) each of the covenants and provisions in this Agreement required to be
performed or complied with prior to the Distribution shall have been
performed or complied with.
Any determination by the Board of Directors of SFX on behalf of either
party hereto prior to the Distribution Date concerning the satisfaction or
waiver of any or all of the conditions set forth in this Section shall be
conclusive.
ARTICLE 11
MEDIATION
SECTION 11.1 Mediation and Binding Arbitration. If a dispute arises
between SFX and Entertainment as to the interpretation or the implementation
of this Agreement, the Related Agreements or any other agreement entered into
pursuant hereto (other than a dispute with respect to Working Capital which
shall be resolved in accordance with the provisions of Section 2.2. hereof),
including, without limitation, any matter involving an Indemnifiable Loss,
SFX and Entertainment agree to use the following procedures, in lieu of
either party pursuing other available remedies and as the sole remedy, to
resolve the dispute.
SECTION 11.2 Initiation. A party seeking to initiate the procedures shall
give written notice to the other party, describing briefly the nature of the
dispute. A meeting shall be held between the parties within 10 days of the
receipt of such notice, attended by individuals with decision-making
authority regarding the dispute, to attempt in good faith to negotiate a
resolution of the dispute.
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SECTION 11.3 Submission to Mediation. If, within 30 days after such
meeting, the parties have not succeeded in negotiating a resolution of the
dispute, they agree to submit the dispute to mediation in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and to
bear equally the costs of the mediation.
SECTION 11.4 Selection of Mediator. The parties will jointly appoint a
mutually acceptable mediator, seeking assistance in such regard from the
American Arbitration Association or another mutually agreed-upon organization
if they have been unable to agree upon such appointment within 20 days from
the conclusion of the negotiation period.
SECTION 11.5 Mediation. The parties agree to participate in good faith in
the mediation and negotiations related thereto for a period of 30 days
following the initial mediation session. If the parties are not successful in
resolving the dispute through the mediation by the end of such 30-day period,
then the parties agree to submit the matter to binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, by a sole arbitrator selected in accordance with the provisions
of Section 11.6 hereof. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Section 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof.
SECTION 11.6 Selection of Arbitrator. The parties shall have 10 days from
the end of the mediation period to agree upon a mutually acceptable neutral
person not affiliated with either of the parties to act as arbitrator. If no
arbitrator has been selected within such time, an arbitrator shall be
selected for the Disputing Parties by the American Arbitration Association.
SECTION 11.7 Cost of Arbitration. The costs of arbitration shall be
apportioned between SFX and Entertainment as determined by the arbitrator in
such manner as the arbitrator deems reasonable taking into account the
circumstances of the case, the conduct of the parties during the proceeding,
and the result of the arbitration.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 Complete Agreement. Subject to Section 3.3 hereof , this
Agreement, including the Annexes and Exhibits and the agreements and other
documents referred to herein, shall constitute the entire agreement between
SFX and Entertainment with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter.
SECTION 12.2 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable
principles of conflicts law) as to all matters, including, without
limitation, matters of validity, construction, effect, performance and
remedies.
SECTION 12.3 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given on the date of service if served personally on the
part to whom notice is given, on the day of transmission if set via facsimile
transmission to the facsimile number given below, provided telephonic
confirmation of receipt is obtained promptly after completion of
transmission, on the business day after delivery to an overnight courier
service or the Express mail service maintained by the United States Postal
Service, provided receipt of delivery has been confirmed, or on the fifth day
after mailing provided receipt of delivery is confirmed, if mailed to the
party
F-17
to whom notice is to be given, by first class mail, registered or certified,
postage prepaid, properly addressed and return-receipt requested, to the
party as follows:
If to SFX
prior to the Effective Time: SFX Broadcasting, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to: Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
after the Effective Time: Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
If to Entertainment: SFX Entertainment, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Two ▇▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Any party may change its address by giving the other party written notice of
its new address in the manner set forth above.
SECTION 12.4 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of SFX and Entertainment
and with the consent of Parent, which consent shall not be unreasonably
withheld
SECTION 12.5 Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in
the sole discretion of SFX without the approval of Entertainment or Parent.
In the event of such termination, no party shall have any Liability of any
kind to any other party.
SECTION 12.6 Successor and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, but neither
this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party without the prior written consent of the
other party.
SECTION 12.7 No Third Party Beneficiaries. Except for the indemnification
rights under this Agreement of any Indemnity in their capacity as such and
except for the mutual releases provided for in this Agreement, this
Agreement, the Exhibits hereto and the Related Agreements are solely for the
benefit of the parties hereto and are not intended to confer upon any other
person except the parties hereto any rights or remedies hereunder.
F-18
SECTION 12.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 12.9 Interpretation. The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term
"person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
SECTION 12.10 Annexes, Etc. The Annexes, Schedules and Exhibits shall be
construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
SECTION 12.11 Legal Enforceability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first above written.
SFX BROADCASTING, INC.
By:
Name:
Title:
SFX ENTERTAINMENT, INC.
By:
Name:
Title:
SBI HOLDING CORPORATION,
with respect to Section
12.4 only.
By:
Name:
Title:
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ANNEX I
ASSUMED LIABILITIES
(a) Lease Agreement dated May 1, 1986, as amended, between AR DE Realty
Corp., N.V. and ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ Communications Management Corporation,
assumed by SFX, and that certain Lease Agreement dated May 27, 1997, between
HIRO Real Estate Co. and SFX (the "Leases"),
(b) Debt and Liabilities incurred by SFX Concerts, Inc. or Entertainment
or their respective Subsidiaries after the date of execution of the Merger
Agreement in connection with acquisitions and capital expenditures approved
by their respective Boards of Directors and such other debt and Liabilities
as Entertainment deems appropriate;
(b) Liabilities under the Airplane Agreement and the Triathlon SCMC
Agreement, as well as the New York Leases (both leases);
(c) Liabilities under the following, subject to Section 4.3 of this
Agreement:
(i) Employment Agreement with ▇▇▇ ▇▇▇▇▇▇▇▇ dated January 2, 1997;
(ii) Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇ dated January 2, 1997;
(iii) Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇ dated June 1997;
(iv) Employment Agreement with ▇▇▇▇▇ Lybesma dated June 1997 and all
other concert division employees;
(v) the employment agreements of all employees located on ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇.
(d) All Liabilities and obligations of SFX and its Subsidiaries arising
under the Asset Purchase and Sale Agreement, dated June 23, 1997 by and among
Sunshine Concerts, L.L.C., SFX Broadcasting, Inc., Sunshine Promotions, Inc.,
P. ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(e) All Liabilities and obligations arising under the SCMC Termination
Agreement described in Section 4.06 of the Company Disclosure Schedule to the
Merger Agreement; and
(g) obligations which accrue after the Distribution Date for all the items
above.
(h) all liabilities and obligations under SFX Entertainments proposed
private placement of $275 million of debt.
I-1
ANNEX II
TRANSFERRED ASSETS
Transferred Assets. Subject to Section 4.3 of this Agreement, the
following assets and properties as of the Distribution Date:
(a) the assets under the Airplane Agreement
(b) the assets under the Triathlon SCMC Agreement
(c) the New York Leases (both leases), including the cash collateral on
the leases, and all assets located in the New York offices;
(d) the note receivable resulting from the sale of SFX's radio stations in
Myrtle Beach;
(e) Employment Agreement with ▇▇▇ ▇▇▇▇▇▇▇▇ dated January 2, 1997;
(f) Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇ dated January 2, 1997;
(g) Employment Agreement with ▇▇▇▇▇ ▇▇▇▇▇ dated June 1997;
(h) Employment Agreement with ▇▇▇▇▇ Lybesma dated June 1997 and all other
concert division employees;
(i) the employment agreements of all employees located on ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇.
(j) rights which accrue after the Distribution Date for all of the items
listed above;
(k) all accounts receivable relating to the Entertainment Business of SFX;
and
(l) all assets used primarily in the Transferred Businesses including,
without limitation, permits, licences, intellectual property and other
rights.
(m) all of the capital stock of SFX Concerts, Inc. and its subsidiaries.