EXECUTION COUNTERPART
---------------------------
STOCK PURCHASE AGREEMENT
BY AND AMONG
PACE ENTERTAINMENT CORPORATION
THE SELLING SHAREHOLDERS
AND
SFX ENTERTAINMENT, INC.
---------------------------
Dated as of December 12, 1997
TABLE OF CONTENTS
1. Purchase and Sale........................................................................................2
1.1 Purchase and Sale......................................................................2
1.2 Further Assurances.....................................................................2
2. Closing; Purchase Price..................................................................................2
2.1 Closing Date...........................................................................2
2.2 Purchase Price and Payment at Closing and Post Closing.................................2
3. Representations and Warranties..................................................................4
3.1 Representations and Warranties of the Company...................................................4
(a) Due Organization; Good Standing and Power..............................................4
(b) Validity of Agreement; Capitalization..................................................4
(c) No Approvals or Notices Required; No Conflict with Instruments.........................5
(d) Financial Information and Absence of Certain Changes...................................5
(e) Real Estate and Contracts..............................................................8
(f) Accounts Receivable....................................................................9
(g) Legal Proceedings......................................................................9
(h) Insurance..............................................................................9
(i) Intellectual Property.................................................................10
(j) Conduct of Business in Compliance with Regulatory and Contractual
Requirements..........................................................................10
(k) Certain Fees..........................................................................10
(l) Environmental. Health and Safety Compliance...........................................11
(m) Taxes.................................................................................11
(n) Employee Benefit Plans and Arrangements; Labor Relations..............................12
(o) Transactions With Affiliates..........................................................13
(p) Certain Payments......................................................................14
3.2 Representations and Warranties of Each Seller..................................................14
(a) Validity of Agreement.................................................................14
(b) Title to Shares.......................................................................14
(c) No Approvals or Notices Required; No Conflict with Instruments........................15
(d) Legal Proceedings.....................................................................15
(e) Certain Fees..........................................................................15
(f) Rights of Third Parties...............................................................15
(g) Sellers' Knowledge of Company Matters.................................................16
(h) Investment Representations............................................................16
3.3 Representations and Warranties of Buyer........................................................16
(a) Due Organization; Good Standing and Power.............................................16
(b) Validity of Agreement.................................................................16
(c) Reports; Financial Statements.........................................................17
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(d) No Approvals or Notices Required; No Conflict with Instruments........................17
(e) Certain Fees..........................................................................18
(f) Financing.............................................................................18
(g) Buyer Shares..........................................................................18
(h) First Report..........................................................................18
3.4 Exclusive Representations and Warranties of the Parties........................................18
3.5 Survival of Representations and Warranties.....................................................18
4. Covenants; Actions Prior to Closing.....................................................................19
4.1 Access to Information..........................................................................19
4.2 Conduct of the Business........................................................................19
4.3 Further Actions................................................................................21
4.4 Notification...................................................................................22
4.5 No Inconsistent Action.........................................................................22
4.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act..........................................................................22
4.7 Public Announcements...........................................................................22
4.8 Excluded Assets................................................................................22
4.9 Acquisition Facility; Term Loan................................................................23
4.10 Amendment of Schedules.........................................................................25
4.11 Notification Concerning Investments............................................................25
4.12 Delivery of Financial Statements...............................................................26
5. Conditions Precedent....................................................................................26
5.1 Conditions Precedent to Obligations of All Parties.............................................26
(a) No Governmental Action................................................................26
(b) No Injunction in a Private Action.....................................................26
(c) Termination under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act...............................................26
5.2 Conditions Precedent to Obligations of Buyer...................................................26
(a) Accuracy of Representations and Warranties............................................27
(b) Performance of Agreements.............................................................27
(c) Material Adverse Change...............................................................28
(d) Payment of Notes......................................................................28
(e) Third Party Consents..................................................................28
(f) Termination of Stock Options..........................................................29
(g) Legal Opinion.........................................................................29
5.3 Conditions Precedent to the Obligations of the Sellers.........................................29
(a) Accuracy Representations and Warranties...............................................29
(b) Performance of Agreements.............................................................29
(c) Legal Opinion.........................................................................29
6. Termination.............................................................................................29
6.1 General........................................................................................29
6.2 Liabilities in Event of Termination............................................................30
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7. Covenants; Actions Subsequent to Closing................................................................30
7.1 Articles of Incorporation; Bylaws..............................................................30
7.2 Post-Closing Operational Matters...............................................................30
7.3 Pension and Health Insurance. ................................................................34
7.4 Obligations Related to Completion of Spin-Off and Condition of Buyer after the
Spin-Off.......................................................................................34
7.5 Five-Year Put Option...........................................................................35
7.6 General Provisions Common to all Put Options...................................................36
7.7 Further Assurances.............................................................................37
8. Indemnification.........................................................................................38
8.1 Indemnification by the Sellers.................................................................38
8.2 Indemnification of Sellers and Company Agents..................................................38
8.3 Limits on Indemnification Liability............................................................39
8.4 Indemnification Procedures.....................................................................40
8.5 Appointment of Seller Representative...........................................................41
8.6 Survival; Right To Indemnification Not Affected By Knowledge or Materiality
..............................................................................................42
9. Miscellaneous...........................................................................................42
9.1 Payment of Certain Fees and Expenses...........................................................42
9.2 Notices........................................................................................42
9.3 Entire Agreement...............................................................................44
9.4 Binding Effect; Benefit........................................................................44
9.5 Assignability..................................................................................44
9.6 Amendment; Waiver..............................................................................44
9.7 Limitation on Interest.........................................................................44
9.8 Transfer Taxes.................................................................................45
9.9 Section Headings; Index........................................................................45
9.10 Severability...................................................................................45
9.11 Counterparts...................................................................................45
9.12 Applicable Law.................................................................................45
9.13 Dispute Resolution.............................................................................45
(a) Good Faith Negotiations...............................................................45
(b) Mediation.............................................................................45
(c) Arbitration...........................................................................45
9.14 Waiver.........................................................................................46
9.15 No Third Party Beneficiaries...................................................................46
9.16 Release of Claims by Sellers...................................................................46
10. Definitions.............................................................................................47
10.1 Defined Terms..................................................................................47
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10.2 Certain Additional Defined Terms...............................................................51
10.3 References.....................................................................................53
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedule 3.1(a) - State of Incorporation and Foreign Qualification
Schedule 3. l(b) - Ownership of Stock
Schedule 3.1(c) - Consents and Approvals
Schedule 3.1(d) - Financial Information
Schedule 3.1(e) - Real Estate and Contracts
Schedule 3.1(g) - Legal Proceedings
Schedule 3.1 (h) - Insurance
Schedule 3.1(i) - Intellectual Property
Schedule 3.1(j) - Conduct of Business in Compliance with Regulatory and
Contractual Requirements
Schedule 3.1(1) - Environmental Compliance
Schedule 3.1(m) - Taxes
Schedule 3.1(n) - Employee Benefit Plans
Schedule 3.1(o) - Affiliate Transactions
Schedule 3.3(d) - Buyer Consents
Schedule 4.2(c) - Pending Transactions
Schedule 4.2(d)(i) - Encumbrances
Schedule 10.1(a) - Existing Employment Agreements
Schedule 10. l(b) - Restricted Stock Agreements
Schedule 10.1(c) - Stock Option Agreements
Schedule 10. l(d) - Wholly-Owned Subsidiaries
Exhibit 1 - Allocation of Purchase Price
Exhibit 2 - Stock Option Redemption Agreement for Seller Optionholders
Exhibit 3 - Stock Option Redemption Agreement for Pure Optionholders
Exhibit 4 - Sellers' Opinion
Exhibit 5 - Buyer's Opinion
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of December 12, 1997 by and among PACE ENTERTAINMENT CORPORATION, a
Texas corporation (the "Company"), the holders of the Company's Common Shares
listed on Exhibit 1 (collectively, the "Sellers" and individually, a "Seller"),
and SFX ENTERTAINMENT, INC., a Delaware corporation ("Buyer"). Certain terms
used in this Agreement are defined in Section 10 below.
R E C I T A L S:
1. The Sellers own all of the issued and outstanding capital stock
(the "Stock") of the Company, which is engaged primarily in the business of
producing, presenting and promoting theatrical shows, music concerts, and
specialized motorized and other sporting events (the "Business").
2. The Sellers desire to sell the Stock to Buyer and Buyer desires to
acquire the Stock from the Sellers, in consideration of the payment by Buyer of
the purchase price provided for herein, all upon the terms and subject to the
conditions hereinafter set forth.
3. It is a condition to Buyer's obligation to close the acquisition of
the Stock from the Sellers that the holders of options or other rights to
acquire the Company's Common Shares listed on Exhibit 1 (collectively, the
"Optionholders" and individually, an "Optionholder"), agree to "cash out" all
outstanding options to acquire the Company's Common Shares so that upon
consummation of the transaction contemplated hereby, Buyer will own one hundred
percent (100%) of the Company's outstanding capital stock and there shall not
be outstanding any options or other rights to acquire any of the Company's
capital stock.
4. The Company joins in the execution of this Agreement for the
purpose of evidencing its consent to consummation of the foregoing transaction
and for the purpose of making certain representations and warranties to and
covenants and agreements with Buyer.
5. It is contemplated by the parties hereto that all of the shares of
Buyer will be spun off to the shareholders of SFX Broadcasting, Inc. ("SFX
Broadcasting") in the transaction (the "Spin- Off") described in Section 5.07
of the Agreement and Plan of Merger dated August 24, 1997 among SFX
Broadcasting, SBI Holding Corporation and SBI Radio Acquisition Corporation.
6. SFX Broadcasting joins in this Agreement for the limited purpose of
providing its unconditional guarantee of the obligations of Buyer to make the
Closing Cash Payment and deliver the Buyer Shares (as such terms are
hereinafter defined). Once the Closing Cash Payment is made and the Buyer
Shares are delivered, SFX Broadcasting shall be released from all obligations
hereunder.
AGREEMENT
In consideration of the premises and the respective representations,
warranties, covenants, agreements and conditions of the parties contained
herein, it is agreed as follows:
1. Purchase and Sale.
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing Sellers shall sell and deliver to Buyer and Buyer
shall purchase from Sellers all of the Stock, free and clear of all
Encumbrances other than restrictions on resale under applicable securities
laws. At the Closing, each of the Sellers shall deliver to Buyer certificates
evidencing the Stock owned by such Seller (which, in the aggregate, shall
constitute all of the Stock), duly endorsed for transfer or accompanied by duly
executed stock powers, with signatures guaranteed by a commercial bank or a
member of the New York Stock Exchange.
1.2 Further Assurances. From time to time after the Closing, the
Sellers will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance,
assignment, transfer and delivery and will take such other actions as Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver the Stock to Buyer or to evidence such transfer.
2. Closing; Purchase Price.
2.1 Closing Date. The closing of the transactions provided for in this
Agreement (the "Closing") shall take place (i) at the offices of ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., local time, on a
date to be selected by Buyer on five (5) days written notice to Seller
Representative, but in no event later than the latter to occur of (x) the Drop
Dead Date, or (y) the tenth business day following the satisfaction or waiver
(subject to Applicable Law) of each of the conditions to the obligations of the
parties set forth in Section 5, or (ii) at such other time or place or on such
other date as the parties hereto shall agree. The date on which the Closing
takes place is herein referred to as the "Closing Date".
2.2 Purchase Price and Payment at Closing and Post Closing. (a) The
aggregate purchase price for the Stock and the "cash out" of the Optionholders
(the "Purchase Price") shall consist of (i) $108,000,000 in cash and (ii)
1,500,000 shares (the "Buyer Shares") of Class A Common Stock, par value $0.01
per share ("Buyer Common Stock"), of Buyer. The "Closing Cash Payment" set
forth beside the name of each Seller on Exhibit 1 shall be paid to such Seller
at the Closing in the form of a bank cashier's check payable to the order of
such Seller or, if requested by such Seller, in immediately available funds by
confirmed wire transfer to a bank account to be designated by such Seller (such
designation to occur no later than the second business day prior to the Closing
Date). Upon consummation of the Spin Off, each Seller shall receive a
certificate evidencing the number of Buyer Shares set forth next to his name on
Exhibit 1 under the heading "Final No. of Buyer Shares," which shall be free
and clear of all Encumbrances other than restrictions on re-sale under
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applicable securities laws. If a Seller's name appears on Exhibit 1 more than
once, then such Seller shall receive (i) the sum total of the Closing Cash
Payments set forth beside his name and (ii) the sum total of the Final No. of
Buyer Shares set forth beside his name. The aggregate number of Buyer Shares
has been determined based upon the assumption that each holder of one share (or
the option to acquire one share) of SFX Broadcasting Common Stock will receive
one share of Buyer Common Stock in the Spin-Off. Therefore, the aggregate
number of Buyer Shares included as a part of the Purchase Price shall be
adjusted to take into account (i) any share dividend (other than the Spin-Off),
stock split, reverse split or similar transaction changing the number of
outstanding shares of SFX Broadcasting Common Stock prior to the Spin-Off or
the number of outstanding shares of Buyer Common Stock after the Spin-Off and
before the issuance of the Buyer Shares, and (ii) any deviation from a
one-for-one ratio in the number of shares of Buyer Common Stock distributed to
each holder of a share (or the option to acquire a share) of SFX Broadcasting
Common Stock in the Spin-Off.
(b) A portion of the Closing Cash Payment shall be paid to the Company
and used by the Company at the Closing, to (i) fund the payments due under the
Stock Option Release and Termination Agreements to be executed by the Company,
Seller Representative, and the Optionholders in the form set forth on Exhibit 2
and Exhibit 3 (the "Option Redemption Agreements"), and (ii) fund the payment
of the Closing Cash Payment due to the Restricted Shareholders with respect to
their Restricted Shares. The purpose of the payment to the Company pursuant to
the immediately preceding sentence is to allow the processing of such payments
through the Company's payroll system to ensure that all applicable payroll tax
withholding obligations of the Company are satisfied. The portion of the
Purchase Price being allocated to each of the Optionholders and Restricted
Shareholders is set forth on Exhibit 1. As used herein, (i) the term
"Restricted Shareholders" shall mean those Sellers who have received shares of
Stock from the Company subject to forfeiture upon the occurrence of certain
events and (ii) the term "Restricted Shares" shall mean those shares of the
Stock owned by the Restricted Shareholders which are so subject to forfeiture.
(c) Sellers acknowledge and agree that the allocation of the Purchase
Price among them and among the Optionholders as set forth on Exhibit 1 is the
sole responsibility of the Sellers, and Buyer shall have no obligation or other
responsibility with respect to such allocation.
(d) At least five days prior to the Closing Date, Buyer may agree to
pay a cash premium amount to certain Sellers or Optionholders as additional
consideration for the sale of such Sellers' Stock and such Optionholders'
rights to acquire Stock. Any such premium shall be reflected by an amendment to
Exhibit 1 signed by Buyer and Seller Representative. Any such premium paid
shall in no event reduce the amount of Purchase Price otherwise payable to any
Seller or Optionholder.
(e) Notwithstanding any restriction or prohibition to the contrary set
forth herein, the Company shall have the right, through and until the Closing,
to pay extraordinary bonuses to any one or more of the employees of the Company
in such amounts and to such employees as the Company's Board of Directors may
determine in its sole discretion. The amount of such bonuses
3
shall be applied as a dollar-for-dollar reduction to the cash portion of the
Purchase Price, in which case the Buyer and each Seller hereby authorizes the
Company to unilaterally amend Exhibit 1 in a manner necessary to reflect such
reduction in the cash portion of the Purchase Price (to be borne
proportionately by the Sellers and Optionholders in a manner consistent with
the calculations currently set forth in Exhibit 1).
3. Representations and Warranties.
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to Buyer as follows:
(a) Due Organization; Good Standing and Power. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas. Each Subsidiary is a corporation
or partnership duly organized, validly existing and, if applicable, in
good standing under the laws of the state of its organization. The
Company and each Subsidiary has the corporate or partnership power and
authority to own, lease and operate its respective assets and to
conduct its respective business as now conducted and to perform their
respective obligations under the Applicable Contracts. The Company and
each Subsidiary is duly authorized, qualified or licensed to do
business as a foreign corporation or partnership and is in good
standing in each jurisdiction in which their respective right, title
or interest in or to any of their respective assets, or the conduct of
their respective business, requires such authorization, qualification
or licensing, except where the failure to so qualify or to be in good
standing in such other jurisdictions would not have a material adverse
effect on the assets, the business or the results of operations of the
Company and its Subsidiaries, taken as a whole. The state of
incorporation or organization of the Company and each Subsidiary and
jurisdictions in which the Company and each Subsidiary are qualified
or licensed to do business are set forth on Schedule 3.1(a).
(b) Validity of Agreement; Capitalization. The Company has
the full corporate power and authority to execute and deliver this
Agreement and consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action (including the unanimous approval of the
Company's Board of Directors) and no other corporate proceeding on the
part of the Company is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms. The Company's authorized
capital consists of 500,000 shares of common stock, $1.00 par value,
of which 2761.6379 are issued and 2217.6785 are outstanding. The
record and beneficial ownership of such shares is as set forth on
Exhibit 1 hereto. All of the issued and outstanding shares of the
Company and all of the issued and outstanding shares of each
Subsidiary that is a corporation have been duly authorized and validly
issued, are fully paid and nonassessable, and have not been issued in
violation of any preemptive or similar rights. The Company and
4
its Subsidiaries have paid all required capital contributions to the
extent due and payable with respect to all partnerships in which the
Company or any Subsidiary is a partner. Except as set forth on
Schedule 3.1(b), there are no Encumbrances other than restrictions on
resale under applicable securities laws and except for any capital
call or subsequent capital contribution provisions contained in any
partnership agreement of a Subsidiary that is a partnership on any of
the Stock or any of the outstanding equity ownership interests in any
of the Subsidiaries. As of the date of this Agreement, the Stock
constitutes all shares of the outstanding capital stock of the
Company. Except as set forth on Schedule 3. l(b), there are (and as of
the Closing Date there will be) outstanding (i) no shares of capital
stock or other voting securities of the Company or any Subsidiary, no
securities of the Company or any Subsidiary convertible into or
exchangeable for shares of the capital stock or other voting
securities of the Company or such Subsidiary, (ii) no options or other
rights to acquire from the Company or any Subsidiary, and no
obligation of the Company or any Subsidiary to issue, redeem, or sell,
any shares of its capital stock or other voting securities or any
securities of the Company or any Subsidiary convertible into or
exchangeable for such capital stock or voting securities, and (iii) no
equity equivalents, interest in the ownership or earnings, or other
similar rights of or with respect to the Company or any Subsidiary.
Schedule 3. l(b) sets forth a list of all entities in which the
Company or any Subsidiary owns a material equity interest other than
(i) the Subsidiaries and (ii) investments in individual theatrical
productions. In addition, Schedule 3.1(b) sets forth a list of all
theatrical productions in which the Company had an investment balance
as of September 30, 1997 in the amount of $100,000 or more.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except as described in Schedule 3.1(c) hereto, the
execution, delivery and performance of this Agreement by the Company
and, with respect to the Company, the consummation of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or the lapse of time or both) or require any consent,
approval, filing or notice under Applicable Law (other than under the
HSR Act) and (ii) will not result in the creation of any Encumbrance
on the Stock or the ownership interest in any Subsidiary under,
conflict with, violate, or result in the breach or termination of any
provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of the Company or
any Subsidiary under, or result in the creation of an Encumbrance upon
any material portion of the assets of the Company or any Subsidiary
pursuant to, the Organizational Documents of the Company or any
Subsidiary, any resolutions adopted by the Board of Directors or the
shareholders of the Company or any Subsidiary, or similar action by a
constituent body in the case of a non-corporate Subsidiary or any
material indenture, instrument or other agreement to which the Company
or any Subsidiary is a party or by which any of their respective
assets is bound.
(d) Financial Information and Absence of Certain Changes. (i)
The Company has delivered to Buyer accurate and complete copies of (x)
the Company's audited consolidated balance sheets as of September 30,
1994, September 30, 1995 and September 30, 1996, and
5
the related audited consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the
period ended September 30, 1996, and the notes and schedules thereto,
prepared in conformity with GAAP, together with the unqualified
reports thereon of Ernst & Young, independent public accountants (the
"Audited Financial Statements"), and (y)the Company's unaudited
consolidated balance sheet as of September 30, 1997 (the "Latest
Balance Sheet"), and the related unaudited statements of income,
stockholders' equity and cash flows for the year period then ended
(together with the Latest Balance Sheet, the "Unaudited Financial
Statements"), certified by the Company's Chief Financial Officer (the
Audited Financial Statements and Unaudited Financial Statements are
referred to collectively as the "Financial Statements"). The Financial
Statements have been prepared from the books and records of the
Company and its Consolidated Subsidiaries in conformity with GAAP
applied on a basis consistent with preceding years throughout the
periods involved, except that the Unaudited Financial Statements are
not accompanied by notes or other textual disclosure required by GAAP,
and fairly present the Company's consolidated financial position as of
the respective dates thereof and its consolidated results of
operations and cash flows for the periods then ended, except (x) that
the Unaudited Financial Statements are subject to normal year-end
adjustments consistent with past practice and which taken as a whole
will not be material to the Company, and (y) as disclosed in Schedule
3.1(d). The Company is not aware of any state of facts which would
make the Unaudited Statements unauditable.
(ii) The Company has delivered to Buyer accurate and
complete copies of (x) Pavilion's audited balance sheets as of October
31, 1994, October 31, 1995 and September 30, 1996, and the related
audited consolidated statements of income, partners' capital and cash
flows for the period from inception (April 1, 1994) to October 31,
1994, the year ended October 31, 1995 and the eleven months ended
September 30, 1996, and the notes and schedules thereto, prepared in
conformity with GAAP, together with the unqualified reports thereon of
Price Waterhouse, L.L.P., independent public accountants (the
"Pavilion Audited Financial Statements"), and (y) Pavilion's unaudited
consolidated balance sheet as of September 30, 1997 (the "Latest
Pavilion Balance Sheet"), and the related unaudited statements of
income for the year then ended (together with the Latest Pavilion
Balance Sheet, the "Unaudited Pavilion Financial Statements"),
certified by the Company's Chief Financial Officer (the Pavilion
Audited Financial Statements and the Pavilion Unaudited Financial
Statements are collectively referred to as the "Pavilion Financial
Statements"). The Pavilion Financial Statements have been prepared
from the books and records of Pavilion in conformity with GAAP applied
on a basis consistent with preceding periods involved, except that the
Unaudited Pavilion Financial Statements are not accompanied by notes
or other textual disclosure required by GAAP, and fairly present
Pavilion's financial position as of the respective dates thereof and
its consolidated results of operations and cash flows for the periods
then ended, except that the Pavilion Unaudited Financial Statements
are subject to normal year-end adjustments consistent with past
practice and which taken as a whole will not be material to the
Company.
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(iii) Except as disclosed on Schedule 3.1(d), since
September 30, 1997 and through the date hereof, there has not been any
change in the assets, liabilities, financial condition, or operations
of (x) the Company and its Consolidated Subsidiaries from that
reflected in the Financial Statements, or (y) Pavilion from that
reflected in the Pavilion Financial Statements, in each case other
than as a result of capital contributions to Subsidiaries, changes in
the Ordinary Course of Business and changes in general economic
conditions affecting the industries in which the Company and Pavilion
operate. Without limiting any of the foregoing, since September 30,
1997 and through the date hereof, except as disclosed on Schedule
3.1(d) the Company and its Subsidiaries have not:
(a) other than in the Ordinary Course of Business,
(i) mortgaged, pledged, or subjected to any Encumbrance (or agreed to
do so with respect to) any material portion of their assets, (ii)
discharged or satisfied any Encumbrance, (iii) paid or satisfied any
obligation or liability or (iv) entered into, terminated, or received
notice of termination of any Applicable Contract involving a total
remaining commitment by the Company or any Subsidiary of at least
$250,000;
(b) sold or transferred, or agreed to sell or
transfer, any material portion of their assets, or canceled or agreed
to cancel, any debts due them or claims therefor, except, in each
case, for full consideration and in the ordinary course of business;
(c) purchased or agreed to purchase any securities,
bonds, or any other capital stock or assets of any other entity with
cash or liquid assets, or used cash or liquid assets to incur debts,
for matters not within the Ordinary Course of Business;
(d) increased any salaries or granted or agreed to
grant, or paid, or agreed to pay, any bonus, loan, to or with any of
its directors, officers or agents except as compensation in the
Ordinary Course of Business for appropriate services performed or paid
any severance or termination benefits to any employee in excess of
$5,000;
(e) issued any shares of Stock or options
exercisable therefor or declared or paid any dividend or made any
other distribution to their equity owners (other than the Company or
its Subsidiaries);
(f) except for capital expenditures in connection
with production costs for Rugrats Live, development of Bayou Place
Performance Hall and renovation of the Garden State Arts Center, made
or authorized any individual capital expenditure of more than $250,000
or capital expenditures in the aggregate in excess of $1,000,000;
(g) made or applied to make any change in accounting
methods or practices, including for tax purposes;
7
(h) amended any Organizational Documents of the
Company or any Subsidiary (other than mere name changes);
(i) entered into any agreement, commitment or
understanding, whether or not in writing, with respect to any of the
foregoing; or
(j) suffered a Material Adverse Effect.
(e) Real Estate and Contracts.
(i) Schedule 3.1(e) hereto contains a complete and
correct list of the Company's and Subsidiaries' owned and
leased real estate (the "Real Estate") and a description of
all material leases under which the Company or a Subsidiary
is a lessee of Real Estate (the "Leases"); and
(ii) Schedule 3.1(e) hereto contains a complete and
correct list of (x) the Amphitheater Partnership Agreements
and (y) local theatrical presentation agreements (together
with the Amphitheater Partnership Agreements and the Existing
Employee Agreements, the "Contracts").
True and complete copies of (i) the Contracts and (ii) other documents
referred to in Schedule 3. l(e) hereto (including all amendments
thereto) have been delivered to or made available for inspection by
Buyer. Pavilion owns good and indefeasible title to the Charlotte
Blockbuster Pavilion in Charlotte, North Carolina free and clear of
all Encumbrances other than Ordinary Real Estate Encumbrances and the
liens securing payment of that certain Promissory Note dated April 1,
1994, payable to Blockbuster Entertainment Corporation and in the
original principal amount of $8,000,000. Starwood Amphitheater
Operating Company owns good and indefeasible title to the Starwood
Amphitheater in Nashville, Tennessee free and clear of all
Encumbrances other than Ordinary Real Estate Encumbrances and the
liens securing payment of that certain Fourth Amended and Restated
Promissory Note dated June 1, 1997, payable to NationsBank, N.A. and
in the original principal amount of $2,438,344.55. Except as disclosed
on Schedule 3. l(e), (i) all Leases and Contracts are in full force
and effect and are valid and enforceable in accordance with their
respective terms, except where the failure to be in full force and
effect and valid and enforceable would not in the aggregate have a
material adverse effect on the assets of the Company or on its results
of operations, (ii) none of the Company, the Subsidiaries and, to the
knowledge of the Company, any other parties thereto, are in breach or
default in the performance of any material obligation under the Leases
or Contracts, and (iii) to the knowledge of the Company, no event has
occurred or has failed to occur whereby any of the other parties
thereto have been or will be released therefrom or will be entitled to
refuse to perform thereunder. Neither the Company nor any Subsidiary
has received any written notice or other written communication
regarding any actual or alleged violation of, or failure to comply
with, any legal requirement or contractual obligation on the part of
the Company or
8
any Subsidiary relating to any of the Contracts or Leases, except
where any such violation or failure would not have a material adverse
effect on the assets, business or the results of operations of the
Company and its Subsidiaries, taken as a whole, it being agreed for
these purposes that the loss of ownership of any one amphitheater
would be a material adverse effect on the business of the Company and
its Subsidiaries, taken as a whole.
(f) Accounts Receivable. All accounts receivable reflected on
the Latest Balance Sheet or on the accounting records of the Company
and its Subsidiaries as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations
arising from sales actually made or services actually performed, and
are subject to no material setoffs or counterclaims in aggregate
amounts in excess of the reserves therefor reflected on the Financial
Statements or the Pavilion Financial Statements. To the knowledge of
the Company, the reserves shown on the Financial Statements, the
Pavilion Financial Statements or on the accounting records of the
Company and its Subsidiaries as of the Closing Date are adequate and
calculated consistently with past practice.
(g) Legal Proceedings. Except as described in Schedule 3.1(g)
hereto, (i) there is no litigation, proceeding, claim or governmental
investigation pending or, to the knowledge of the Company, threatened
seeking relief or damages which, if granted, would materially and
adversely affect the Company or which would prevent the consummation
of the transactions contemplated by this Agreement and (ii) neither
the Company nor any Subsidiary has been charged with any violation of
or, to the knowledge of the Company, threatened with a charge or
violation of, any provision of Applicable Law or regulation which
charge or violation, if determined adversely to either the Company or
any Subsidiary, would result in a Company Material Adverse Effect or
that will adversely affect the right of Buyer to own the Stock or
materially affect the right of Buyer to operate the Company's and
Subsidiaries' Business after the Closing Date in substantially the
manner in which it is currently operated.
(h) Insurance. Schedule 3. l(h) hereto sets forth a list and
brief description of the insurance policies relating to the insurable
properties of the Company and its Subsidiaries and the conduct of the
Business of the Company and its Subsidiaries. All premiums due and
arising thereon have been paid and such policies are in full force and
effect. Except as set forth on Schedule 3.1(h):
(i) All policies to which the Company or any Subsidiary is a
party or that provide coverage to the Company or any Subsidiary:
(A) are valid, outstanding, and enforceable;
(B) are sufficient for compliance with all material
Legal Requirements, the failure to comply with which
will have a Company Material Adverse Effect, and to
the extent that insurance is required
9
to be obtained pursuant to the terms of any
Applicable Contract, the Company or its Subsidiaries
have complied with such requirement in all material
respects; and
(C) will not be revoked or cancelled due solely to
the consummation of the Contemplated Transactions.
(ii) Neither the Company nor any Subsidiary has
received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights with
respect to the Company or a Subsidiary, or (B) any notice of
cancellation or any other indication that any insurance
policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or
able to perform its obligations thereunder.
(iii) The Company and the Subsidiaries have paid all
premiums due, and have otherwise performed all of their
respective obligations, under each policy to which the
Company or any Subsidiary is a party.
(iv) The Company and Subsidiaries have given notice
to the insurer of all claims that may be insured thereby
except where the failure to give such notice would not
materially prejudice the Company's or the Subsidiaries'
rights under such policy.
(i) Intellectual Property. Except as described on Schedule
3.1(i) hereto, to the knowledge of the Company, (x) the Company or its
Subsidiaries own or currently possess the legal right to use all
Intellectual Property needed for the conduct of the Business as
presently conducted, (y) there is no basis for the assertion by any
person of any claim against the Company with respect to the use by the
Company of any Intellectual Property and (z) neither the Company nor
any Subsidiary is infringing or violating, and neither the Company nor
any Subsidiary has infringed or violated any rights of any person with
respect to any Intellectual Property, which, in any such case, would
reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
(j) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(j)
hereto, the Company and each Subsidiary has conducted the Business so
as to comply with all Applicable Laws, the failure to comply with
which would individually or in the aggregate reasonably be expected to
have a Company Material Adverse Effect.
(k) Certain Fees. Neither the Company, any Subsidiary or
their respective officers, directors or employees has employed any
broker or finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the
10
transactions contemplated hereby, other than the fees and expenses
payable to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, which
shall be paid by the Sellers.
(l) Environmental. Health and Safety Compliance. Except as
described on Schedule 3.1(1) hereto,
(i) the Company and each Subsidiary is, and has
continuously been, in compliance with all Environmental Laws;
(ii) all material notices, Permits, licenses or
similar authorizations, if any, required to be obtained or
filed under any Environmental Law in connection with the
operation of the Business have been obtained or filed;
(iii) there are no past, pending or threatened
investigations, proceedings or claims against the Company
relating to the presence, release or remediation of any
Hazardous Material or for non-compliance with any
Environmental Law;
(iv) none of the properties owned, leased or
operated by the Company or any Subsidiary have been used as
landfill or waste disposal sites or contain any underground
storage tanks; and
(v) there are no federal or state air emission
credits or air or water discharge Permits related to the Real
Estate.
For purposes of this Agreement, the term "Environmental Laws" shall
mean, as to any given asset or operation of the Company or its
Subsidiaries, all applicable laws, statutes, ordinances, rules and
regulations of any Governmental Entity pertaining to protection of the
environment in effect as of the Closing Date. For purposes of this
Agreement, the term "Hazardous Material" shall mean any substance
which is listed or defined as a hazardous substance, hazardous
constituent or solid waste pursuant to any Environmental Law.
(m) Taxes. Except as set forth on Schedule 3.1(m) and subject
to the provisions of the immediately succeeding sentence, the Company
and its Subsidiaries have extended or timely filed with appropriate
federal, state, local and other Governmental Entities all Tax Returns
required to be filed with respect to the Company or the Subsidiaries
and have paid, caused to be paid, or adequately reserved in the
Financial Statements or the Pavilion Financial Statements all Taxes
due or claimed to be due from or with respect to such Tax Returns.
Since certain taxing authorities have from time to time in the past
challenged without success the Company's or its Subsidiaries' position
that no sales taxes are due with respect to ticket sales made through
tax exempt entities with which the Company and its Subsidiaries do
business, and since such challenges may recur in the future, no
representation is being made hereby concerning the reporting and
payment of sales tax with respect to ticket
11
sales made through such tax exempt entities, although the Company
believes that no sales taxes are due with respect thereto. Except as
set forth on Schedule 3.1(m), no issue has been raised or adjustment
proposed by the IRS or any other taxing authority in connection with
any of the Company's Tax Returns, and there are no outstanding
agreements or waivers that extend any statutory period of limitations
applicable to any federal, state or local Tax Returns that include or
reflect the use and operation of the Company, the Subsidiaries or the
conduct of the Business. Except as set forth on Schedule 3.1(m),
neither the Company nor any Subsidiary has received notice of
deficiency, assessment, audit, investigation, or proposed deficiency,
assessment or audit with respect to the Company or the Subsidiaries.
(n) Employee Benefit Plans and Arrangements; Labor Relations.
(i) Schedule 3.1(n) hereto lists all
employee benefit plans and collective bargaining, labor and
employment agreements and severance agreements or other
similar arrangements (together with all documents or
instruments establishing or constituting any related trust,
annuity contract or other funding instrument) to which the
Company or any Subsidiary is a party or by which the Company
or any Subsidiary is bound, including, without limitation,
(1) any profit sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer, consulting,
retirement, severance, or incentive compensation plan,
agreement or arrangement, (2) any welfare benefit plan,
agreement or arrangement or any plan, agreement or
arrangement providing for "fringe benefits" or perquisites to
employees, officers, directors or agents, including but not
limited to benefits relating to automobiles, clubs, vacation,
child care, parenting or maternity leave, sabbaticals, sick
leave, medical expenses, dental expenses, disability,
accidental death or dismemberment, hospitalization, life
insurance and other types of insurance, (3) any employment
agreement, or (4) any other "employee benefit plan" (within
the meaning of Section 3(3) of ERISA).
(ii) The Company has made available to
Buyer true, correct and complete copies of all plan documents
and/or contracts (including, where applicable, any documents
and/or instruments establishing or constituting any related
trust, annuity contract or funding instrument) and summary
plan descriptions with respect to the plans, agreements and
arrangements listed in Schedule 3.1(n) hereto, or summary
descriptions of any such plans, agreements or arrangements
not otherwise in writing. The Company has provided Buyer with
true, correct and complete copies of the Form 5500 filed with
respect to each plan identified in Schedule 3.1(n) hereto
that was required to file an annual report for the plan year
immediately preceding the Closing Date. In addition, the
Company has made available to Buyer (a) true, correct and
complete copies of any and all written communications notices
or claims that the Company, or any Subsidiary have received
from the IRS, the Department of Labor and/or the Pension
Benefit Guaranty Corporation concerning any plan, arrangement
or agreement identified in Schedule 3.1(n) hereto that give
notice of possible
12
imposition of a fine, penalty or liability with respect to
such plan, arrangement or agreement and (b) true, correct and
complete copies of any complaints, petitions, claims or other
notices of liability relating to any such plan, arrangement
or agreement that have been filed by any other party.
(iii) Except as indicated on Schedule
3.1(n) hereto, with respect to each plan identified in
Schedule 3.1(n) hereto which is an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) or a "plan"
(within the meaning of Section 4975(e)(1) of the Code), each
of the Company and the Subsidiaries has complied with and
performed in all material respects all of their contractual
obligations and all obligations under the Code, ERISA and all
applicable federal, state and local laws, rules and
regulations required to be performed by them, and there has
been no "prohibited transaction" as defined in Section 4975
of the Code or Section 406 of ERISA which could give rise to
a material liability under Section 4975 of the Code or
Sections 502(i) or 409 of ERISA.
(iv) Each of the Company and its Subsidiary
has complied with all legal requirements relating to
employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes,
occupational safety and health, and plant closing, the
failure to comply with which would reasonably be expected to
have a Company Material Adverse Effect.
(v) Except as indicated on Schedule 3.1(n)
hereto, there is not presently pending or existing, and to
the Company's knowledge, there is not threatened (a) any
strike, slowdown, picketing, work stoppage, or material
employee grievance process, (b) any proceeding against or
affecting the Company or any Subsidiary relating to the
alleged violation of any legal requirement pertaining to
labor relations or employment matters, including any charge
or complaint before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any comparable
governmental body or commission, or other labor or employment
dispute against the Company or any Subsidiary or (c) any
application for certification of a collective bargaining
agent. There is no lockout of any employees by the Company or
any Subsidiary, and no such action is currently contemplated
by the Company or any Subsidiary.
(o) Transactions With Affiliates. No shareholder, director or
officer of the Company, and no associate of any such shareholder,
director or officer is currently, directly, or indirectly, a party to
any transaction with the Company or any Subsidiary, including any
agreement, arrangement or understanding, written or oral, providing
for the employment of, furnishing of services by, rental of real or
personal property from, or otherwise requiring payment to any such
shareholder, director, officer or associate, except as disclosed on
Schedule 3.1(o) and except for the Existing Employee Agreements. No
shareholder, director
13
or officer of the Company or any Subsidiary, and no associate of such
shareholder, director or officer owns, directly or indirectly, any
interest in, or serves as a director, officer, or employee of, any
customer, supplier or competitor of the Company or any Subsidiary,
except as disclosed on Schedule 3.1(o). For the purposes of this
Section 3. l (o) only, an "associate" of any shareholder, director or
officer means a member of the immediate family of such shareholder,
director or officer or any corporation, partnership, trust or other
entity in which such shareholder, director, officer or employee has a
substantial ownership or beneficial interest or is a director,
officer, partner or trustee, or person holding a similar position.
(p) Certain Payments. Neither the Company or any Subsidiary,
or any director, officer, agent or employee of the Company or any
Subsidiary, or to the Company's knowledge, any other person acting for
or on behalf of the Company or any Subsidiary, has paid or agreed to
pay any money, service or any valuable consideration, as defined in
Sections 317 and 507 of the Communications Act of 1934, as amended,
other than any such payments or agreements to pay made in accordance
with such sections, for the radio or television broadcast of any
matter whatsoever.
3.2 Representations and Warranties of Each Seller. Each of the Sellers
individually represents and warrants to Buyer, solely on his or her own behalf
and only as to himself or herself, as follows:
(a) Validity of Agreement. This Agreement has been duly
executed and delivered by each Seller and constitutes a legal, valid
and binding obligation of each Seller, enforceable against such Seller
in accordance with its terms. Each Seller has full power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder. Each Seller, if a natural person, is over 21 years of age
and has not had a legal representative appointed by a court of law or
otherwise act in his or her behalf or with respect to any of his or
her property. If such Seller is not a natural person: such Seller is a
corporation or other entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation
or organization; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate or partnership action; no other
corporate or partnership proceeding on the part of such Seller is
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby; this Agreement has been duly
delivered by such Seller; and except as contemplated by Section 4.6 of
this Agreement, such Seller need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Entity in order to consummate the transactions
contemplated by this Agreement.
(b) Title to Shares. Such Seller owns beneficially and of
record such shares of the Company's Stock and options to acquire the
Company's Stock as set forth opposite such Seller's name on Exhibit 1.
Such Seller is not a party to any option, warrant, purchase right, or
other contract or commitment (other than this Agreement or any
applicable Existing
14
Employee Agreement) that could require such Seller to sell or offer to
sell, transfer, or otherwise dispose of any capital stock of the
Company or any of its Subsidiaries to any Person other than the
Company. No Seller is a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any capital
stock of the Company (other than this Agreement, the Voting Trust
Agreements between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Voting Trustee, and each of
▇▇▇▇▇ ▇▇▇▇▇▇▇, Miles ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ and certain agreements
contained in the Existing Employee Agreements which obligate certain
employees to execute Voting Trust Agreements with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
upon his request). Each Seller represents and warrants that, upon
consummation of the transactions contemplated hereby, Buyer will
acquire good, valid and indefeasible title to the number of shares of
Stock set forth opposite the name of such Seller on Exhibit 1, free
and clear of all Encumbrances, other than (i) those that may arise by
virtue of any actions taken by or on behalf of Buyer or its affiliates
or (ii) restrictions on transfer that may be imposed by federal or
state securities laws.
(c) No Approvals or Notices Required; No Conflict with
Instruments. The execution, delivery and performance of this Agreement
by each Seller and the consummation by him or it of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or the lapse of time or both) or require any consent,
approval, filing or notice under, any provision of any law, rule or
regulation, court order, judgment or decree applicable to such Seller
and (ii) will not result in the creation of any Encumbrance on the
Stock held by such Seller under, conflict with, or result in the
breach or termination of any provision of, or constitute a default
under, or result in the acceleration of the performance of the
obligations of such Seller pursuant to any indenture, mortgage, deed
of trust, lease, licensing agreement, contract, instrument or other
agreement to which such Seller is a party or by which such Seller or
such Seller's assets is bound or affected, other than (x) agreements
with the Company related to the issuance of shares of Company's Stock
or options to acquire the Company's Stock and (y) agreements creating
liens which will be released at Closing.
(d) Legal Proceedings. Except as described in Schedule 3.1(g)
hereto, no Seller has been charged with any violation of or, to the
knowledge of such Seller, threatened with a charge or violation of,
any provision of Applicable Law or regulation which charge or
violation, if determined adversely to such Seller, might reasonably be
expected to affect the right of Buyer to own the Stock or of the
Company and its Subsidiaries to operate the Business after the Closing
Date in substantially the manner in which it is currently operated.
(e) Certain Fees. No Seller has employed any broker or finder
or incurred any other liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby,
other than the fees and expenses payable to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.,
Inc and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, which shall be paid by the Sellers.
(f) Rights of Third Parties. Each Seller represents, with
respect to the shares of Stock held by such Seller as indicated on
Exhibit 1 hereto, that such shares of Stock are
15
transferable and assignable to Buyer as contemplated by this Agreement
without the waiver (except by the Company) of any right of first
refusal or the consent of any other party.
(g) Sellers' Knowledge of Company Matters. Each Seller
represents that he or she has reviewed the representations and
warranties of the Company contained in this Agreement, together with
the Schedules thereto, and has no knowledge of the incorrectness of
any such representation or warranty or the incompleteness of any such
Schedule.
(h) Investment Representations. Each Seller is acquiring the
Buyer Shares for his or its own account for investment and not with a
view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof, except (i) in an offering
covered by a registration statement filed with the Securities and
Exchange Commission (the "SEC") under the Securities Act covering the
Buyer Shares or (ii) pursuant to an applicable exemption under the
Securities Act. Such Seller, and each owner of an equity interest in
such Seller, is an "accredited investor," as that term is defined in
Regulation D of the Securities Act and such Seller or its purchaser
representative is a sophisticated investor by virtue of his education,
training and/or numerous prior investments made on his or her behalf
or through entities which he or she, alone or with others, controls.
Such Seller or its purchaser representative is knowledgeable and
experienced in financial and business matters, and is capable of
evaluating the merits and risks of an investment and of making an
informed business decision.
3.3 Representations and Warranties of Buyer. Buyer represents and
warrants to the Sellers as follows:
(a) Due Organization; Good Standing and Power. Each of the
Buyer and SFX Broadcasting is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
SFX Broadcasting, the Buyer and each of their respective subsidiaries
have the corporate power and authority to own, lease and operate their
respective assets and to conduct their respective businesses as now
conducted. SFX Broadcasting, the Buyer and each of their respective
subsidiaries are duly authorized, qualified or licensed to do business
as a foreign corporation or partnership and are in good standing in
each jurisdiction in which their respective right, title or interest
in or to any of their respective assets, or the conduct of their
respective business, requires such authorization, qualification or
licensing, except where the failure to so qualify or to be in good
standing in such other jurisdictions would not have a material adverse
effect on the assets, the business or the results of operations of the
Buyer and its subsidiaries.
(b) Validity of Agreement. Buyer has full corporate power and
authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Buyer and constitutes a legal, valid and
binding obligation of the Buyer, enforceable against it in accordance
with its terms. SFX Broadcasting has full corporate power and
authority to execute and deliver the
16
guarantee of Buyer's obligations hereunder (the "SFX Guarantee") and
to consummate the transactions contemplated hereby. The SFX Guarantee
has been duly executed and delivered by SFX Broadcasting and
constitutes a legal, valid and binding obligation of SFX Broadcasting,
enforceable against it in accordance with its terms.
(c) Reports; Financial Statements. (i) Since December 31,
1995, SFX Broadcasting has filed with the SEC all forms, reports and
documents required to be filed by it pursuant to the Securities Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations of the SEC thereunder, all of which have
complied as of their respective filing dates in all material respects
with the applicable provisions of the Securities Act and the Exchange
Act, and the rules and regulations of the SEC thereunder, and none of
such forms, reports or documents, including without limitation any
financial statements or schedules included therein, at the time filed,
contained any untrue statement of a material fact or omitted to state
any 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.
(ii) The audited or unaudited consolidated balance sheets of
SFX Broadcasting and subsidiaries and the related consolidated
statements of earnings, stockholders' equity and changes in financial
position (including the related notes thereto) included in SFX
Broadcasting's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1995 and 1996, and in SFX Broadcasting's Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30, 1997, present
fairly the financial position of SFX Broadcasting and its subsidiaries
as of their respective dates, and the results of their operations and
the changes in their financial position, as the case may be, for the
periods presented therein, all in conformity with generally accepted
accounting principles applied on a consistent basis except as
otherwise noted therein and subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments and any
other adjustments described therein.
(iii) Since September 30, 1997, there has not been any
material adverse change in the business, assets, results of operations
or condition (financial or otherwise) of Buyer and its subsidiaries
taken as a whole other than general economic conditions affecting the
broadcasting industry.
(d) No Approvals or Notices Required; No Conflict with
Instruments. Except as disclosed on Schedule 3.3(d), the execution,
delivery and performance of this Agreement by the Buyer and the SFX
Guarantee by SFX Broadcasting and the consummation of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or the lapse of time or both) or require any consent,
approval, filing or notice under Applicable Law (other than under the
HSR Act) and (ii) will not result in the creation of any Encumbrance
on the Buyer Shares under, conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or
result in the acceleration of the performance of the obligations of
the Buyer or SFX Broadcasting under, or result in the
17
creation of an Encumbrance upon any material portion of the assets of
SFX Broadcasting, the Buyer or any of their respective Subsidiaries
pursuant to, the charters or by-laws of SFX Broadcasting or the Buyer,
or any material indenture, instrument or other agreement to which SFX
Broadcasting or the Buyer is a party or by which any of their
respective assets is bound.
(e) Certain Fees. No person or entity is entitled to receive
from SFX Broadcasting, the Buyer or any of their respective
subsidiaries any investment banking, brokerage or finder's fee in
connection with this Agreement or the transactions contemplated hereby
other than those persons, if any, whose fees and expenses will be paid
in full by Buyer or its affiliates.
(f) Financing. At Closing, Buyer shall have funds available
sufficient to consummate the transactions contemplated hereby on the
terms contemplated hereby.
(g) Buyer Shares. At Closing, the Buyer Shares shall have
been duly authorized for issuance and, if and when issued and
delivered by Buyer in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable. The issuance of
Buyer Shares under this Agreement is not subject to any preemptive or
similar rights.
(h) First Report. While Buyer makes no representation or
warranty that the projections contained in the First Report will
accurately reflect Buyer's performance, such projections are
reasonable and good faith projections of Buyer's assets, liabilities,
revenues, income and cash flow during the periods projected. Such
projections were prepared in good faith based upon reasonable
assumptions as of the date delivered and constitute good faith
estimations of the future performance of Buyer based upon its current
and proposed future operations as of the date delivered and as of the
date hereof.
3.4 Exclusive Representations and Warranties of the Parties. The
representations and warranties of the parties made in this Section 3 are the
sole and exclusive representations made by them or any of their Affiliates with
respect to the transactions contemplated by this Agreement, and supersede and
replace any statements made by any of them prior to the date of this Agreement
and prior to the Closing Date.
3.5 Survival of Representations and Warranties. The respective
representations and warranties of the parties contained herein shall expire on
the earlier to occur of (a) eighteen months following the Closing Date and (b)
sixty days following the completion of the first audit of the Company's
financial statements which occurs after the Closing; provided (i) that there
shall be no expiration of any such representation or warranty as to which a
bona fide claim has been asserted by written notice of such claim delivered to
the party or parties making such representation or warranty prior to the
expiration of such representation or warranty, and (ii) the representations and
warranties contained in Sections 3.2(b) and 3.1(m) (with respect to state and
federal income tax only) shall survive the Closing indefinitely. This Section
3.4 shall not at any time relieve any party hereto
18
from the performance of such party's agreements, covenants and undertakings set
forth in this Agreement.
4. Covenants; Actions Prior to Closing.
4.1 Access to Information. During the period beginning on the date
hereof and ending on the Closing Date, the Company will, and the Sellers will
cause the Company and its Representatives to (a) give or cause to be given to
Buyer and its Representatives full and free access to the plant, properties,
books and records of the Company and the Subsidiaries as Buyer shall from time
to time reasonably request, (b) furnish or cause to be furnished to Buyer such
financial and operating data, including tax returns and supporting work papers
and schedules and other information with respect to the Company and the
Subsidiaries as Buyer shall from time to time reasonably request, and (c) give
or cause to be given to Buyer and its Representatives access to the
Representatives of the Company and the Subsidiaries as Buyer may reasonably
request. The Sellers and the Company agree that such access shall include,
subject to any required landlord consent, the right to conduct Phase I or Phase
II environmental studies of the Real Estate, to perform a soil and groundwater
analysis of the Real Estate and to conduct such other environmental
investigations of the Real Estate as Buyer shall deem necessary or appropriate
to determine on-site conditions and the presence or absence of any Hazardous
Materials. Buyer agrees to indemnify, reimburse, defend and hold harmless the
Company and the Sellers for, from and against all losses, claims, damages,
liabilities to third parties or related costs or expenses (including, but not
limited to, court costs and attorneys' fees) arising out of personal injury or
property damage caused by the activities of Buyer and its representatives on or
about the Real Estate. In connection with such environmental investigations,
the Sellers and the Company will provide to or make available for inspection
(i) all records relating to the disposal of waste materials generated at the
Real Estate; (ii) all environmental Permits and records relating to compliance
with such Permits; (iii) all records of spills or other releases; (iv) all
records relating to employee exposure to workplace chemicals; (v) all
environmental audits or assessments; (vi) all insurance records relating to
coverage for environmental incidents affecting the Real Estate; (vii) all
chemical inventories and reports of chemical emissions; (viii) all
correspondence relating to pending or threatened environmental claims; and (ix)
all records obtained from prior owners or operators of the Real Estate relating
to environmental conditions.
4.2 Conduct of the Business. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved by Buyer,
during the period beginning on the date hereof and ending on the Closing Date,
the Company and the Subsidiaries will and the Sellers will cause the Company
and the Subsidiaries to:
(a) conduct the Business only in the Ordinary Course of
Business (other than the negotiation and consummation of the pending
transactions listed on Schedule 4.2(c)) and use its reasonable best
efforts to keep available the services of the present employees of the
Company and the Subsidiaries and preserve the Company's and the
Subsidiaries' present relationships with persons having business
dealings with the Company and the Subsidiaries;
19
(b) maintain the Company's and the Subsidiaries' books,
accounts and records, including their credit and collection policies,
in the usual, regular and ordinary manner, on a basis consistent with
past practice, and comply in all material respects with all Applicable
Laws and other obligations of the Company and the Subsidiaries;
(c) not (i) sell, lease or otherwise dispose of any of the
material assets of the Company or any Subsidiary other than in the
Ordinary Course of Business, (ii) modify or change in any material
respect any material contract of the Company or any Subsidiary, other
than in the Ordinary Course of Business, and other than in connection
with (x) the purchase of one or both of Blockbuster Entertainment
Corporation's and Sony Music Entertainment Inc.'s indirect interest in
Pavilion Partners or (y) the negotiation and consummation of the
pending transactions listed on Schedule 4.2(c), or (iii) agree,
whether in writing or otherwise, to do any of the foregoing;
(d) not (i) permit or allow any of the assets of the Company
or any Subsidiary to become subject to any material Encumbrances
except as contemplated in Schedule 4.2(d)(i), (ii) waive any material
claims or rights relating to the Business, except in the Ordinary
Course of Business, (iii) grant any increase in the compensation of
any Seller employed in the conduct of the Business or any bonus to any
such person, (iv) provide for any new pension, retirement or other
employment benefits or contracts for employees of the Company or any
Subsidiary, (v) amend any existing employment agreement other than to
(x) extend the term thereof through and until one year from the
Closing Date or (y) to prohibit a required relocation without the
employee's consent or (vi) agree, whether in writing or otherwise, to
do any of the foregoing;
(e) not, except for a Qualified Employee Stock Issuance, (i)
issue, sell or pledge, or authorize the issuance, sale or pledge of
any shares of capital stock of the Company or any Subsidiary or any
securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock of the Company
or any Subsidiary or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares
of capital stock of the Company or any Subsidiary, or any options,
warrants, calls, rights, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock of the
Company or any Subsidiary or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any
such shares of capital stock, or grant or accelerate any right to
convert or exchange any securities of the Company or any Subsidiary
for shares of Company Common Stock or the capital stock of any
Subsidiary, or (ii) redeem or otherwise acquire, or propose to redeem
or otherwise acquire, any of the outstanding equity securities of the
Company or any Subsidiary (including shares of Company Common Stock);
(iii) declare, set aside or pay any dividend or other distribution in
respect of any shares of capital stock of the Company or any
Subsidiary; (iv) propose or adopt any amendments to the Organizational
Documents of the Company or any Subsidiary (except as expressly
contemplated in Section 7.2 hereof); or (v) agree, whether in writing
or otherwise, to do any of the foregoing;
20
(f) cooperate with all of the Buyer's efforts to obtain and
acquire title commitments or title policies with respect to all of the
Real Estate and execute and deliver, at the request of the Buyer,
customary "non-imputation" affidavits in form required by the Buyer
and its title insurers with such changes as may be necessary to
reflect accurately the facts as they then exist;
(g) cooperate with all efforts of the Buyer to obtain, with
regard to each Lease, an estoppel certificate from the landlord (and
any overlandlords) with regard to the status of each such Lease; and
(h) cooperate with all efforts of the Buyer to obtain, with
regard to the Leases at ▇▇▇▇ ▇▇▇▇▇ Blockbuster Amphitheater in San
Bernardino, California and Desert Sky Blockbuster Pavilion in Phoenix,
Arizona, a consent letter from the respective landlord with regard to
each such Lease for the indirect transfer of the Company's interest in
the tenant under each such Lease.
As used above, a "Qualified Employee Stock Issuance" shall mean the issuance of
common stock of the Company to one or more of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ (herein, "Qualified
Employees")if the Qualified Employee agrees to be bound by the provisions of
this Agreement as a "Seller" in the event that he acquires any shares of common
stock of the Company. In the event of a Qualified Employee Stock Issuance made
at or prior to the Closing, the Buyer and each Seller hereby authorizes the
Company to unilaterally amend Exhibit 1 in a manner necessary to reflect any
new shares of common stock of the Company issued pursuant to such Qualified
Employee Stock Issuance such that the Purchase Price will be proportionately
reallocated among all of the Sellers, including the recipients of any new
shares of common stock of the Company pursuant to such Qualified Employee Stock
Issuance.
4.3 Further Actions. Subject to the terms and conditions hereof, the
Sellers, Company and Buyer will each use their reasonable best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using reasonable best
efforts: (i) to obtain prior to the Closing Date all licenses, Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities and parties to contracts with the Company, the Subsidiaries or the
Sellers as are necessary for the consummation of the transactions contemplated
hereby; (ii) to effect all necessary registrations and filings; and (iii) to
furnish to each other such information and assistance as reasonably may be
requested in connection with the foregoing. Where the consent of or a waiver
from any third party is required under the terms of any of the Company's or the
Subsidiaries' Leases or Contracts to the transactions contemplated by this
Agreement, the Company will use reasonable best efforts to obtain such consent
on terms and conditions not less favorable than as in effect on the date
hereof. The Company and Buyer shall cooperate fully with each other to the
extent reasonably required to obtain such consents. Each Seller who is also an
Optionholder (each such Seller who is an Optionholder being herein called a
"Seller Optionholder") hereby covenants and agrees to execute and deliver to
the Company an Option Redemption Agreement in
21
the form of Exhibit 2 hereto upon demand of the Company but in no event later
than December 19, 1997. The Company and the Sellers shall use all reasonable
efforts to obtain the signature of all other Optionholders who are not Sellers
(such Optionholders who are not Sellers being herein called "Pure
Optionholders") to an Option Redemption Agreement in the form of Exhibit 3
hereto on or before January 8, 1998.
4.4 Notification. The Company shall promptly notify Buyer in writing
and keep it advised as to (i) any litigation or administrative proceeding filed
or pending against the Company or any Subsidiary or, to their knowledge,
threatened against any of them, including any such litigation or administrative
proceeding that challenges the transactions contemplated hereby; (ii) any
material damage or destruction of any of the material assets of the Company or
any Subsidiary; and (iii) any Material Adverse Effect. The Buyer shall promptly
notify the Company of any fact, circumstance or event discovered or determined
by Buyer which causes Buyer to believe that the Company or the Sellers have
breached a representation, warranty, covenant or agreement contained herein.
4.5 No Inconsistent Action. Subject to Sections 6.1 and 6.2 hereof, no
party hereto shall take any action inconsistent with its obligations under this
Agreement or which could materially hinder or delay the consummation of the
transactions contemplated by this Agreement.
4.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as is practicable after the date of
this Agreement, but in no event later than seven (7) business days after the
final execution hereof, the Buyer, the Company, and any Sellers required to do
so shall file any required Notification and Report Forms and related material
that they are required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the HSR
Act, will use their reasonable efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper, or advisable.
4.7 Public Announcements. Except as may be required by Applicable Law,
neither Buyer, on the one hand, nor Sellers and the Company, on the other,
shall issue any press release or otherwise make any public statements with
respect to this Agreement or the transactions contemplated hereby at any time
prior to December 19, 1997, without the prior written consent of the other
parties, which consent shall not be unreasonably withheld. In no event shall
either party issue any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby without
having first provided prior notice thereof to the other party.
4.8 Excluded Assets. The following assets which might otherwise be
considered as owned by the Company shall be excluded from the provisions of
this Agreement and shall be deemed to be (without duplication) "Excluded
Assets" for purposes hereof: (i) all notes, memoranda, agreements or reports of
any consultant or other professional employed by the Company in connection with
the sale or leveraged recapitalization of the Company; (ii) all agreements
communications and correspondence between the Sellers or the Company and
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
22
& Co., Inc. or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together, the "Advisor") and their respective
employees, representatives or agents relating to the transactions contemplated
by this Agreement or any alternatives thereto; (iii) all lists of prospective
purchasers for such transactions compiled by either the Company, the Sellers or
the Advisor; (iv) all bids submitted by any prospective purchasers of or
investors in the Company; (v) all analyses by Company or the Advisor of any
bids submitted by any prospective purchaser or investor; (vi) all
correspondence or communications between the Company, the Sellers, or the
Advisor and their respective employees, representatives or agents, and any
prospective purchaser of or investor in the Company other than the Purchaser;
(vii) all correspondence or communication between the Company, the Sellers, and
the Advisor, their respective employees, representatives or agents, regarding
any or all of the bids, the prospective purchasers, the engagement of or the
activities of the Advisor or any of the transactions contemplated in this
Agreement or any alternatives thereto; (viii) all internal correspondence and
communications of the Company with respect to the sale of the Company or any
alternatives thereto, or any transaction contemplated in this Agreement.
Immediately prior to the Closing, the Company shall distribute all Excluded
Assets to the Seller Representative.
4.9 Acquisition Facility; Term Loan.
(a) After the execution of this Agreement and before the
Closing, but provided this Agreement has not been previously
terminated, the Buyer shall make available to the Company an
acquisition facility of up to $25,000,000 (the "Acquisition
Facility"), to be used by the Company to fund the acquisitions
described on Schedule 4.2(c). Advances under the Acquisition Facility
(each an "Acquisition Advance", and collectively, the "Acquisition
Advances") shall be made upon fifteen (15) days prior written notice
from the Company to the Buyer, which notice shall specify the amount
requested and the purpose for the Acquisition Advance. Prior to
funding any Acquisition Advances, the Company shall execute such
documents as the Buyer shall reasonably request to evidence the
Acquisition Facility and the perfection of the security interests
related thereto and to effectuate the remaining terms and conditions
of this Section 4.9.
(b) If this Agreement is terminated for any reason other than
(i) a willful breach by the Sellers of their obligation to tender
delivery of their stock certificates at the Closing of this Agreement
or (ii) failure or inability to satisfy all of the conditions to
Buyer's obligation to close caused by a willful breach by, or gross
negligence of, the Sellers in the performance of their obligations
under this Agreement, then, to the extent that any Acquisition
Advances have been made, the Company shall have the option
contemporaneously with such termination to either repay in full the
Acquisition Advances to the Buyers without interest or convert the
Acquisition Advances to a full recourse term loan (the "Term Loan").
If pursuant to the foregoing sentence, the Acquisition Advances may
not be converted to a Term Loan, the provisions of Section 4.9(e)
below shall apply and shall be the exclusive remedy of Buyer with
respect to any Acquisition Advances. The Term Loan shall bear interest
at a rate per annum equal to the Buyer's blended cost of funds (as
computed by the Buyer and agreed to by the Company) for the first two
years of the term,
23
escalating 1% per annum on the second anniversary and increasing 1%
per annum on each anniversary thereafter. The Term Loan shall have a
five year term commencing with the date of the initial Acquisition
Advance, with interest only payable in arrears for the first two (2)
years of the term followed by amortization based on available cash
flow from the assets acquired with the Term Loan proceeds (the
"Acquired Assets"). Cash flow will be defined as net income from the
Acquired Assets after deducting (i) taxes, (ii) changes in working
capital, (iii) capital expenditures, and (iv) a reasonable reserve for
contingencies and future capital expenditures consistent with budget.
A final payment of all accrued and unpaid interest and principal shall
be due and payable on the fifth anniversary of the term of the Term
Loan.
(c) The Term Loan shall be secured by (i) a first priority
perfected lien on the Acquired Assets, together with the operating
cash flow from the Acquired Assets, and (ii) an option (the "Pavilion
Option"), exercisable only in the event that the Term Loan is not
fully paid and discharged within sixty days after any event of default
under the Term Loan, to require the Company to sell to the Buyer 100%
of its partnership interests in Pavilion at a purchase price (the
"Pavilion Purchase Price") equal to (x) the quotient, the numerator of
which is the cash flow of Pavilion for the then most recent twelve
(12) month period (the "Measuring Period"), and the denominator of
which is the cash flow of the Company for the Measuring Period
prepared on a proforma basis as though all assets owned by the Company
on the last day of the Measuring Period had been owned for the full
Measuring Period, multiplied by (y) the Purchase Price. The Pavilion
Option will be granted subject to the provisions of the Pavilion
Partnership Agreement and with the express acknowledgment that the
exercisability thereof shall be expressly conditioned upon, without
further recourse against the Company or the Sellers, Buyer obtaining
the required consents under such Partnership Agreement.
(d) With the exception of the Buyer's first lien on the
Acquired Assets and its rights under the Pavilion Option
(collectively, the "Collateral"), the Term Loan shall be subordinate
to loans made by the Company's senior bank lender (the "Senior
Lender") pursuant to the terms of a commercially reasonable
intercreditor agreement (the "Intercreditor Agreement") among the
Buyer, the Company and the Senior Lender, to be negotiated in good
faith by the Buyer and the Company. The Intercreditor Agreement shall,
among other things, (i) acknowledge the Buyer's first priority lien on
the Acquired Assets and disclaim any security interests of the Senior
Lender with respect to the Acquired Assets; (ii) provide that the
Senior Lender will release any liens it may have on Pavilion,
Pavilion's partnership interests or any of Pavilion's assets in
exchange for its receipt of the Pavilion Purchase Price; and (iii) not
contain any provisions or terms which limit in any material respect or
impose any material delay on the Buyer's right to commence any action
to realize on the Collateral.
(e) In the event the parties fail to consummate the
transactions contemplated by this Agreement due to (i) a willful
breach by the Sellers of their obligation to tender delivery
24
of their stock certificates at the Closing of this Agreement, or (ii)
failure or inability to satisfy all of the conditions to Buyer's
obligation to close caused by a willful breach by, or gross negligence
of, the Sellers in the performance of their obligations under this
Agreement and if, in either of such cases, Buyer is not in breach of
this Agreement and has satisfied, or is prepared to satisfy, all of
the conditions to Sellers' obligation to Close, then the Acquisition
Facility shall accelerate and be immediately due and payable except
that Buyer agrees that it will not exercise or pursue any remedies
available to it by reason of the failure of the Company to pay such
accelerated amounts for a period of sixty (60) days following such
acceleration; provided, however, if the Company should provide written
notice to the Buyer that the Company either does not have the right to
convert the Acquisition Facility into the Term Loan or irrevocably
waives and releases any right to convert the Acquisition Facility into
the Term Loan, then the Acquisition Facility shall not accelerate and
become due and payable until after a period of sixty (60) days
following the failure of the consummation of the transactions
contemplated hereby. If the Acquisition Facility should be accelerated
pursuant to the foregoing provisions, (a) the Acquisition Advances
will bear interest from and after acceleration at a default rate equal
to 3% above the interest rate in effect at the time of acceleration,
which default rate shall increase 1/4% each month (but in no event
shall it exceed the highest rate permissible under applicable law)
until the entire balance of the Acquisition Advances shall be paid in
full, and (b) Buyer shall have the option of either (1) exercising the
Pavilion Option and offsetting the outstanding balance of the
Acquisition Advances against the Pavilion Purchase Price; or (2)
availing itself of any other remedies it may have in law or equity
under the documents executed in connection with the Acquisition
Facility, including, but not limited to, foreclosing on the Acquired
Assets. Notwithstanding the foregoing, the remedy in (b)(1) of the
immediately preceding sentence shall not be available in the event (i)
certificates representing at least 85% of the Company's outstanding
Stock are tendered at the Closing or (ii) the Acquisition Facility is,
in fact, paid and discharged in full within sixty (60) days after the
failure to consummate the transactions contemplated hereby.
4.10 Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall be entitled until the Supplemental Disclosure
Deadline (in the case of the Company) or the Closing (in the case of Buyer) to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules. For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Sections 5.2 and 5.3 have been
fulfilled, the Schedules hereto shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude all information contained in any supplement or amendment thereto.
4.11 Notification Concerning Investments. On or before the
Supplemental Disclosure Deadline, the Company shall provide notice to the Buyer
of all material theatrical investments and
25
tour investments made or undertaken in the Ordinary Course of Business after
the date hereof and on or before the Bring Down Date.
5. Conditions Precedent.
5.1 Conditions Precedent to Obligations of All Parties. The respective
obligations of the parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction (or written waiver by the Buyer
on the one hand and the Seller Representative on behalf of the Company and each
of the Sellers on the other) at or prior to the Closing Date of each of the
following conditions:
(a) No Governmental Action. No action of any Governmental
Entity shall have been taken or threatened and no statute, rule,
regulation or executive order shall have been proposed, promulgated or
enacted by any Governmental Entity which seeks to restrain, enjoin or
otherwise prohibit or to obtain damages or other relief in connection
with this Agreement or the transactions contemplated hereby.
(b) No Injunction in a Private Action. No action taken by any
private party shall have resulted in the entry of an injunction or
other order of specific performance which purports to prohibit or
materially limit the completion of all or any portion of the
Contemplated Transactions; provided, however, if any private party
(other than the Company, any Seller or any Optionholder) shall have
taken or threatened an action which seeks to restrain, enjoin or
otherwise prohibit or to obtain damages or other relief in connection
with this Agreement or the transactions contemplated hereby, then, the
obligations of the Sellers hereunder shall be conditioned upon Buyer
agreeing to indemnify, defend and hold harmless the Sellers from and
against any and all liability, costs and other expenses relating to or
arising out of any such action in a manner reasonably acceptable to
the Sellers.
(c) Termination under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. The termination
or early termination of the applicable waiting period under the HSR
Act shall have occurred.
5.2 Conditions Precedent to Obligations of Buyer. The obligations of
Buyer under this Agreement are subject to the satisfaction (or written waiver
by Buyer) at or prior to the Closing Date of each of the following conditions;
provided, however, that (A) the conditions set forth in Sections 5.2(a) and
5.2(c) hereof shall be deemed to have been satisfied if, on or before the
Supplemental Disclosure Deadline (but no earlier than the Bring Down Date) the
Buyer has received (i) a certificate from a duly authorized officer of the
Company, on behalf of the Company, affirming that the conditions set forth in
Sections 5.2(a) (with respect to the representations and warranties of the
Company contained herein) and 5.2(c) were fulfilled as of the Bring Down Date
and (ii) a certificate from the Seller Representative, on behalf of the
Sellers, affirming that the condition set forth in Section 5.2(a) (with respect
to the representations and warranties of the Sellers contained herein) was
fulfilled as of the Bring Down Date; however, if such certificates are not
received by Buyer on or
26
before the Supplemental Disclosure Deadline, the conditions set forth in
Sections 5.2(a) and 5.2(c) shall nevertheless be deemed to have been satisfied
if the Buyer has not terminated this Agreement on or before the Supplemental
Disclosure Termination Date as a result of such conditions not being fulfilled
on the Bring Down Date and (B) the conditions set forth in Section 5.2(e)
hereof shall be deemed to have been satisfied if the Buyer has not terminated
this Agreement on or before January 30, 1998 as a result of such condition not
being fulfilled:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Sellers and the Company
contained herein or in any certificate or document delivered to Buyer
pursuant hereto shall be true and correct in all material respects on
and as of the Bring Down Date, with the same force and effect as
though such representations had been made on and as of the Bring Down
Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such date),
without giving effect to any supplement to disclosure schedules. For
purposes of this section, (i) to the extent that any representation
and warranty of the Sellers or the Company contained herein or in any
certificate or document delivered to Buyer pursuant hereto shall be
untrue or incorrect in any material respect on and as of the Bring
Down Date, such representation and warranty shall be deemed to be true
and correct in all material respects on and as of the Bring Down Date
if the Sellers and the Company have either caused, or agreed to cause,
the breach of such representation and warranty to be cured on or prior
to the Closing with the express understanding and acknowledgment that
all amounts expended by the Company in causing such breach to be cured
shall be applied as a dollar-for-dollar reduction against the cash
portion of the Purchase Price and (ii) in determining whether the
representations and warranties are true and correct in all material
respects, no effect will be given to any material or Material Adverse
Effect qualifier contained in such representation and warranty.
(b) Performance of Agreements. The Sellers and the Company
shall have, in all material respects, performed all obligations and
agreements, and complied with all covenants and conditions, contained
in this Agreement to be performed or complied with by them prior to or
at the Closing Date; provided, however, if the Sellers shall deliver
to Buyer certificates evidencing eighty-five percent (85%) or more of
the issued and outstanding shares of the Stock, duly endorsed for
transfer or accompanied by duly executed stock powers at the Closing,
then Buyer shall be deemed to have waived the fulfillment of the
conditions set forth in this Section 5.2(b) by reason of the failure
of the other Sellers to deliver certificates evidencing the remaining
shares of issued and outstanding Stock.
(c) Material Adverse Change. The Company shall not have
suffered a Material Adverse Effect.
(d) Payment of Notes. Prior to or contemporaneously with the
Closing, (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have paid, or caused to have been
paid, in full (x) that certain $2,910,799.96 promissory note dated
March 28, 1997, executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and payable to the
Company, (y) that certain $3,006,283.80 promissory note dated November
4, 1997, executed
27
by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and payable to the Company and (z) any other
amounts payable by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to the Company under any open
account and (ii) ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have paid, or caused to have been
paid, in full, that certain $1,231,500 Promissory Note dated July 11,
1997, executed by ▇▇▇▇▇ ▇▇▇▇▇▇▇ and payable to the Company, (iii) the
Company shall have surrendered or sold for their cash surrender value
all outstanding key man life insurance policies owned by the Company
on the lives of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Miles ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the aggregate amount of approximately $750,000,
and (iv) the Company shall have collected all accounts receivable
accrued on account of "split dollar" life insurance on the life of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the aggregate amount of approximately $830,000.
(e) Third Party Consents. The Company shall have obtained
from YM Corp (the "Sony Sub"), Westside Amphitheatre Corporation
("Westside") and Charlotte Amphitheater Corporation (together with
Westside, the "Blockbuster Sub") a waiver of the provisions of Section
12.1(b) of Pavilion's Partnership Agreement with respect to any
Amphitheaters (as such term is defined in Pavilion's Partnership
Agreement) currently or hereafter owned, operated or managed, directly
or indirectly, by Buyer; provided, however, that if (i) the Company
should execute and enter into a binding agreement in form and
substance reasonably satisfactory to the Buyer to purchase all or
substantially all of the Sony Sub's indirect interest in Pavilion,
then the Company shall be deemed to have obtained the required waiver
from the Sony Sub specified in this Section 5.1(e) and (ii) the
Company should execute and enter into a definitive agreement in form
and substance reasonably satisfactory to the Buyer to purchase all or
substantially all of the Blockbuster Sub's indirect interest in
Pavilion, then the Company shall be deemed to have obtained the
required waiver from the Blockbuster Sub specified in this Section
5.2(e). For purposes of the proviso contained in the immediately
preceding sentence, (A) the Buyer does hereby approve of the form and
substance of (x) the draft of that certain Purchase Agreement for the
acquisition of the Blockbuster Sub's interest in Pavilion dated
December 12, 1997 which has been previously provided by the Company's
counsel to the Buyer's counsel and (y) the draft of a letter agreement
for the acquisition of the Sony Sub's interest in Pavilion dated
December 9, 1997 which has been previously provided by the Company's
counsel to the Buyer's Counsel (as modified by the ▇▇▇▇-up thereof
prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and dated December 11, 1997), (B) material
changes to either such draft will require the approval of the Buyer
(which shall not be unreasonably withheld) and (C) any non-material
changes shall be deemed to be acceptable and satisfactory to the
Buyer.
(f) Termination of Stock Options. Option Redemption
Agreements, in the form attached hereto as Exhibit 3, shall have been
executed by each Pure Optionholder.
(g) Legal Opinion. Buyer shall have received the legal
opinion of the law firm of Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
concerning the matters set forth on Exhibit 4 hereof.
28
5.3 Conditions Precedent to the Obligations of the Sellers. The
obligations of the Sellers under this Agreement are subject to the satisfaction
(or waiver by the Sellers) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy Representations and Warranties. All
representations and warranties of Buyer contained herein or in any
certificate or document delivered to the Sellers pursuant hereto shall
be true and correct on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made
on and as of the Closing Date, except as contemplated or permitted by
this Agreement.
(b) Performance of Agreements. Buyer shall have performed all
obligations and agreements, and complied with all covenants and
conditions contained in this Agreement to be performed or complied
with by it prior to or at the Closing Date.
(c) Legal Opinion. The Sellers shall have received the legal
opinion of the law firm of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ concerning the matters set
forth on Exhibit 5 hereof.
6. Termination.
6.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned (a) by mutual consent of Buyer and the
Seller Representative, (b) by Buyer at any time prior to the Supplemental
Disclosure Termination Deadline if the conditions set forth in Sections 5.2(a)
and 5.2(c) are not satisfied or deemed satisfied as of the Bring Down Date, (c)
by the Buyer at any time prior to January 10, 1998 if all of the Pure
Optionholders have not executed Option Redemption Agreements on or before
January 8, 1998, or (d) in the event that the Closing Date shall not have
occurred on or before the Drop Dead Date, or such later date as the Buyer and
the Seller Representative shall agree, for any reason other than the failure of
the condition set forth in Section 5.1(c) to have been satisfied, by the Buyer
or the Seller Representative by notice to the other parties; provided, however,
that if the Closing Date shall not have occurred on or before such date due to
a breach of this Agreement by one of the parties or an Affiliate of such party,
that party may not terminate this Agreement. If the Closing has not occurred on
or before the Drop Dead Date by reason of the failure of the condition set
forth in Section 5.1(c) to have been satisfied, and if the Closing has not
occurred on or before May 31, 1998, or such later date as the Buyer and the
Seller Representative shall agree, then this Agreement may be terminated and
the transactions contemplated hereby may be abandoned by either Buyer or the
Seller Representative; provided, that if the Closing Date shall not have
occurred on or prior to May 31, 1998 due to a breach of this Agreement by one
of the parties or an Affiliate of such party, that party may not terminate this
Agreement. If the conditions set forth in Section 5.1(c) has not been satisfied
on or before April 1, 1998 and this Agreement has not been previously
terminated pursuant to the foregoing provisions, then the cash portion of the
Purchase Price specified in Section 2.2(i) hereof shall increase from and after
April 1, 1998 at a per annum rate of 9% through and until the date that the
Closing shall occur.
29
6.2 Liabilities in Event of Termination. In the event of any
termination of this Agreement as provided above, this Agreement shall forthwith
become wholly void and of no further force or effect, except that the
provisions of Sections 8.5, 9.1, 9.12 and 9.13 hereof shall remain in full
force and effect, and provided that nothing contained herein shall release any
party from liability for any failure to comply with any provision, covenant or
agreement contained herein.
7. Covenants; Actions Subsequent to Closing.
7.1 Articles of Incorporation; Bylaws. The Articles of Incorporation
and Bylaws of the Company will not be amended for a period of six years from
the Closing Date in any manner that would adversely affect the indemnification
or litigation expense reimbursement rights thereunder of individuals who on or
prior to the Closing Date were directors, officers, employees or agents of the
Company, except (i) if such amendment is required by law, or (ii) if such
amendment is designed to preclude any claim for indemnification or expense
reimbursement arising from (x) a claim by Buyer under Section 8.1 of this
Agreement, or (y) a claim among or between any of the Sellers or Optionholders
related solely to the Contemplated Transaction.
7.2 Post-Closing Operational Matters.
(a) Buyer agrees that the Company shall maintain its
executive headquarters in the Houston, Texas area for a period of not
less than five years from the Closing Date.
(b) Buyer intends to operate the Company after the Closing
Date in substantially the same manner in which it is currently being
operated and as it shall continue to be operated between the date of
this Agreement and the Closing Date, and shall consult with ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Executive"), and Executive will participate in any
decision, with respect to changing the Company's policies, personnel,
culture, compensation structure, reporting systems or configuration
and alignment of operating divisions.
(c) It is the intention of the Buyer to acquire additional
businesses in Theatrical and Motorsports. Such acquired Theatrical and
Motorsports businesses will be acquired and managed by the Company,
unless the revenues from the Theatrical and Motorsports lines of
businesses in such acquired companies do not constitute a majority of
the revenues of the acquired company, in which case the acquired
company may be held by Buyer outside of the Company but the management
of the Theatrical and Motorsports lines of businesses of such acquired
company will report to the Executive. Reference is made to (i) the
fact that the Company is currently negotiating the terms and
conditions upon which it may acquire two-thirds of the ownership
interests in United Sports of America ("USA Motorsports"), a
partnership, which shall exclude only the one-third interest currently
owned by Contemporary Sports, Inc. ("Contemporary") and (ii) the fact
that the Buyer is currently negotiating the terms and conditions upon
which it may acquire ownership of Contemporary. Without limiting the
generality of the foregoing provisions contained in this Section
7.2(c), the Buyer hereby agrees that, within 30 days of the later to
occur of the closing of the Contemplated Transaction and the
occurrence of the acquisition by the Buyer of ownership
30
of Contemporary, the Buyer shall contribute to the Company all of
Contemporary's ownership interest, direct or indirect, in the assets
of USA Motorsports (or its successor).
As used herein, the following terms shall have the meanings indicated
below:
(i) "Theatrical" shall mean (I) the presentation,
production or booking of, or the provision of any logistical
or technical services in connection with, any type of live
staged shows (other than musical concerts), including
Broadway-type shows, magic shows, family entertainment and
variety shows, (ii) the ownership, operation or management of
venues in which theatrical-type presentations are typically
presented and (iii) ancillary businesses.
(ii) "Motorsports" shall mean the presentation,
promotion, production or other exploitation of any live event
featuring motorized races or demonstrations, including
motocross and other motorized races, monster truck shows, air
shows, thrill shows, demolition derbies, tractor pulls, other
events developed by Motorsports and ancillary business.
(d) Buyer agrees that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will be appointed at
the Closing as a member of and the Chairman of the Board of the
Company for a term to expire on the earlier of (I) five (5) years
following the Closing Date or (ii) the termination of the Executive's
Employment Agreement (and not just his employment) with the Company
for any reason other than death or disability of the Executive.
(e) Buyer agrees that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will remain as the
Chief Executive Officer of the Company (in addition to any other
responsibilities which he may have with Buyer) for a five year period
following the Closing Date. Buyer agrees that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will be
appointed at the Closing as a member of the Company's Board of
Directors with a term of two (2) years and fifteen (15) days following
the Closing.
(f) Buyer agrees that the Bylaws of the Company shall be
amended at or prior to the Closing in a manner necessary to
incorporate the following provisions therein:
(i) Any proposed sale by the Company of all or any
substantial portion of the Company's Theatrical line of
business or Motorsports line of business for a period of one
(1) year from and after the Closing shall require (x)
majority approval of the Company's board of directors and (y)
the affirmative vote of either ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ in favor of such proposed sale;
(ii) If either the Company's Theatrical line of
business or Motorsports line of business has been previously
sold by the Company, any proposed sale of the other of such
lines of business after the first anniversary of the Closing
Date and before the fifteenth (15th) day following the second
anniversary of the Closing Date shall require
31
(x) majority approval of the Company's board of directors and
(y) the affirmative vote of either ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇
▇. ▇▇▇▇▇▇ in favor of such proposed sale;
(iii) Any proposed sale of the Company's Theatrical
line of business or the Motorsports line of business at any
time within two years and fifteen days following the Closing
Date shall not be consummated unless (i) all members of the
board of directors of the Company have been specifically
notified of such proposed transaction at least thirty (30)
days prior to the consummation thereof and (ii) the proposed
purchaser has been notified of the existence of Executive's
right of first refusal and purchase options set forth in
Executive's Employment Agreement with Buyer with respect to
the Motorsports line of business and the Theatrical line of
business;
(iv) A provision that no member of the Board of Directors may
be removed therefrom except upon death, disability or with adequate
cause; and
(v) A provision requiring unanimous approval of the
board of directors to amend any of the provisions in the
Bylaws required to be included pursuant to the foregoing
provisions prior to two years and fifteen days following the
Closing Date.
Buyer agrees that the Articles of Incorporation of the Company may be
amended at or before the Closing in a manner that prohibits any
amendment or removal of the foregoing provisions from the Bylaws of
the Company without the approval of both the shareholders and the
unanimous approval of all of the members of the board of directors of
the Company. Buyer covenants and agrees with the Sellers and the
Executive, acknowledging and agreeing that the Sellers have materially
relied upon the agreements contained in this Section 7.2 and that
Executive has relied upon the provisions contained in this Section 7.2
in connection with the entry into the Executive's Employment Agreement
with Buyer, that it will not take any action or vote its shares of the
capital stock of the Company at any time prior to two years and
fifteen days following the Closing Date in a manner which would
change, amend or modify the provisions contained in the Bylaws as
required pursuant to the preceding provisions or otherwise negate or
abrogate the purposes and provisions hereof.
(g) The Buyer covenants and agrees that the executive
employees (both corporate and operational) of the Company will be, at
all times after the Closing, provided stock options or other stock
awards on a basis that is at least equivalent to the basis upon which
stock options or other stock awards are given to any other executive
employees of the Buyer.
(h) The Buyer covenants and agrees with the Seller, as a
material inducement to the decision of the Seller to enter into this
Agreement, as follows:
(i) Subject to the aggregate limitation set forth in
clause (ii) below, the Buyer will pay, or cause to be paid,
to each and every At Will Employee whose
32
employment is terminated during the Relevant Period for a
Non-Qualified Reason a severance payment or series of
severance payments in such amount or amounts as is designated
by the Seller Representative in his sole and absolute
discretion.
(ii) The Buyer shall not be obligated to pay more
than $1,000,000 of severance payments in the aggregate
pursuant to Section 7.2(h)(i).
(iii) The Buyer shall provide written notice to the
Seller Representative prior to the termination of any At Will
Employee's employment for a Non-Qualified Reason during the
Relevant Period. The Seller Representative shall notify the
Buyer of the amount and terms of the severance payment or
series of severance payments that will be required to be made
to each At Will Employee whose employment is to be terminated
for a Non-Qualified Reason during the Relevant Period no
later than 10 days after receipt of notice from the Buyer of
the proposed termination of such At Will Employee's
employment. After such designation by the Seller
Representative of an At Will Employee's severance payment,
the Buyer may revoke its prior plans to terminate such At
Will Employee for any reason.
(iv) To the extent that the Buyer should fail to
make any severance payment required to be made pursuant to
the provisions of this Section 7.2(h), the Sellers (or any
one or more of the Sellers) shall have the right to make such
payments on behalf of the Buyer in which case all amounts so
paid on behalf of the Buyer shall be immediately due and
payable from the Buyer to the Sellers who made such payments
together with interest thereon at the lesser of 18% per annum
and the maximum non-usurious interest rate permitted by
applicable law.
(v) The At Will Employees are expressly intended
third party beneficiaries of the provisions contained in this
Section 7.2(h).
(vi) As used herein, the phrase "At Will Employee"
shall mean any person employed by the Company or any
Subsidiary as of the Closing Date other than (i) the
employees listed on Schedule 10.1(a) hereto and (ii) any
other employee of the Company or any Subsidiary who may enter
into a written employment agreement with the Company or any
Subsidiary with the express written approval of the Buyer
after the date hereof and prior to the Closing Date.
(vii) An At Will Employee's employment shall be
deemed to have been terminated for a "Non-Qualified Reason"
if such employee's employment is terminated (A) by such At
Will Employee's employer for a reason not related to
insubordination, fraud, malfeasance, illegal acts or
violations of the employer's policies and procedures or (B)
by such At Will Employee after (i) such At Will Employee is
required without his consent to relocate to another
metropolitan area or
33
(ii) such At Will Employee's job duties, responsibilities or
status are materially diminished without his consent.
(viii) As used herein, "Relevant Period" shall mean
the period of time commencing upon the Closing Date and
continuing until the earlier of (x) the 396th day after
completion of the Spin Off or (y) the second anniversary of
the Closing Date.
(ix) The Buyer shall bear complete responsibility
for any payments that may be due under employment contracts
in the event of a wrongful termination after the Closing of
any employee with an employment contract. Any amounts so paid
to employees with employment contracts shall not be applied
towards or reduce the $1,000,000 aggregate limit on required
severance payments specified in Section 7.2(h)(ii) hereof.
7.3 Pension and Health Insurance. Unless the Seller Representative
should advise the Buyer at any time during the three year period following the
Closing that the 401(k) Plan must be replaced with the Buyer's plan, Buyer
agrees that the Company will continue, for a period of not less than three
years following the Closing Date, the Company's existing employee benefit
plans, including the Company's Employees' 401(k) and Profit Sharing Plan (the
"401(k) Plan") and life insurance, long term and short term disability
insurance and health insurance (collectively, the "Insurance Plans"); provided,
however, that (i) the Buyer may replace the 401(k) Plan and the Insurance Plans
with another plan or plans providing, in the aggregate, for a substantially
equivalent or greater level of compensation, funding and benefits and (ii) the
expiration of such three year period will not affect any rights under any such
plan, which thereafter will be governed solely by the terms thereof. Buyer
agrees from and after the date hereof it will take no action inconsistent with
the provisions of this Section 7.3.
7.4 Obligations Related to Completion of Spin-Off and Condition of
Buyer after the Spin- Off..
(a) If the Spin-Off has not been completed on or before any
Spin-Off Cut Off Date (herein defined), then each Seller shall have a
right and option ("Failed Spin-Off Put Option"), exercisable by notice
to Buyer at any time within ten days following such Spin-Off Cut Off
Date, to require Buyer to pay him or her cash in lieu of the Buyer
Shares to which such Seller is entitled pursuant to the provisions of
Section 2.2 hereof for a cash payment of $13.33 per Buyer Share. As
used herein, the term "Spin-Off Cut Off Date" shall mean July 1, 1998
and the first day of every third month thereafter.
(b) Reference is made to the fact that, prior to the
execution of this Agreement, Buyer has delivered to the Company and
the Seller Representative a valuation analysis (the "First Report")
prepared by the Buyer, with the assistance of the Buyer's
underwriters, concerning the projected range of fair value of the
Buyer Shares upon completion of the
34
Spin-Off. The projected range of fair value contained in the First
Report has been determined based upon a market value analysis
("Valuation Procedure"), applied to the Buyer's Projected Financial
Status as of the time of the Spin-Off. The "Buyer's Projected
Financial Status" means, as of any time in the future, the assets,
debts, liabilities, earnings, cash flows and other financial
characteristics (taking into account the nature and quality thereof)
of the Buyer currently expected to be in place at such time. The
Sellers shall have the following special contractual rights in regard
to the foregoing and with respect to the Buyer Shares to be delivered
pursuant to the provisions hereof:
(i) At the Closing, the Buyer shall deliver to the
Sellers a report certifying that the Buyer's Projected
Financial Status as of the time of the Spin-Off has not
changed materially and adversely except as explicitly
referenced in such report.
(ii) Within 10 days following the completion of the
Spin-Off, the Buyer shall deliver to the Sellers a valuation
analysis ("Final Report") prepared by the Buyer, with the
assistance of the Buyer's underwriters, concerning the range
of fair value of the Buyer Shares at such time. The projected
range of fair value contained in the Final Report shall be
determined using the Valuation Procedure utilized in the
First Report applied to the actual assets, debts,
liabilities, earnings, cash flows and other financial
characteristics (taking into account the nature and quality
thereof) of the Buyer at the timer of the Spin-Off.
Notwithstanding the foregoing, if the average selling price
per share of the Buyer Shares is $13.33 per share or more
during the 5 day period immediately following the completion
of the Spin-Off, then (i) the Buyer shall not be obligated to
deliver the Final Report and (ii) the remaining provisions of
this Section 7.4(b) shall not apply.
(iii) If the Final Report reflects an adverse change
to the range of fair value from the range of fair value shown
in the First Report, then the Buyer shall include with the
Final Report a written offer ("Make-Up Offer") to the Sellers
to provide an additional cash payment or additional number of
Buyer Shares, which each Seller shall have the option of
taking, as consideration for the adverse change from the
anticipated fair range of value for the Buyer Shares
reflected in the First Report.
(iv) If any Seller either believes that (x) the fair
range of value in the Final Report was not accurately
determined in accordance with the provisions and requirements
hereof or (y) the Make-Up Offer is insufficient consideration
for the adverse change from the anticipated fair range of
value for the Buyer Shares reflected in the First Report,
then such Seller shall have the contractual right, as his
sole right and remedy therefor, to assert a claim against,
and receive from, the Buyer an additional monetary sum
determined to be adequate compensation for the adverse change
from the anticipated fair value of the Buyer Shares reflected
in the First Report, to be determined pursuant to a
proceeding conducted under Section 9.13 hereof.
35
7.5 Five-Year Put Option. Each Seller shall have a right and option
("Five Year Put Option"), exercisable by notice to Buyer at any time during the
Five Year Option Period (herein defined), to require Buyer to purchase all or
any portion of such Seller's Put Shares (herein defined) for a cash purchase
price of $33.00 per share. As used herein, (i) the term "Five Year Option
Period" shall mean a period of time commencing upon the fifth anniversary of
the Closing Date and continuing for a period of ninety (90) days thereafter and
(ii) the term "Put Shares" shall mean, with respect to each Seller, one-third
of the Buyer Shares received by such Seller pursuant to Section 2.2 hereof (as
adjusted to reflect any stock dividends or corporate recapitalizations after
the date hereof resulting in stock splits, combinations or exchanges of shares
or any similar transactions). The Put Shares shall be separately certificated
with an appropriate legend referencing the Five Year Put Option.
Notwithstanding the provisions of Section 9.4 hereof, but subject to the
provisions of the next succeeding sentence, the Five Year Put Option shall not
be assignable to any assignee of a Seller's Put Shares. Notwithstanding the
provisions of the immediately preceding sentence, each Seller's Five Year Put
Option shall automatically inure to the benefit of any Qualified Assignee with
respect to any Put Shares transferred to such Qualified Assignee. As used
herein, a "Qualified Assignee" shall mean any assignee in a private transfer of
Put Shares by a Seller in compliance with the Securities Act of 1933 or an
exemption therefrom to (I) an affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended) of such Seller, (ii) any partner,
shareholder or other equity owner of such Seller pursuant to a distribution by
such Seller to its equity holders, (iii) the spouse or lineal descendants of
such Seller, including any transfer by bequest or devise, or to a trust or
trusts for the benefit of such Seller or any of the foregoing or (iv) any other
Seller.
7.6 General Provisions Common to all Put Options.
(a) The following provisions shall govern the closing ("Put
Closing") of the purchase by Buyer of any Buyer Shares pursuant to an
exercise of the Failed Spin-Off Put Option or the Five Year Put Option
(herein collectively called the "Put Options"); provided, however,
that in the event a Seller exercises a Failed Spin-Off Put Option, the
following provisions shall apply as if the Seller had been issued his
allocable portion of the Buyer Shares at Closing (except that any
restrictions under the Delaware General Corporation Law on the
redemption by a corporation of its own shares shall not be
applicable):
(i) The Put Closing with respect to any Put Option
shall be held (i) at 10:00 am local time on the fifth (5th)
business day following the last day with respect to which
such Put Option was exercisable and (ii) at the offices of
Buyer.
(ii) At the Put Closing with respect to any Put
Option, the Sellers who have exercised such Put Option ("Put
Sellers") and Buyer shall be obligated to execute and deliver
the following:
(A) Buyer shall deliver to each Put Seller,
in immediately available funds, the total purchase
price (as determined in accordance with the
provisions contained in this Section 7) for the
Buyer Shares being purchased from such Put Seller.
36
(B) The Put Seller shall execute and
deliver to Buyer (i) the certificates representing
the Buyer Shares being purchased by Buyer endorsed
for transfer to Buyer, free of all liens, claims and
encumbrances and (ii) such other instruments of
assignment, certificates of authority, tax releases,
consents to transfer and instruments in evidence of
title as may be reasonably required by Buyer.
(b) The per share purchase price payable upon the exercise of
any Put Option as provided for herein shall hereafter be adjusted as
may be necessary to reflect (i) any stock dividends or corporate
recapitalizations after the date hereof resulting in stock splits,
combinations or exchanges of shares or any similar transactions and
(ii) any change described in the last sentence of Section 2.2(a)
hereof.
(c) Notwithstanding anything to the contrary contained
herein, if Buyer's required purchase and redemption of any Buyer
Shares at a Put Closing would violate the laws of Buyer's state of
incorporation or other applicable law, then the following provisions
shall apply:
(i) Buyer shall take, before the Put Closing, all
possible steps permitted under the law of Buyer's state of
incorporation to recapitalize and to increase Buyer's surplus
to an amount necessary to permit Buyer to purchase all of
such Buyer Shares at such Put Closing. Such steps shall
include, without limitation, reducing the par value of Buyer
common stock and increasing the book value of all of the
assets of Buyer including its goodwill, if any, to their then
respective fair market value on the books of Buyer.
(ii) If, after taking all possible steps in
accordance with Section 7.6(c)(i) hereof, Buyer's purchase
and redemption of all of such Buyer Shares would still
violate the laws of Buyer's state of incorporation or other
applicable law, Buyer shall be obligated and required to:
(A) purchase and redeem as many of such
Buyer Shares at the Put Closing as is possible under
the laws of its state of incorporation; and
(B) thereafter purchase, from time to time,
such portion of such Buyer Shares which is not
purchased pursuant to Section 7.6(c)(ii)(A), as soon
as, in Buyer's reasonable discretion, it is legally
able to do so; provided, that the purchase price for
all such unpurchased Buyer Shares shall accrue
interest thereon at four percent over the then
national prime rate of interest per annum from and
after the date on which the Put Closing should have
occurred until such Buyer Shares are thereafter
purchased by Buyer.
(d) If Buyer should fail for any reason to timely honor its
obligations to any Seller hereunder following an exercise of a Put
Option by such Seller, then such Seller shall
37
be, without limiting or negating any other rights, remedies or
recourses otherwise available to such Seller on account of such
failure, released from any obligations to Buyer or the Company or any
of the Company's Subsidiaries, whether under an employment agreement
or otherwise, to refrain from competing with Buyer, the Company, or
the Company's subsidiaries, or from soliciting their respective
employees or customers.
7.7 Further Assurances. From time to time, without further
consideration, the Sellers, will, at all times after the Closing at the expense
of Buyer, execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order to more effectively consummate the transactions
contemplated hereby. From time to time, without further consideration, the
Buyer will, at the expense of Sellers, execute and deliver such documents as
the Sellers may reasonably request in order to more effectively consummate the
transactions contemplated hereby. In case at any time after the Closing Date
any further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement will take or cause its proper officers
and directors to take all such necessary action.
8. Indemnification.
8.1 Indemnification by the Sellers.
(a) Subject to the provisions of this Section 8, following
the Closing the Sellers shall protect, indemnify and hold harmless
Buyer, each officer, director and agent of Buyer and each person who
controls Buyer in respect of any losses, claims, damages, liabilities,
deficiencies, delinquencies, defaults, assessments, fees, penalties or
related costs or expenses, including, but not limited to, costs of
investigation and defense, court costs and attorneys', and
accountants' fees and disbursements, and any federal, state or local
income or franchise taxes payable in respect of the receipt of cash or
money in discharge of the foregoing, but reduced by (i) any net amount
paid on account of such loss by any insurance policies, and (ii) any
reserves on the Unaudited Financial Statements or the Unaudited
Pavilion Financial Statements for liabilities or loss contingencies,
whether or not of a similar nature, (collectively referred to herein
as "Damages") to which Buyer may become subject if such Damages arise
out of or are based upon (A) the breach of (i) any of the
representations and warranties contained in Section 3.1 hereof
(whether such breach occurred as of the date of execution of this
Agreement or as of the Bring Down Date) or (ii) the covenants or
agreements made by the Sellers or the Company in this Agreement and
any liabilities with respect to the Excluded Assets or (B) Applicable
401K Claims; provided, however, that the reduction for any reserves on
the Unaudited Financial Statements or the Unaudited Pavilion Financial
Statements pursuant to clause (ii) above shall only be applicable with
respect to Damages which arise out of or are based upon the breach of
any representations and warranties contained in Section 3.1(d), (g) or
(m) hereof.
(b) Subject to the provisions of this Section 8, following
the Closing each Seller, individually and not jointly, shall protect,
indemnify and hold harmless the Buyer in respect
38
of any Damages to which Buyer may become subject if such Damages arise
out of or are based upon the breach of any of the representations,
warranties, covenants or agreements made by such Seller on his or her
own behalf in Section 3.2 of this Agreement (except for the
representation and warranty made by such Seller in Section 3.2(g),
damages for breach of which shall be borne proportionately by Sellers
as if the Damages arise under Section 8.1(a) above).
8.2 Indemnification of Sellers and Company Agents.
(a) Subject to the provisions of this Section 8, following
the Closing Buyer shall protect, indemnify and hold harmless the
Sellers, in respect of any Damages to which the Sellers may become
subject if such Damages arise out of or are based upon the breach of
any of the representations, warranties, covenants or agreements made
by Buyer in this Agreement.
(b) It is understood and agreed that the Company shall
indemnify and hold harmless, and, after the Closing Date, the Company
and the Buyer shall indemnify and hold harmless, each present and
former employee, officer or director of the Company to the fullest
extent permitted under applicable law against any Damages in
connection with any claim, action, suit, proceeding or investigation
arising out of or pertaining to any action or omission occurring prior
to or at the Closing Date (including, without limitation, any claim,
action, suit, proceeding or investigation which arises out of or
relates to the transactions contemplated hereby) without regard to the
form of action whether in law or in equity and including but not
limited to claims based on negligence, strict liability or any other
theory of recovery, provided, however, that no indemnification shall
be required for any Damages arising from (i) a claim by Buyer under
Section 8.1 of this Agreement, or (ii) a claim among or between the
Sellers or Optionholders related solely to the Contemplated
Transaction. These rights to indemnification and the obligations set
forth in this Section 8.2(b) shall survive the Closing and shall
continue in full force and effect for a period of not less than six
years from the Closing Date. In the event any Indemnified Party
asserts in writing that he is entitled to be indemnified and held
harmless against any potential Damages arising out of or pertaining to
any such Claim prior to the end of such six-year period, all rights to
indemnification in respect of any such Damages shall continue until
disposition of any such Claim. Without limiting the foregoing, the
Company and the Buyer, to the fullest extent permitted under
applicable law, will periodically advance expenses as incurred with
respect to any such Claim or potential Claim; provided that the person
to whom expenses are advanced, if required by applicable law, provides
a written affirmation of his good faith belief that he has met the
standard of conduct prescribed by law as being necessary for
indemnification and a written undertaking to repay such advances if it
is ultimately determined by a court of competent jurisdiction that
such person is not entitled to indemnification pursuant to this
Section 8.2(b).
39
8.3 Limits on Indemnification Liability.
(a) Notwithstanding any other provisions to the contrary in
this Agreement, (i) the liability under Section 8.1(a) of a Seller
shall be limited to a percentage of the total of Damages equal to his
or her respective "Equity Percentage without Pure Optionholders" as
set forth opposite his name on Exhibit 1 hereto ("Liability
Percentage"), (ii) the maximum aggregate liability of the Sellers to
protect, indemnify, and hold the Buyer harmless in respect of
Supplemental Disclosed Damages shall be limited to the first
$2,000,000 of such Supplemental Disclosed Damages, and the maximum
liability of a Seller with respect to Supplemental Disclosed Damages
shall be equal to his or her Liability Percentage of such $2,000,000
limit and (iii) the maximum aggregate liability of the Sellers to
protect, indemnify, and hold the Buyer harmless in respect of Damages
(inclusive of any Supplemental Disclosed Damages) shall be limited to
the first $10,000,000 of such Damages, and the maximum liability of a
Seller shall be equal to his or her Liability Percentage of such
$10,000,000 limit. As used herein, "Supplemental Disclosed Damages"
shall mean Damages which arise out of or are based upon the breach of
any of the representations and warranties contained in Section 3.1
hereof (whether such breach occurred as of the date of execution of
this Agreement or as of the Bring Down Date) which breach was
disclosed to Buyer pursuant to a supplement to the disclosure
schedules made pursuant to the provisions of Section 4.10 hereof on or
before the Supplemental Disclosure Deadline.
(b) The total liability of Buyer to protect, indemnify and
hold the Sellers harmless in respect of Damages pursuant to the
provisions of Section 8.2(a) hereof shall be limited to the first
$10,000,000 of such Damages, with respect to the Buyer's breach of a
representation or warranty contained in Section 3.3 of this Agreement,
but Buyer's liability shall not be so limited in the case of any
breach by Buyer of any of the covenants or agreements contained in
this Agreement, including the Buyer's obligations under any of the Put
Options and Buyer's obligations to pay the Purchase Price.
(c) No indemnification shall be required to be made by any
party under this Section 8 with respect to any Damages except to the
extent that, with respect to any indemnification required to be made
by Sellers hereunder, the aggregate amount of Damages incurred by the
Buyer exceeds $750,000, but in the event the aggregate amount of
Damages incurred by the Buyer exceeds $750,000, the Sellers shall
indemnify the Buyer from the first dollar of such Damages.
(d) The limitations on liabilities provided in this Section
8.3 in respect of inaccurate representations and warranties are
intended to apply to all claims made in respect thereof, whether under
this Agreement or common law. Following the Closing, neither Buyer nor
any Seller shall have any liability to the other for any matters
existing or arising prior to the Closing Date, except as provided in
this Section 8.
40
8.4 Indemnification Procedures. The obligations and liabilities of
each indemnifying party hereunder with respect to claims resulting from the
assertion of liability by the other party or third parties shall be subject to
the following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification (a "Claim") against Buyer or the Sellers
(the "Indemnifying Party") under this Section 8, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 30
days after the Indemnified Party has given notice of the Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety (subject to any limitations contained in Section
8) of any Damages the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of or caused by the Claim,
(ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Claim and fulfill its indemnification obligations hereunder, (iii)
the Claim involves only money damages and does not seek an injunction
or other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Claim is not, in the good faith judgment of the
Indemnifying Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Claim actively and diligently and in good faith.
(c) So long as the Indemnifying Party is conducting the
defense of the Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co counsel at its sole cost and
expense and participate in the defense of the Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to
the Claim without the prior written consent of the Indemnified Party
(not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (ii) the Indemnifying Party will remain
responsible for any damages the Indemnified Party may suffer resulting
41
from, arising out of, relating to, in the nature of, or caused by the
Claim to the fullest extent provided in this Section 8.
8.5 Appointment of Seller Representative. The Sellers hereby appoint
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as their representative (the "Seller Representative"), who
shall have full power and authority to make all decisions relating to the
defense and/or settlement of any claims for which the Sellers may be required
to indemnify Buyer (and vice versa) and to take such other actions (and any
other actions reasonably related or ancillary thereto) provided to be taken
after the Closing by the Sellers, provided, that the Seller Representative
shall not have the power to make decisions relating to the defense and/or
settlement of any claims made by Buyer under Section 8.1(b) other than under
the last parenthetical clause thereof. If the Seller Representative shall die
or become incapacitated or otherwise be unable or unwilling to serve, then
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall serve as successor Seller Representative, and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ shall have the same rights and authorization as ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
hereunder. If ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall die or become incapacitated, or shall
otherwise be unable or unwilling to serve, then the Sellers (acting by a vote
of the holders of a majority of the Company's Stock as of the Closing) shall
select another representative from among the Sellers (or their heirs,
executors, administrators or personal representatives) to replace the Seller
Representative, which representative shall have the same rights and authorities
as the Seller Representative hereunder. Decisions and actions by the Seller
Representative, including any agreement between the Seller Representative and
Buyer relating to the defense or settlement of any claims for which the Sellers
may be required to indemnify Buyer under Section 8.1(a), shall be binding upon
all of the Sellers, and no Seller shall have the right to object, dissent,
protest or otherwise contest the same. By their execution of this Agreement,
the Sellers shall be deemed to have agreed that (i) the provisions of this
Section 8.5 are independent and separable, irrevocable and coupled with an
interest and shall be enforceable notwithstanding any rights or remedies that
any Seller may have in connection with the transactions contemplated by this
Agreement, (ii) the remedy at law for any breach of the provisions of this
Section 8.5 would be inadequate, (iii) Buyer shall be entitled to temporary and
permanent injunctive relief without the necessity of proving damages if it
brings an action to enforce the provisions of this Section 8.5, (iv) the
provisions of this Section 8.5 shall be binding upon the heirs, executors,
administrators, personal representatives and successors of each Seller, and (v)
any reference in this Agreement to a Seller shall mean and include the
successors to the Seller's rights hereunder, whether pursuant to a testamentary
disposition, the laws of descent and distribution, or otherwise.
8.6 Survival; Right To Indemnification Not Affected By Knowledge or
Materiality. Except for the contractual limitation set forth in Section
8.3(a)(iii) hereof, the right to indemnification, payment of Damages or other
remedy based on the breach of representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to
42
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations. Furthermore, for the
purposes of calculating the amount of Damages arising from any breach or
default of any of the representations, warranties, covenants and agreements
contained in this Agreement or any Closing Document, the application provisions
thereof shall be read and interpreted as if any qualification stated herein
with respect to materiality or Material Adverse Effect was not contained
therein.
9. Miscellaneous.
9.1 Payment of Certain Fees and Expenses. Each of the parties hereto
shall pay the fees and expenses incurred by it in connection with the
negotiation, preparation, execution and performance of this Agreement,
including, without limitation, brokers' fees, attorneys' fees and accountants'
fees; provided, however, that (i) Company and Buyer shall each pay one-half of
the filing fees under the HSR Act and (ii) if the Closing occurs, then the
Sellers shall be obligated to pay, or reimburse to the Company, all of the fees
and expenses incurred by the Company in connection with the negotiation,
preparation, execution and performance of this Agreement which amount shall be
paid by the Buyer to the Company at the Closing with a dollar-for-dollar
reduction to the cash portion of the Purchase Price.
9.2 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or mailed,
first class mail, postage prepaid, return receipt requested, as follows:
(a) If to the Company:
PACE Entertainment Corporation
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
PACE Entertainment Corporation
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
43
▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer:
SFX Entertainment, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ F.X. Sillerman
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
SFX Entertainment, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to a Seller, to the address shown on his or her
signature page.
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
9.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof and
supersede and preempt any prior understandings, written or oral, which may have
related to the subject matter hereof in any way.
9.4 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted heirs,
personal representatives, successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto or their respective heirs, personal representatives, successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
9.5 Assignability. Except for an assignment of Sellers' rights created
in Section 7.5 hereof, this Agreement shall not be assignable by the Sellers
without the prior written consent of Buyer or by Buyer without the prior
written consent of the Sellers.
44
9.6 Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so waiving or
his or her personal representative under Section 8.6. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants, or agreements contained
herein, and in any documents delivered or to be delivered pursuant to this
Agreement and in connection with the Closing hereunder. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
9.7 Limitation on Interest. Regardless of any provision contained
herein or any other document executed in connection with this Agreement, the
parties hereto shall not be obliged to pay, and the parties hereto shall never
be entitled to charge, reserve, receive, collect or apply, as interest (it
being understood that interest shall be calculated as the aggregate of all
charges that are contracted for, charged, reserved, received, collected,
applied or paid which constitute interest under Applicable Law) payable
hereunder any amount in excess of the maximum nonusurious contract rate of
interest allowed from time to time by Applicable Law, and in the event any of
the parties hereto ever charges, reserves, receives, collects or applies, as
interest, any such excess, at the option of the payor of such interest, such
amount shall be deemed a partial prepayment of the amount payable hereunder or
promptly refunded to the payer of such interest.
9.8 Transfer Taxes. All sales and transfer Taxes and fees incurred in
connection with this Agreement and the transactions contemplated hereby shall
be borne by the Buyer or the Company, and expressly shall not be a liability of
the Seller.
9.9 Section Headings; Index. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.10 Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.12 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
9.13 Dispute Resolution. Any dispute, difference or question relating
to the terms of this Agreement ("Dispute") between Buyer and the Company or any
Seller, or between any combination
45
thereof ("Disputing Parties"), shall be resolved in accordance with the
following dispute resolution procedures:
(a) Good Faith Negotiations. The Disputing Parties shall
endeavor, in good faith, to resolve the Dispute through negotiations.
If the Parties fail to resolve the Dispute within a reasonable time,
the Disputing Party shall meet at any mutually agreed location to
resolve the Dispute. Each Party that is not an individual shall
nominate a senior officer or officers of its management to attend such
meeting.
(b) Mediation. In the event that the negotiations do not
result in a mutually acceptable resolution, any Disputing Party may
require that the Dispute be referred to mediation in Houston, Texas.
One mediator shall be appointed by the agreement of the Parties. The
mediator shall be suitably qualified person having no direct or
personal interest in the outcome of the Dispute. Mediation shall be
held within thirty (30) days of referral to mediation. In the event
the Disputing Parties are unable to agree on a mediator, the Parties
agree to the appointment of a mediator pursuant to the Commercial
Mediation Rules of the American Arbitration Association.
(c) Arbitration. In the event the Parties are unsuccessful in
their mediation of the Dispute, or if any Dispute arises about the
interpretation or application of this Section 9.13, either Disputing
Party may request that the Dispute be settled by arbitration by an
arbitrator mutually acceptable to the Disputing Parties in an
arbitration proceeding conducted in the City of Houston, Texas in
accordance with the rules existing at the date hereof of the American
Arbitration Association, provided that the arbitrator shall comply
with the Federal Rules of Evidence and full discovery shall be
permitted in accordance with the Federal Rules of Civil Procedure (but
expressly excluding the so-called Initial Disclosure provisions
thereof). If the Disputing Parties hereto cannot agree on an
arbitrator within ten (10) business days of the initiation of the
arbitration proceeding, an arbitrator shall be selected for the
Disputing Parties by the American Arbitration Association. The
Disputing Parties shall use their reasonable best efforts to have the
arbitral proceeding concluded and a judgment rendered by the
arbitrator within forty (40) business days of the initiation of the
arbitration proceeding. The decision of such arbitrator shall be
final, and judgment upon the award rendered by the arbitration may be
entered in any court having jurisdiction thereof (subject to appeal of
manifest errors of law), and the costs (including, without limitation,
reasonable fees and expenses of counsel and experts for the Disputing
Parties) of such arbitration (including the costs to enforce or
preserve the rights awarded in the arbitration) shall be borne by the
Disputing Party whom the decision of the arbitrator is against. If the
decision of the arbitrator is not clearly against one of the Disputing
Parties or the decision of the arbitrator is against more than one
Disputing Party on one or more issues, the costs of such arbitration
shall be borne equally by the Disputing Parties.
9.14 Waiver. All of the original rights and powers of any party
hereunder shall remain in force notwithstanding any neglect, forbearance or
delay in enforcement thereof, and no party shall
46
be deemed to have waived any of its rights, any provision of this Agreement or
any notice given hereunder unless such waiver is in a writing signed by an
officer of the waiving party. No such waiver by a party of any breach by
another party of any provision of this Agreement shall be deemed a waiver of
any continuing, future or recurring breach of such provision or any other
provision of this Agreement. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action or
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.
9.15 No Third Party Beneficiaries. Except as provided in Section
7.2(h) hereof, this Agreement shall not confer any rights or remedies upon any
Person other than the parties hereto and their respective successors and
permitted assigns.
9.16 Release of Claims by Sellers. Each of the Sellers does hereby
release, waive, forgive and discharge any and all claims, demands, causes of
action, obligations, orders, contracts or agreements, or debts or liabilities
(whether known or unknown) (collectively, "claims") which such Seller may have
against (i) any other Seller, the Company or Buyer or any of their
Representatives which in any way relates to or arises out of the transactions
or agreements by which such Seller received or acquired ownership of Stock or
options to acquire Stock (including, without limitation, any promises,
undertakings or commitments made or purported to have been made for the
issuance of additional shares of Stock or options to acquire additional Stock)
and any claims which each Seller may have by reason of being a shareholder of
the Company and (ii) any other Seller, the Company or the Seller Representative
as to the Contemplated Transactions (including, without limitation, the terms,
provisions and conditions contained herein and the manner of obtaining Seller's
agreement hereto). Upon request of the Company, Buyer or any other Seller, each
Seller hereby agrees that such Seller will execute and deliver at the Closing
such other and further documents as may be reasonably requested to further
evidence, confirm and reaffirm the release, waiver and discharge set forth in
this Section 9.16.
10. Definitions.
10.1 Defined Terms. As used in this Agreement, each of the following
terms (whether or not capitalized) has the meaning given it below:
"Affiliate" means, with respect to any person, any other
person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such person. The term "control," (including, with correlative
meanings, the term "controlled by" and "under common control with") as
used in the immediately preceding sentence, when used with respect to
any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
47
"Applicable 401K Claims" means any claim, audit, action,
proceeding, challenge or adjustment brought or imposed by the Internal
Revenue Service with respect to the 401K Plan to the extent that such
claim, audit, action, proceeding, challenge or adjustment is (A) based
upon or arises out of the operation of the 401K Plan after the Closing
and through and until the earlier of (i) three years following the
Closing Date or (ii) termination or replacement of the 401K Plan and
(B) not attributable to any change after the Closing Date in the
manner or method of administering, operating or funding the 401K Plan.
"Amphitheater Partnership Agreements" means the respective
Partnership Agreements by which each of the Amphitheater Partnerships
were created, as each of such Partnership Agreements may have been
previously amended, supplemented, modified or restated.
"Amphitheater Partnerships" means (i) Pavilion, (ii) Coral
Sky Amphitheater Partnership, a Florida general partnership, (iii)
Western Amphitheater Partners, a California general partnership, (iv)
Walnut Creek Amphitheater Partnership, a New York general partnership,
(v) Starwood Amphitheater Operating Company, a Tennessee general
partnership, and (vi) GSAC Partners, a Delaware general partnership.
"Applicable Contract" means any contract or agreement (a)
under which the Company or any Subsidiary has or is entitled to
acquire any material rights; or (b) under which the Company or any
Subsidiary has or may become subject to any material obligation or
liability.
"Applicable Law" means any statute, law, rule or regulation
or any judgment, order, writ, injunction or decree of any Governmental
Entity to which a specified person or property is subject.
"Bring Down Date" shall mean the earlier to occur of (i)
December 31, 1997 or (ii) the date upon which Buyer makes a public
announcement concerning all or any portion of the Contemplated
Transactions. As used in the immediately preceding sentence, the
phrase "public announcement" shall mean either (x) the filing of any
document with the Securities and Exchange Commission on a
non-confidential basis which references or describes all or any
portion of the Contemplated Transaction or (y) the issuance of any
press release which describes or references all or any portion of the
Contemplated Transactions other than a press release which is issued,
pursuant to advice from legal counsel to the Buyer that applicable
securities laws require such press release, (A) in response to
specific inquiries about the Contemplated Transactions or (B) to
correct reported inaccuracies about the Contemplated Transactions.
"Code" means the Internal Revenue Code of 1986, as amended
and in effect on the Closing Date.
48
"Company Material Adverse Effect" means a Material Adverse
Effect with respect to the Company.
"Consolidated Subsidiary" means the Subsidiaries of the
Company whose financial results are consolidated with those of the
Company under GAAP for financial reporting purposes.
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including (a) the sale of the shares
of Stock by Sellers to Buyer, (b) the cancellation of the Outstanding
Options; (c) the execution, delivery and performance of the
Option Redemption Agreements attached as Exhibit 2; and (d) the
performance by the Company, Buyer and Sellers of their respective
covenants and obligations under this Agreement.
"Drop Dead Date" means the earlier of (i) sixty days after
the Company has obtained, or is deemed to have obtained, the consents
described in Section 5.2(e) hereof or (ii) March 1, 1998; provided,
however, in no event shall the Drop Dead Date be earlier than February
23, 1998.
"Encumbrances" means liens, charges, pledges, options, rights
of first refusal, mortgages, deeds of trust, security interests,
claims, restrictions (whether on voting, sale, transfer, disposition
or otherwise), licenses, sublicenses, easements and other encumbrances
of every type and description, whether imposed by law, agreement,
understanding or otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Existing Employee Agreements" means (i) all of the
Employment Agreements and related agreements listed on Schedule
10.1(a) attached hereto, (ii) all of the Restricted Stock Agreements
listed on Schedule 10. l(b) attached hereto, (iii) all of the Stock
Option Agreements listed on Schedule 10.1(c) attached hereto and (iv)
the PACE Entertainment Corporation 1996 Incentive Compensation Plan.
"GAAP"means generally accepted accounting principles as in
effect on the date of this Agreement.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental or
regulatory body, agency, department, commission, board, bureau or
other authority or instrumentality (domestic or foreign).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
49
"Intellectual Property" means patents, trademarks, service
marks, trade names, copyrights and trade secrets, and all
registrations, applications, licenses and rights with respect to any
of the foregoing.
"IRS" means the Internal Revenue Service.
"Knowledge" means a Person's actual current knowledge,
without inquiry. When used with respect to the Company or Subsidiary,
knowledge shall include only the knowledge of the Company's officers
and directors.
"Material Adverse Change" or "Material Adverse Effect" means,
when used in conjunction with the Company or Subsidiaries, any change,
effect, event or occurrence that will or that could reasonably be
expected to be materially adverse to the business, properties, assets,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, other than (i) changes
in general economic conditions affecting the industries in which the
Company and its Subsidiaries operate, (ii) seasonal variations in the
Company's or its Subsidiaries' Business, (iii) changes resulting from
any matters disclosed on any Schedule to this Agreement which are
reasonably predictable, (iv) changes resulting from any increase in
expenses as a result of the acquisitions listed on Schedule 4.2(c) and
(v) any increased working capital deficit brought about by additional
borrowings under the Company's short term working capital line with
NationsBank of Texas, N.A.
"Ordinary Course of Business" means an action taken by a
Person if: (a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person; (b) such action is not required
by applicable corporate law or the Bylaws or similar organizational
documents of such Person to be authorized by the board of directors of
such Person; and (c) such action is similar in nature and magnitude to
actions customarily taken.
"Ordinary Real Estate Encumbrances" means, with respect to
any real estate, (i) liens securing taxes which are not yet
delinquent, (ii) rights of eminent domain unless notice of the
exercise thereof has been previously provided to the owner of such
real estate and (iii) easements, restrictions, concessions, licenses,
rights of access, terms of governmental permits and other Encumbrances
which either (x) do not materially interfere with or materially
restrict the current use and operation of such real estate or (y) are
required, necessary or useful in connection with the current use and
operation of such real estate.
"Organizational Documents" means (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b) the
partnership agreement or any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (d) any charter or
similar document adopted or filed in
50
connection with the creation, formation, or organization of a Person;
and (e) any amendment to any of the foregoing.
"Pavilion" means Pavilion Partners, a Delaware general
partnership.
"Permits" means licenses, permits, franchises, consents,
approvals and other authorizations of or from Governmental Entities.
"Person" means any individual, corporation (including any
non-profit corporation), partnership (general or limited), joint
venture, limited liability company, estate, association, joint-stock
company, trust, enterprise, unincorporated organization or
Governmental Entity.
"Reasonable best efforts" means a party's best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Representative" means with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants,
and financial advisors.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means (i) all corporations and partnerships
which are wholly owned (directly or indirectly) by the Company, as
listed on Schedule 10.1(d) hereof, (ii) the Amphitheater Partnerships,
(iii) PTG-Florida, Inc./BSMG Joint Venture, (iv) Rugrats American
Tour, Ltd. and (v) Bayou Place Performance Hall General Partnership.
"Supplemental Disclosure Deadline" means the date which is
two (2) business days following the later of (i) the Bring Down Date
or (ii) the date upon which Buyer provides notice to the Company that
the Bring Down Date has occurred; provided, however, in no event shall
the Supplemental Disclosure Deadline be later than January 2, 1998.
"Supplemental Disclosure Termination Date" means the seventh
day following the earlier of (i) the date, no earlier than the Bring
Down Date, that the Company provides notice to the Buyer that no
further supplemental disclosures pursuant to Section 4.10 are required
or (ii) the Supplemental Disclosure Deadline.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise or other tax
imposed by any United States federal, state or local (or any foreign
or provincial) taxing authority, including any interest, penalties or
additions attributable thereto.
51
"Tax Return" means any return or report, including any
related or supporting information, with respect to Taxes.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United
States.
10.2 Certain Additional Defined Terms. In addition to such terms as
are defined in Section 10.1, the following terms are used in this Agreement as
defined in the Sections of this Agreement referenced opposite such terms:
Defined Term Reference
------------ ---------
401K Plan Section 7.3
Accounts Receivable Section 3.1(f)
Acquired Assets Section 4.9(b)
Acquisition Advance Section 4.9(a)
Acquisition Facility Section 4.9(a)
Acquisition Proposal Section 4.6
Advisor Section 4.9
Agreement Preamble
At Will Employee Section (h)(vi)
Audited Financial Statements Section 3.1(d)
Business Recital 1
Buyer Preamble
Buyer Shares Section 2.2
Claim Section 8.4
Closing Section 2.1
Closing Buyer Shares Section 2.2
Closing Cash Payment Section 2.2
Closing Date Section 2.1
Collateral Section 4.9(d)
Company Preamble
Contracts Section 3.1(e)
Damages Section 8.1
Dispute Section 9.12
Disputing Parties Section 9.12
Environmental Assessment Section 5.2(c)
Environmental Laws Section 3.1(1)
Exchange Act Section 3.3(c)
Executive Section 7.2(b)
Failed Spin-Off Put Option Section 7.4(a)
Financial Statements Section 3.1(d)
First Report Section 7.4(b)
Five Year Option Period Section 7.5
52
Five Year Put Option Section 7.5
Hazardous Material Section 3.1(1)
Indemnified Party Section 8.4
Indemnifying Party Section 8.4
Insurance Plan Section 7.3
Intercreditor Agreement Section 4.9(d)
Key Employee Agreements Section 4.2(c)
Latest Balance Sheet Section 3.1(d)
Latest Pavilion Balance Sheet Section 3.1(d)
Leases Section 3.1 (e)
Liability Percentage Section 8.3(a)
Loan Facility Section 4.10
Measuring Period Section 4.9(c)
Motorsports Section 7.2(c)
Non-Qualified Reason Section 7.2(vii)
Option Redemption Agreement Section 2.2
Pavilion Audited Financial Statements Section 3.1(d)
Pavilion Option Section 4.9(c)
Pavilion Purchase Price Section 4.9(c)
Pavilion Unaudited Financial Statements Section 3.1(d)
Purchase Price Section 2.2
Pure Optionholders Section 4.3
Put Closing Section 7.6
Put Option Section 7.6
Put Sellers Section 7.6
Put Shares Section 7.5
Qualified Assignee Section 7.5
Qualified Employee Section 4.2
Qualified Employee Stock Issuance Section 4.2
Qualified Update Report Section 7.4(b)
Real Estate Section 3.1(e)
Relevant Period Section 7.2(h)(vii)
Report Due Date Section 7.4(b)
Restricted Shareholders Section 2.2
Restricted Shares Section 2.2
SEC Section 3.2(g)
SFX Broadcasting Recital 4
SFX Guarantee Section 3.3(b)
Seller Optionholder Section 4.3
Seller Representative Section 8.5
Sellers Preamble
Senior Lender Section 4.9(d)
Spin-Off Recital 4
Spin-Off Cut-Off Date Section 7.4(a)
53
Stock Recital 1
Supplemental Disclosed Damages Section 8.3(a)
Term Loan Section 4.9(b)
Theatrical Section 7.2(c)
Unaudited Financial Statements Section 3.1(d)
10.3 References. All references in this Agreement to Sections,
paragraphs and other subdivisions refer to the Sections, paragraphs and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes" and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference herein
to a Schedule, Exhibit or Annex refers to the item identified separately in
writing by the parties hereto as the described Schedule, Exhibit or Annex to
this Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
PACE ENTERTAINMENT CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Title: Chairman of the Borad of Directors
------------------------------------------
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: Vice President
------------------------------------------
SFX BROADCASTING GUARANTEE
SFX Broadcasting hereby joins in the execution of this Agreement to
irrevocably, absolutely and unconditionally guarantee to the Company and the
Sellers the full and timely performance of all of Buyer's obligations,
including the delivery of the Purchase Price, under this Agreement
(the"Guaranty"). The obligations of SFX Broadcasting contained in this Guaranty
shall be absolute and unconditional without regard to any defense that would
not otherwise be available to SFX Broadcasting if it were the Buyer under this
Agreement, and shall not be reduced or affected in any way by any failure or
omission to enforce any right against the Buyer, or by any other action which
54
may in any manner or to any extent vary the risks of SFX Broadcasting, or which
might otherwise constitute a legal or equitable discharge of SFX Broadcasting;
it being the purpose and intent of SFX Broadcasting and the Company and the
Sellers that (a) this Guaranty and the obligations of SFX Broadcasting
hereunder shall be absolute and unconditional under any and all circumstances
and shall not be discharged except by payment and performance as herein
provided, (b) this Guaranty be construed as a payment guaranty and not as a
guaranty of collection and (c) SFX Broadcasting's liability under this Guaranty
shall be primary, and not secondary. SFX Broadcasting agrees that, without the
necessity of any reservation of rights against SFX Broadcasting and without
notice to or further assent by SFX Broadcasting, (1) any demand for payment of
any or all of the sums due under this Agreement may be rescinded by the party
making such demand, and Buyer's obligations reinstated or continued, and (2)
the Agreement or any related agreements may, from time to time, in whole or in
part, be renewed, extended, modified, rearranged, consolidated, compromised or
released, without notice to or further assent by SFX Broadcasting, who will
remain bound hereunder notwithstanding any such rescission, renewal, extension,
modification, rearrangement, consolidation, compromise or release.
SFX Broadcasting waives (i) any defense (other than performance of
Buyer's obligations under the Agreement) arising by reason of any disability,
insolvency, lack of authority or power, change in composition or structure,
dissolution or any other defense of Buyer or SFX Broadcasting (even though
rendering same void, unenforceable or otherwise uncollectible); and (ii)
joinder of Buyer in any suit or action to enforce this Guaranty, in particular,
and without in any way limiting the foregoing, SFX Broadcasting waives any
right to require the Company or the Sellers to file suit against Buyer or take
any other action against Buyer as a prerequisite to the Company or the Sellers
taking any action or bringing any suit against SFX Broadcasting under this
Guaranty. No failure to exercise nor any delay in exercising on the part of the
Company or Sellers any right, power or privilege hereunder or at law or in
equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law or in equity. This Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time payment of
any amounts due under this Agreement is rescinded or must otherwise be restored
or returned to Buyer on account of any insolvency, bankruptcy or reorganization
of Buyer, or on account of any preferential transfer, all as though such
payment had never been made. Subject to the foregoing sentence, this Guaranty
shall be released and of no further force and effect upon the later to occur of
(i) delivery of the Cash Purchase Price to the Sellers and the Pure
Optionholders pursuant to the provisions hereof and the provisions of the
Option Redemption Agreements and (ii) delivery of the Buyer Shares to the
Sellers in accordance with the provisions hereof or payment to all Sellers of
the cash payment referenced in Section 7.4(a) hereof in lieu of the delivery of
the Buyer Shares.
This Guaranty has been executed and delivered in, and shall be
construed and enforced in accordance with the laws of, the State of Texas, and
any dispute hereunder shall be governed by Section 9.13 of the Agreement.
55
SFX Broadcasting, by executing and delivering this Guaranty, agrees,
acknowledges, represents and warrants that (i) SFX Broadcasting will benefit,
directly or indirectly, by the Seller's and Company's execution and delivery of
this Agreement and (ii) without the execution and delivery of this Guaranty and
SFX Broadcasting's agreement to be bound by the provisions hereof, Seller and
the Company would not have agreed to enter the Agreement with Buyer.
SFX BROADCASTING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: Vice President
--------------------------------
56
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereunder.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: as of December 12, 1997
-----------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
I, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, are the spouse of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
THE ▇▇▇▇▇▇ FAMILY FOUNDATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: as of December 12, 1997
-----------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
---------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
▇▇▇▇▇▇ INTERESTS LIMITED PARTNERSHIP
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: as of December 12, 1997
-----------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
---------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ Miles ▇. ▇▇▇▇▇▇
------------------------------
Printed Name: Miles ▇. ▇▇▇▇▇▇
-----------------
Date: as of December 4, 1997
-----------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. #▇▇▇
------------------------------
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------
I, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ am the spouse of Miles ▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Printed Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Date: as of December 12, 1997
-----------
Address:
------------------------------
------------------------------
I, ▇▇▇▇▇ ▇▇▇▇▇▇▇ am the spouse of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇
------------------
Date: as of December 4, 1997
-----------
Address: ▇▇▇ ▇. ▇▇▇▇ ▇▇ #▇▇▇
-------------------------------
▇▇, ▇▇ ▇▇▇▇▇
-------------------------------
I, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ am the spouse of ▇▇▇▇▇ ▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Printed Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: as of December 12, 1997
-----------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
I, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, am the spouse of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Date: as of December 12, 1997
-----------
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, am the spouse of ▇▇▇▇ ▇. ▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------
Date: as of December 12, 1997
-----------
Address:
-------------------------------
-------------------------------
I, ▇▇▇▇▇ ▇▇▇▇▇▇▇, am the spouse of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
Date: as of December 5, 1997
----------
Address: 10007 Oxted
-------------------------------
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------
I, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, am the spouse of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
SELLER COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain
Stock Purchase Agreement dated December 12, 1997 among PACE ENTERTAINMENT
CORPORATION, a Texas corporation, SFX ENTERTAINMENT, INC., and others, and
shall be treated as a "Seller" thereuner.
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇▇
------------------
Date: as of December 4, 1997
-----------
Address: 3538 Aluna Dr
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------
I, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇, am the spouse of ▇▇▇▇ ▇▇▇▇▇▇ and hereby join in the
execution of this Agreement to bind my community property interest, if any,
with respect to any shares of stock of the Company issued to my spouse.
/s/ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇
-------------------------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇
------------------
Accepted and Agreed
SFX ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President