AGREEMENT AND PLAN OF MERGER

 

 

ARTICLE I		DEFINITIONS	2
1.1		Definitions	2
1.2		Terms Defined Elsewhere	10
1.3		Interpretation	12
ARTICLE II		THE MERGER	13
2.1		The Merger	13
2.2		Effective Time	13
2.3		Closing of the Merger	13
2.4		Effects of the Merger	13
2.5		Certificate of Incorporation and By-laws	13
2.6		Directors and Officers	14
ARTICLE III		EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; PAYMENT	14
3.1		Conversion of Shares; Treatment of Company Options and Company Warrants	14
3.2		Distribution of the Initial Merger Consideration	16
3.3		Escrow Amount	18
3.4		Working Capital Adjustment to Initial Merger Consideration	19
3.5		Dissenting Shares	22
3.6		Withholding Rights	22
ARTICLE IV		REPRESENTATIONS AND WARRANTIES OF THE COMPANY	22
4.1		Organization and Corporate Power	23
4.2		Due Authorization and No Conflict	23
4.3		Corporate Records/Fundamental Documents	24
4.4		Capitalization	24
4.5		Subsidiaries	25
4.6		Financial Statements	25
4.7		Absence of Undisclosed Liabilities	26
4.8		Absence of Certain Developments	26
4.9		Transactions with Affiliates	26
4.10		Properties	27
4.11		Sufficiency of Assets	27
4.12		Tax Matters	27

 

 

4.13		Material Contracts	29
4.14		Intellectual Property	31
4.15		Litigation	32
4.16		Labor Matters	33
4.17		Permits; Compliance with Laws	33
4.18		Employee Benefit Programs	34
4.19		Brokers	35
4.20		Insurance Coverage	35
4.21		Investment Banking; Brokerage	36
4.22		Environmental Matters	36
4.23		Inventory	36
4.24		Accounts Receivable	36
ARTICLE V		REPRESENTATIONS AND WARRANTIES OF THE MATERIAL STOCKHOLDERS	37
5.1		Organization and Corporate Power	37
5.2		Due Authorization and No Conflict	37
5.3		Ownership	37
5.4		No Litigation	38
ARTICLE VI		REPRESENTATIONS AND WARRANTIES OF TICKETMASTER AND MERGER SUB	38
6.1		Organization and Corporate Power	38
6.2		Authority and Non-Contravention	38
6.3		Capitalization of the Surviving Corporation.	39
6.4		Financial Capability	40
6.5		No Litigation	40
6.6		Investment Banking; Brokerage	40
ARTICLE VII		COVENANTS	40
7.1		Interim Operations of the Company	40
7.2		Access	42
7.3		Information Rights	43
7.4		Confidentiality	43
7.5		Efforts and Actions of the Parties	43
7.6		Exclusivity.	45

 

 

7.7		Covenant Not to Compete; Non-Solicitation; Retained Information.	46
7.8		Notice of Certain Events	48
7.9		Release	48
7.10		Certain Agreements	49
7.11		Tax Matters	49
7.12		Other Stockholder Notification	51
7.13		Indemnification of Officers and Directors	51
7.14		Employee Matters.	51
7.15		Crystal Lake Lease Covenant	53
7.16		Termination of Agreements	53
ARTICLE VIII		CONDITIONS TO OBLIGATIONS	53
8.1		Conditions to the Company’s, Ticketmaster’s and Merger Sub’s Obligation to Effect the Closing	53
8.2		Conditions to Obligations of Ticketmaster and Merger Sub to Effect the Closing	54
8.3		Conditions to Obligations of the Company and the Material Stockholders	56
8.4		Frustration of Closing Conditions	57
ARTICLE IX		TERMINATION	57
9.1		Termination	57
9.2		Effect of Termination	58
ARTICLE X		SURVIVAL; TRANSACTION RELATED INDEMNIFICATION	59
10.1		Survival of Representations, Warranties and Covenants	59
10.2		Indemnification by Material Stockholders	59
10.3		Indemnification by Ticketmaster	60
10.4		Limitations on Indemnification	60
10.5		Notice; Payment of Losses; Defense of Third-Party Claims	61
10.6		Calculation of Losses	63
10.7		Exclusive Remedy	63
ARTICLE XI		STOCKHOLDERS’ REPRESENTATIVE	64
11.1		The Stockholders’ Representative	64
11.2		No Reliance	66
ARTICLE XII		MISCELLANEOUS	67
12.1		Binding Effect; Assignment	67

 

 

12.2		Notices	67
12.3		Choice of Law	68
12.4		Entire Agreement; Amendments and Waivers	68
12.5		Counterparts	69
12.6		Severability	69
12.7		No Third Party Beneficiaries	69
12.8		Specific Performance	69
12.9		Expenses	69
12.10		Submission to Jurisdiction; Waivers	69
12.11		Publicity	70
12.12		WAIVER OF JURY TRIAL	70

 

Exhibits

 

Exhibit A - Stockholders of the Company

 

Exhibit B - Form of Stockholders’ Agreement

 

Exhibit C - Amended Certificate of Incorporation of the Company

 

Exhibit D - Amended and Restated By-laws of the Company

 

Exhibit E - Form of Escrow Agreement

 

Exhibit F - Form of Legal Opinion of Perkins Coie

 

Exhibit G - Form of Cash, Indebtedness and Expenses Schedule

 

Exhibit H - Form of Payment Schedule

 

Exhibit I - Accounting Principles

 

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of January 11, 2008, is entered into by and among The V.I.P. Tour Company, a Delaware corporation (the “ Company ”), Ticketmaster, a Delaware corporation (“ Ticketmaster ”), V.I.P. Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Ticketmaster (“ Merger Sub ”), TNSH, LLC, a Delaware limited liability company, acting in its capacity as the Stockholders’ Representative in connection with the transactions contemplated by this Agreement (the “ Stockholders’ Representative ”) and the stockholders of the Company set forth on the signature page hereto (the “ Material Stockholders ”, and each individually, a “ Material Stockholder ”).

 

RECITALS

 

WHEREAS , as of the date of this Agreement, all of the issued and outstanding shares of capital stock of the Company are owned by the Material Stockholders and by the Company’s other stockholders (the “ Other Stockholders ” and, together with the Material Stockholders, the holders of Company Options and the holders of Company Warrants, the “ Stockholders ”, all as set forth on Exhibit A );

 

WHEREAS , the parties hereto desire that Merger Sub merge with and into the Company (the “ Merger ”), and that at such time, the Shares, the outstanding and unexercised Company Options (other than the Rollover Options) and the Company Warrants shall be converted into the right to receive, as the case may be, the Initial Merger Consideration and the Initial Liquidation Preference, in each case subject in each case to adjustment as set forth in, and pursuant to the terms and subject to the conditions of, this Agreement and the DGCL, and in each case following which such holder thereof shall have no further rights under or with respect to such Company Options (other than the Rollover Options) or Company Warrants;

 

WHEREAS , each Rollover Option that is outstanding and unexercised as of the Effective Time shall be assumed by the Surviving Corporation and become an option (an “ Assumed Option ”) to purchase a number of shares of Surviving Corporation Common Stock as set forth in this Agreement, subject to adjustment and pursuant to the terms and subject to the conditions of, this Agreement and the DGCL;

 

WHEREAS , the board of directors of the Company, Ticketmaster and Merger Sub have each determined that the Merger is fair, advisable and in the best interests of their respective stockholders and have each approved this Agreement and the other Transaction Documents, and the board of directors of the Company has recommended the adoption of this Agreement by the holders of the Preferred Stock and the Common Stock; and

 

WHEREAS , this Agreement and the other Transaction Documents and the Transactions, including the Merger, have been approved by (a) the holders of a majority of the Common Stock and (b) the holders of 66.67% of the outstanding shares of Preferred Stock.

 

NOW, THEREFORE , in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and

 

 

sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1           Definitions .  As used in this Agreement, the following terms shall have the following meanings:

 

“ Accounts Receivable ” means (a) all accounts receivable and other rights to payment from customers of the Company and the Subsidiaries and (b) all other accounts and notes receivable of the Company and the Subsidiaries.

 

“ Affiliate ” of a Person means (i) with respect to an individual, any member of such Person’s family (including any child, step-child, parent, step-parent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law), (ii) with respect to an entity, any officer, director, stockholder, member, partner, investor, employee and agent of such entity, except that with respect to Section 7.7 of this Agreement the foregoing will be limited to officers, directors, managers or employees of an entity or beneficial owners of such entity’s equity capital who have decision making authority over investments made by such entity, and (iii) with respect to any Person, any Person which directly or indirectly controls, is controlled by, or is under common control with such Person.

 

“ Aggregate Liquidation Preference ” means the aggregate Liquidation Preference payable to all holders of Preferred Stock in connection with the Merger.

 

“ Aggregate Option Exercise Price ” means the sum of the cash exercise prices that would be payable upon exercise of all Company Options (including Rollover Options) and Company Warrants immediately prior to the Closing.

 

“ Business ” means the business of the Company and the Subsidiaries, as conducted as of the date of this Agreement, including the Company’s provision of on-line and off-line ticketing distribution services through Subsidiary websites including TicketsNow.com, Inc., OpenSeats, Inc., NetTickets.com, Inc., ShowMe Tickets, LLC and a centralized operator staffed call center, and the aggregation of ticket inventories of companies, agencies, individuals and other dealers nationwide into a comprehensive database for on-line purchases by consumers for sporting, concert and theatre events.

 

“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.

 

“ Cash Equivalents ” means, as of any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date, (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A 1 from S&P or any successor thereto or at least P 1 from Moody’s

 

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or any successor thereto, (c) certificates of deposit or bankers’ acceptances and time deposits maturing within one year from the date of acquisition thereof issued by any commercial bank organized under the Laws of the United States of America or any state thereof or the District of Columbia that at the time of acquisition thereof (i) is at least “adequately capitalized” (as defined in the regulations of its primary federal banking regulator) and (ii) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000, (d) repurchase obligations with a term of not more than seven days for underlying securities of the type described in clause (a) above, entered into with a bank meeting the qualifications set forth in clause (c) above, and (e) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) through (d) above, (ii) has net assets of not less than $500,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s.

 

“ Closing Date Cash ” means the amount equal to (a) cash and Cash Equivalents of the Company and the Subsidiaries as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (determined without giving effect to the consummation of the Transactions) minus (b) cash and Cash Equivalents the use of which by the Company or any of the Subsidiaries is restricted by an enforceable agreement or pursuant to applicable Law.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

“ Company Option ” means each option to purchase Common Stock granted under any employee stock option plan or arrangement of the Company, including, options granted under the Company’s 2005 Equity Incentive Plan

 

“ Company Transaction Expenses ” means (i) the third party fees, costs and expenses incurred by the Company or the Subsidiaries prior to or on the Closing Date in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Transaction Documents, and the consummation of the Transactions, including the fees and expenses of the Company and the Subsidiaries’ Representatives, including one-half of any transfer Taxes, payable in connection with the Transactions and one-half of any filing fees payable in connection with any filings required under the HSR Act and (ii) any special bonuses, transaction bonuses, change in control bonuses, success fees or other bonus payments paid or payable to any employees of the Company or the Subsidiaries in connection with the Transactions.

 

“ Company Warrants ” means those certain warrants to purchase shares of Common Stock.

 

“ Consent ” means any consent, approval, authorization, waiver, grant, franchise, license, exemption or Order of, or any registration, certificate, qualification, declaration or filing with, or any notice to, any Person, including any Governmental Body.

 

“ Contracts ” means all contracts, agreements, leases, subleases, instruments, undertakings, commitments or other enforceable arrangements, whether written or oral.

 

“ control ” (including the terms “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of stock, as trustee or executor, by Contract or otherwise.

 

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“ Crystal Lake Lease ” means that certain Industrial Lease Agreement, by and between the Company and WM Rockhill Properties, dated as of February 27, 2006 and amended on May 18, 2007, for the premises at 265 Exchange Drive, Crystal Lake, Illinois, 60014.

 

“ Current Assets ” means, as of any particular date of determination, the current assets of the Company determined in accordance with GAAP, but excluding for purposes of this definition only cash and short term investments, employee loans, employee advances, debt financing costs and current deferred Tax asset.

 

“ Current Liabilities ” means, as of any particular date of determination, the current liabilities of the Company determined in accordance with GAAP, but excluding for purposes of this definition only short-term deferred Tax Liability, Taxes payable and current portion of long-term debt.

 

“ Encumbrance ” means any claim, lien, pledge, option, charge, easement, security interest, deed of trust, mortgage, conditional sales agreement, encumbrance or other right of third parties, whether voluntarily incurred or arising by operation of Law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.

 

“ Environmental Law ” means all applicable Laws governing or relating to pollution or the protection of the environment or human health or safety.

 

“ Escrow Expiration Date ” means the date that is 60 days following delivery to the Surviving Corporation of the Surviving Corporation’s audited consolidated financial statements for the 2008 fiscal year.

 

“ Fully-Diluted Closing Common Stock Number ” means the sum of (i) the number of shares of Common Stock issued and outstanding immediately prior to the Effective Time, as reflected on the Payment Schedule, (ii) the number of shares of Common Stock issuable on conversion of the Preferred Stock immediately prior to the Effective Time, as reflected on the Payment Schedule, (iii) the number of shares of Common Stock underlying Company Options (other than any such shares issuable upon the exercise of the Rollover Options) immediately prior to the Effective Time, as reflected on the Payment Schedule, and (iv) the number of shares of Common Stock underlying the Company Warrants immediately prior to the Effective Time, as reflected on the Payment Schedule.

 

“ Fundamental Documents ” means the documents by which a Person (other than an individual) establishes its legal existence or which govern its internal affairs.  For example, the “Fundamental Documents” of a corporation include its certificate of incorporation and by-laws, and the “Fundamental Documents” of a limited liability company include its certificate of formation and operating agreement.

 

“ GAAP ” means generally accepted United States accounting principles consistently applied over all relevant periods.

 

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“ Governmental Body ” means any court, administrative agency, regulatory body, commission or other Governmental Body or instrumentality of the United States or any other country or any state, county, municipality or other governmental division of any country.

 

“ Hazardous Substance ” means any material or substance regulated, or that could result in Liability, under any Environmental Law, including any asbestos or asbestos-containing materials, petroleum or petroleum product, or polychlorinated biphenyls.

 

“ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money (excluding deferred revenue incurred in the ordinary course of business), (b) all obligations of such Person for the deferred purchase price of assets, property or services (excluding current liabilities), (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations under capital leases (which obligations are required to be classified and accounted for as capital lease obligations on a balance sheet of such Person under GAAP), (f) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, bankers’ acceptances or similar facilities, (h) all customer deposits relating to Inventory to be acquired by the Company and its Subsidiaries after the Closing Date, (i) all amounts payable to brokers relating to Inventory sold by such brokers on behalf of the Company or the Subsidiaries (j) all direct or indirect guarantee, support or keep-well obligations of such Person with respect to obligations of the kind referred to in clauses (a) through (i) of this definition and (k) all obligations of the kind referred to in clauses (a) through (i) of this definition of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Encumbrance on property owned by such Person, whether or not such Person has assumed or otherwise become liable for the payment of such obligations.

 

“ Indemnity Cap ” means an amount equal to $15,000,000.

 

 “ Initial Liquidation Preference ” means the Aggregate Liquidation Preference.

 

“ Initial Per Common Share Merger Consideration ” means the amount equal to (x) the Initial Merger Consideration plus the Aggregate Option Exercise Price divided by (y) the Fully-Diluted Closing Common Stock Number.

 

“ Initial Per Share Liquidation Preference ” means the amount equal to the Initial Liquidation Preference divided by the number of shares of Preferred Stock outstanding immediately prior to the Closing on the Closing Date.

 

“ Intellectual Property Rights ” means all intellectual property rights, including patents, trademarks, trade names, service marks, service mark applications, trade dress, logos, designs, devices, domain names and the goodwill of the Company and the Subsidiaries connected with the foregoing, copyrights, software (including source code and object code), databases, systems, websites, mask works, know-how, technical information, trade secrets, processes, formulae, franchises, licenses, inventions, discoveries, technical advances, designs or design protocols, instructions, drawings, blueprints, specifications, marketing materials, and all documentation and media constituting, describing or relating to the foregoing, including manuals, memoranda and

 

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“ Option Exchange Ratio ” means one-for-one.

 

“ Option Rollover Amount ” means an amount equal to (a) the Initial Per Common Share Merger Consideration (provided, that for purposes of this definition, the definition of “Fully Diluted Closing Common Stock Number” shall be deemed to include the number of shares of Common Stock issuable upon conversion of the Rollover Options), multiplied by the number of shares of Common Stock into which the Rollover Options are exercisable minus (b) the aggregate exercise price of the Rollover Options.

 

“ Order ” means any order, restriction, judgment, writ, temporary or permanent injunction, award, decree, stipulation, determination or writ of any Governmental Body.

 

 “ Ordinary Course of Business ” or “ Ordinary Course ” or any similar phrase means the ordinary course of the Business, consistent with the past practice of the Company and the Subsidiaries, to the extent applicable.

 

“ Participating Rights Holders ” means those Persons who, immediately prior to the Effective Time, are holders of Common Stock, Preferred Stock, Company Options (other than with respect to any Rollover Options) and/or the Company Warrants, and whose interests therein, as the result of the Merger, are converted into rights to receive a portion of the Initial Merger Consideration.  For the avoidance of doubt, a Person who is excluded from this definition due to their ownership of Rollover Options is only excluded with respect to their Rollover Options, and is a Participating Rights Holder with respect to any other Common Stock, Company Options or Company Warrants that such Person holds.

 

“ Permits ” means all licenses, permits, franchises, approvals, authorizations, consents or Orders of, or filings with, any Governmental Body, whether foreign, federal, state or local, or any other Person, necessary for the past or present conduct of, or relating to the operation of the Business.

 

“ Permitted Encumbrances ” means (a) liens for Taxes not yet due and payable, (b) statutory or common Law Encumbrances to secure landlords or lessors under leases or rental agreements regarding the premises rented to the extent that no payment or performance under any such lease or rental agreement is in arrears or is otherwise due, (c) deposits or pledges made in connection with, or to secure payment of, worker’s compensation, unemployment insurance, or programs mandated under applicable Laws, (d) statutory or common Law Encumbrances in favor of carriers, warehousemen, mechanics and materials to secure claims for labor, materials or supplies and other like Encumbrances, which secure obligations to the extent that payment thereof is not in arrears or otherwise due, and (e) Encumbrances that do not materially in the aggregate detract from the value of the property subject thereto or materially in the aggregate impair the operations of the Company or any of the Subsidiaries.

 

“ Person ” means any person or entity, whether an individual, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture or Governmental Body.

 

“ Personal Element” means a natural Person’s full name (or last name if associated with an address), telephone number, email address, Unique Identifying Number, photograph, or any

 

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other information, alone or in combination, that allows the identification of a natural Person.

 

“ Pre-Closing Taxes ”  means all Liability for Taxes for the Pre-Closing Tax Period and the Interim Tax Period.  For purposes of calculating such Liability for the Interim Tax Period, the portion of any Tax that is allocable to the Interim Tax Period shall be deemed to equal: (a) in the case of Taxes based upon or related to income or receipts, the amount that would be payable if the Straddle Period had ended on the Closing Date and the books of the Company and the Subsidiaries closed as of the close of such date, (b) in the case of Taxes imposed on specific transactions or events, Taxes imposed on specific transactions or events occurring on or before the Closing Date, and (c) in the case of Taxes imposed on a periodic basis, or in the case of any other Taxes not covered by clause (a) or clause (b), the amount of such Taxes for the entire Straddle Period multiplied by a fraction (a) the numerator of which is the number of calendar days in the period ending on the Closing Date and (b) the denominator of which is the number of calendar days in the entire Straddle Period.

 

“ Pre-Closing Tax Period ” means any Tax period (or portion thereof) ending on or before the Closing Date.

 

“ Proceeding ” means any claim, action, suit, complaint, demand, litigation, prosecution, contest, hearing, inquiry, inquest, audit or other judicial, administrative or arbitration proceeding.

 

“ Publicly Available Software ” means any software that requires as a condition of use, modification, and/or distribution of such software that such software or other software incorporated into or derived from such software (a) be disclosed or distributed in source code form, (b) be licensed for the purpose of making derivative works, or (c) be redistributable at no or minimal charge.

 

“ Representative ” means, with respect to any Person, any officer, director, principal, attorney, accountant, advisor, agent, employee or other representative of such Person.

 

“ Reserve Amount ” means $1,000,000.

 

“ Rollover Holders ” means Cheryl Rosner, Sridhar Murthy, Shawn Freeman, Todd Rumlow and Michael Regent.

 

“ Rollover Options ” means those Company Options held by the Rollover Holders that, in accordance with their current vesting schedules and as set forth on Schedule 1.1.(b)  would in the event that the Merger was not consummated remain unvested as of the date that is 15 months following the Closing Date.

 

“ S&P ” means Standard & Poor’s Ratings Group.

 

“ Shares ” mean, collectively, the shares of Common Stock and Preferred Stock.

 

“ Stockholders’ Agreement ” means the Stockholders’ Agreement of Ticketmaster, dated as of the date hereof, by and among Ticketmaster, the Surviving Corporation and each Rollover Holder, in the form of Exhibit B .

 

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“ Straddle Period ”  means any Tax period that includes but does not end on the Closing Date.

 

“ Subsequent Per Share Common Merger Consideration ” means an amount equal to the percentage specified on the Payment Schedule of the portion of the Escrow Amount that is released from the Escrow Account pursuant to the terms hereof and the terms of the Escrow Agreement.

 

“ Subsidiary ” means, with respect to any Person, as of any date of determination, any other Person as to which such Person owns, directly or indirectly, or otherwise controls, more than 50% of the voting shares or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

 

“ Surviving Corporation Common Stock ” is the common stock of the Surviving Corporation,  $0.01 par value per share.

 

“ Taxes ” means (a) any and all federal, state, local, foreign and other taxes, including income taxes, estimated taxes, alternative or add-on minimum taxes, excise taxes, sales taxes, franchise taxes, employment and payroll related taxes, withholding taxes, transfer taxes, gross receipts taxes, license taxes, severance taxes, stamp taxes, occupation taxes, premium taxes, capital stock taxes, profits taxes, social security (or similar) taxes, unemployment taxes, disability taxes, real property taxes, personal property taxes, value added taxes or other similar taxes including all additions to tax, interest, fines and penalties, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax Liability of any other Person and (b) any Liability for the payment of any amount of the type described in the immediately preceding clause (a) as a result of (1) being a “transferee” of another Person, (2) being a member of an affiliated, combined, consolidated or unitary group, or (3) any contractual Liability.

 

“ Tax Refund ” means any refund, rebate, abatement, reduction or other recovery (whether directly or indirectly through a right of setoff or credit) of Taxes (including payments of estimated Taxes) of the Company, its Subsidiaries and their respective Affiliates and any interest thereon with respect to all Pre-Closing Tax Periods.

 

“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, filed or required to be filed with any Governmental Body.

 

 “ Ticket ” means any printed, electronic or other type of evidence of the right to occupy space at or attend any concert, sporting, entertainment or other act or event or any kind or nature whatsoever, even if not evidenced by any physical manifestation of such right (for example, a “smart card”), including a ticket, license, parking pass, backstage pass or luxury box pass.

 

“ Transaction Documents ” means this Agreement, the Escrow Agreement, the Stockholders’ Agreement and the other agreements to be executed and delivered in connection herewith.

 

“ Unique Identifying Number ” means an identifier uniquely associated with a Person such

 

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as a social security number, driver’s license number, passport number or customer number, but excluding an identifier which is randomly or otherwise assigned so that it cannot be reasonably used to identify the Person.

 

“ User Data ” means (i) all data related to impression and click-through activity of website users, including user identification and associated activities at a web site as well as pings and activity related to closed loop reporting and all other data associated with a user’s behavior on the Internet, (ii) all data that contains a Personal Element, (iii) known, or reasonably inferred information or attributes about a user or identifier, and (iv) all derivatives and aggregations of (i), (ii) and (iii), including user profiles.

 

“ Working Capital ” means (i) Current Assets minus (ii) Current Liabilities.

 

1.2                                  Terms Defined Elsewhere .  The following is a list of additional terms used in this Agreement and a reference to the Article hereof in which such term is defined:

 

Term		Section
Actual Closing Balance Sheet		Section 3.4(d)
Actual Closing Date Cash		Section 3.4(d)
Actual Closing Date Indebtedness		Section 3.4(d)
Actual Working Capital		Section 3.4(d)
Acquisition Transaction		Section 7.6(a)
Adjusted Merger Consideration		Section 3.4(f)
Agreement		Preamble
Assumed Option		Recitals
Bankruptcy and Equity Exception		Section 4.2
Base Balance Sheet		Section 4.6
Base Merger Consideration		Section 3.2(a)(i)
Cash, Indebtedness and Expenses Schedule		Section 3.1(h)
Certificate of Merger		Section 2.2
Closing		Section 2.3
Closing Date		Section 2.3
Common Stock		Section 3.1(b)
Company		Preamble
Company Dissenting Shares		Section 3.5
Company Terminating Breach		Section 9.1(d)
Continuing Employee		Section 7.14(a)
Deductible		Section 10.4(a)
DGCL		Section 2.1
Disclosure Schedule		Article IV
Effective Time		Section 2.2
Employee Benefit Program		Section 4.18(a)
ERISA		Section 4.18(a)
Escrow Account		Section 3.3(a)
Escrow Agent		Section 3.3(a)
Escrow Agreement		Section 3.3(a)
Escrow Amount		Section 3.3(a)

 

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Estimated Closing Balance Sheet		Section 3.4(a)
Estimated Closing Date Cash		Section 3.4(a)
Estimated Closing Date Indebtedness		Section 3.4(a)
Estimated Working Capital		Section 3.4(a)
Excepted Representations		Section 10.1
Final Closing Balance Sheet		Section 3.4(b)
Final Closing Date Cash		Section 3.4(b)
Final Closing Date Indebtedness		Section 3.4(b)
Final Working Capital		Section 3.4(b)
Financial Information		Section 4.6
Firm		Section 3.4(c)
Fundamental Representations		Section 10.1
HSR Act		Section 4.2
Indemnified Party		Section 10.3
Indemnifying Party		Section 10.3
Initial Merger Consideration		Section 3.2(a)
Interim Period		Section 7.1(a)
Investor Restricted Period		Section 7.7(b)
Investor Restricted Stockholder		Section 7.7(b)
Losses		Section 10.2
Management Restricted Period		Section 7.7(b)
Management Restricted Stockholder		Section 7.7(b)
Material Contract		Section 4.13
Material Stockholder		Preamble
Merger		Recitals
Merger Sub		Preamble
Net Working Capital Target		Section 3.2(a)(iii)
November 30, 2007 Unaudited Financials		Section 4.6
Objection Notice		Section 3.4(c)
Other Stockholders		Recitals
Parachute Payment Waiver		Section 7.14(e)
Payment Schedule		Section 3.1(g)
Preferred Stock		Section 3.1(b)
Privacy Policy		Section 4.13(d)
Released Persons		Section 7.9
Reserve Account		Section 3.2(e)
Special Representations		Section 10.1
Stockholders		Recitals
Stockholders’ Representative		Preamble
Stockholder Indemnified Party		Section 10.3
Stockholder Indemnifying Party		Section 10.2
Surviving Corporation		Section 2.1
Tax Reduction		Section 7.11(b)
Termination Date		Section 9.1(f)
Ticketmaster		Preamble
Ticketmaster Indemnified Party		Section 10.2

 

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Ticketmaster Indemnifying Party		Section 10.3
Ticketmaster Plans		Section 7.14(b)
Ticketmaster Shares		Section 6.3(a)
Ticketmaster Terminating Breach		Section 9.1(e)
Transactions		Section 2.1

 

1.3                                  Interpretation .

 

In this Agreement, unless the context otherwise requires:

 

(a)                                   words importing the singular include the plural and vice versa;

 

(b)                                  a reference to a “Subsidiary” is a reference to a Subsidiary of the Company unless otherwise expressly set forth herein;

 

(c)                                   a reference to a clause, party, annex, exhibit or schedule is a reference to a clause of, and a party, annex, exhibit and schedule to this Agreement, including the Disclosure Schedule, and a reference to this Agreement includes any annex, exhibit and schedule hereto, including the Disclosure Schedule;

 

(d)                                  a reference to a statute, regulation, proclamation, ordinance or by-law includes all statues, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, whether passed by the same or another Governmental Body with legal power to do so, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under the statute;

 

(e)                                   a reference to a document includes all amendments or supplements to, or replacements or novations of, that document;

 

(f)                                     a reference to a party to a document includes that party’s successors, permitted transferees and permitted assigns;

 

(g)                                  the use of the term “including” means “including, without limitation”;

 

(h)                                  the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole, including the annexes, schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular Article, sub-section, paragraph, subparagraph or clause contained in this Agreement;

 

(i)                                      the Article and paragraph headings used in this Agreement are for convenience of reference only and shall not govern of affect the interpretation of any of the terms or provisions of this Agreement;

 

(j)                                      where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates;

 

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(k)                                   the language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party;

 

(l)                                      unless otherwise specified herein, all statements or references to dollar amounts or “$” set forth herein or in any other Transaction Document shall refer to United States Dollars; and

 

(m)                                accounting terms not defined in this Agreement shall have the respective meanings given to them under GAAP.

 

ARTICLE II
THE MERGER

 

2.1                                  The Merger .  On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the “ DGCL ”), Merger Sub shall be merged with and into the Company at the Effective Time.  At the Effective Time, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (the “ Surviving Corporation ”).  The Merger and the other transactions expressly contemplated by this Agreement and the other Transaction Documents are collectively referred to herein as the “ Transactions .”

 

2.2                                  Effective Time .  Prior to the Closing, the Company shall prepare, and on the Closing Date, the Company shall file with the Secretary of State of the State of Delaware, a certificate of merger in form and substance satisfactory to Ticketmaster (the “ Certificate of Merger ”) executed in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL (in each case in form and substance satisfactory to Ticketmaster).  The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State, or at such other time as Ticketmaster and the Company shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the “ Effective Time ”).

 

2.3                                  Closing of the Merger .  The closing of the Transactions (the “ Closing ”) shall take place at the offices of O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, New York 10036, at a time and on a date to be designated by the Company and Ticketmaster (the date upon which the Closing actually occurs being referred to herein as the “ Closing Date ”), which shall be not later than the second Business Day after the satisfaction or waiver of the conditions set forth in Article VIII hereof (other than those conditions which by their terms are to be satisfied or waived at the Closing) or at such other time, date and location as the Company and Ticketmaster shall mutually agree.

 

2.4                                  Effects of the Merger .  The Merger shall have the effects set forth in Section 259 of the DGCL.

 

2.5                                  Certificate of Incorporation and By-laws .  At the Effective Time, the Certificate of Incorporation of the Company shall be amended and restated in the form attached as Exhibit C , and as so amended and restated, shall be the Certificate of Incorporation of the Surviving Corporation until amended and restated in accordance with applicable Law.  The by-laws of the Company shall be amended and restated in the form attached as Exhibit D , and as so amended

 

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and restated, shall be the by-laws of the Surviving Corporation until amended and restated in accordance with applicable Law.

 

2.6                                  Directors and Officers .  The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.  The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.

 

ARTICLE III
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; PAYMENT

 

3.1                                  Conversion of Shares; Treatment of Company Options and Company Warrants .

 

(a)                                   Capital Stock of Merger Sub .  At the Effective Time, the 1,000 issued and outstanding shares of the common stock, $0.01 par value per share, of Merger Sub shall be converted into an aggregate number of  shares of common stock, $0.01 par value per share, of the Surviving Corporation equal to the Fully-Diluted Closing Common Stock Number.

 

(b)                                  Cancellation of Stock .  At the Effective Time, each share of the Series A Preferred Stock, par value $0.0001 per share, of the Company (the “ Preferred Stock ”) and common stock, par value $0.0001 per share, of the Company (the “ Common Stock ”) issued and outstanding immediately prior to the Effective Time shall, except as otherwise provided (i) in Section 3.5 as to Company Dissenting Shares and (ii) in Section 3.1(j)  as to treasury shares, by virtue of the Merger and without any action on the part of Ticketmaster, Merger Sub, the Company or the holder thereof, be cancelled and extinguished and be converted automatically into and become the right to receive (A) for each holder of Common Stock, their pro rata portion of the Initial Merger Consideration as specified in Section 3.1(c)  and (B) for each holder of Preferred Stock, their pro rata portion of the Initial Liquidation Preference and the Initial Per Common Share Merger Consideration as specified in Section 3.1(d) .

 

(c)                                   Common Stock . Each share of Common Stock issued and outstanding immediately prior to the Effective Time (whether or not vested) (other than (x) any Company Dissenting Shares and (y) any shares of Common Stock held directly or indirectly by the Company, Ticketmaster or Merger Sub) will be converted at the Effective Time into the right to receive (i) at the Effective Time, an amount per share in cash equal to the Initial Per Common Share Merger Consideration and (ii) subsequent to the Effective Time and in accordance with Section 3.3(c)(i)  and the Escrow Agreement, an amount per share in cash equal to the Subsequent Per Common Share Merger Consideration.

 

(d)                                  Preferred Stock .             Each share of Preferred Stock issued and outstanding immediately prior to the Effective Time (other than any Company Dissenting Shares and any shares of Preferred Stock held directly or indirectly by the Company, Ticketmaster or Merger Sub) will be converted at the Effective Time into the right to receive (i) at the Effective Time, an amount in cash equal to the Initial Per Share Liquidation Preference and an amount per

 

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share in cash equal to the Initial Per Common Share Merger Consideration (ii) subsequent to the Effective Time and in accordance with Section 3.3(c)(i) , an amount per share in cash equal to Subsequent Per Common Share Merger Consideration.

 

(e)                                   Company Options .  Effective as of the Effective Time, each Company Option that is outstanding and unexercised as of the Effective Time that is not a Rollover Option, shall be converted into a right to receive an amount in cash, subject to applicable withholding Tax, as follows: (i) at the Effective Time, a payment equal to the product of the Initial Per Common Share Merger Consideration multiplied by the number of shares of Common Stock underlying such Company Option (whether or not vested), minus the aggregate exercise price with respect to such Company Option (with the aggregate amount of such payment rounded to the nearest whole cent) and (ii) subsequent to the Effective Time and in accordance with Section 3.3(c)(i)  and the Escrow Agreement, an amount in cash equal to the Subsequent Per Share Common Merger Consideration multiplied by the number of shares of Common Stock underlying such Company Option.  Upon and following the Effective Time, each holder of such a Company Option shall have no rights under or with respect to such Company Option other than the right to receive the cash amount(s) determined pursuant to the preceding sentence.  Effective as of the Effective Time, each Rollover Option that is outstanding and unexercised as of the Effective Time shall be assumed by the Surviving Corporation and become an Assumed Option to purchase a number of shares of Surviving Corporation Common Stock (rounded down to the nearest whole number) equal to the product of the number of shares of Common Stock subject to such Rollover Option immediately prior to the Effective Time multiplied by the Option Exchange Ratio.  The per share exercise price for the Surviving Corporation Common Stock issuable upon exercise of such Assumed Option shall be equal (rounded up to the nearest whole cent) to the exercise price per share of Common Stock applicable to such Rollover Option immediately prior to the Effective Time divided by the Option Exchange Ratio.  Except as provided herein, each Assumed Option shall be subject to the terms and conditions set forth in the option agreement evidencing such Assumed Option.  From and after the Effective Time, each Company Option shall no longer represent the right to acquire Common Stock.  Prior to the Effective Time, the Company shall take all necessary or appropriate action (including obtaining any required consents and any other action reasonably requested by Ticketmaster) to effectuate the transactions contemplated by this Section 3.1(e) .  Except as otherwise clearly required by applicable Law or other guidance of the Internal Revenue Service, or pursuant to a determination (within the meaning of Section 1313(a) of the Code or any comparable provision of Law), each of Ticketmaster, V.I.P. Merger Sub and the Surviving Corporation shall treat the Company Options as either exempt from or complying with the provisions of Section 409A of the Code, as the case may be.

 

(f)                                     Company Warrants .  The Company shall provide that each Company Warrant that is outstanding and unexercised as of the Effective Time shall be cancelled and converted into the right to receive (i) at the Effective Time, an amount in cash equal to the Initial Per Share Common Merger Consideration multiplied by the number of shares of Common Stock underlying the Company Warrant, minus the exercise price with respect to such Company Warrant, and (ii) subsequent to the Effective Time and in accordance with Section 3.3(c)(i)  and the Escrow Agreement, an amount in cash equal to the Subsequent Per Share Common Merger Consideration multiplied by the number of shares of Common Stock underlying the Company Warrant.

 

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	(i)		$275,000,000 (the “ Base Merger Consideration ”); plus
	(ii)		an amount equal to the Estimated Closing Date Cash; plus
	(iii)		the amount, if any, by which the Estimated Working Capital is greater than $0.00 (the “ Net
			Working Capital Target ”); minus
	(iv)		the amount, if any, by which the Estimated Working Capital is less than the Net Working Capital
			Target; minus
	(v)		an amount equal to the Estimated Closing Date Indebtedness; minus
	(vi)		the Initial Liquidation Preference; minus
	(vii)		the Escrow Amount; minus
	(viii)		the Reserve Amount; minus
	(ix)		the amount of Company Transaction Expenses; minus
	(x)		the Option Rollover Amount.

 

(b)            Payment to Participating Rights Holders .  On the Closing Date, Ticketmaster or Merger Sub shall pay the Initial Merger Consideration by wire transfer of immediately available funds to an account specified by the Stockholders’ Representative in writing to Ticketmaster not less than two Business Days prior to the Closing, to the Stockholders’ Representative for distribution by the Stockholders’ Representative on the Closing Date (subject to the terms hereof) to the Participating Rights Holders and in accordance with Sections 3.1(c) , 3.1(e) , 3.1(f)  and the Payment Schedule.

 

(c)            Payment to Holders of Preferred Stock .  On the Closing Date, Ticketmaster or Merger Sub shall pay the Initial Liquidation Preference by wire transfer of immediately available funds to an account specified by the Stockholders’ Representative in writing to Ticketmaster not less than two Business Days prior to the Closing, to the Stockholders’ Representative for distribution on the Closing Date (subject to the terms hereof) by the Stockholders’ Representative to the holders of Preferred Stock in accordance with Section 3.1(d)  and the Payment Schedule.

 

(d)            Payment of Escrow Amount .  On the Closing Date, Ticketmaster or Merger Sub shall deliver, by wire transfer in immediately available funds, the Escrow Amount to the Escrow Agent in accordance with Section 3.3(a) .

 

(e)            Payment of Reserve Amount .  On the Closing Date, Ticketmaster or Merger Sub shall pay an amount equal to the Reserve Amount by wire transfer in immediately available funds to a reserve account established and maintained by the Stockholders’ Representative in connection with the Transactions (the “ Reserve Account ”), which shall be specified by the Stockholders’ Representative in writing to Ticketmaster not less than two

 

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Business Days prior to the Closing. The amounts held in the Reserve Account shall be used and distributed as specified in Article XI .

 

(f)             Payments by the Company .  On the Closing Date, the Company shall pay by wire transfer in immediately available funds the (i) Company Transaction Expenses and (ii) the Estimated Closing Date Indebtedness, in each case, in such amounts and to such Persons as set forth on the Cash, Indebtedness and Expenses Schedule.

 

(g)            Evidence of Ownership .  Notwithstanding anything to the contrary herein, (i) the Stockholders’ Representative shall not deliver to (A) any Participating Rights Holder, any Initial Merger Consideration pursuant to Section 3.2(b)  or (B) any holder of Preferred Stock, any Initial Liquidation Preference or pursuant to Section 3.2(c) , in each case until such holder thereof has delivered to Ticketmaster or the Stockholders’ Representative certificates or other evidence of ownership of his, her or its Common Stock, Preferred Stock, Company Options or Company Warrants, as the case may be, and such other documentation as may be reasonably requested by Ticketmaster and; provided further , however , that if such Person has not delivered to the Stockholders’ Representative or Ticketmaster such documentation at Closing, the Stockholders’ Representative shall not distribute to such Person such Person’s portion of the Initial Merger Consideration or the Initial Liquidation Preference, as applicable, until such documentation is delivered.  Any additional amounts payable on or after the Closing Date (whether amounts released from escrow or otherwise) shall be paid by the Stockholders’ Representative to the Participating Rights Holders in accordance with the terms of this Agreement, the Escrow Agreement and the other applicable Transaction Documents.

 

3.3            Escrow Amount .

 

(a)            Escrow Amount .  At the Closing, Ticketmaster shall deliver $15,000,000 in cash (the “ Escrow Amount ”) to an escrow account (the “ Escrow Account ”) to be established by Ticketmaster with The Bank of New York (the “ Escrow Agent ”).  The Escrow Agent shall hold the Escrow Amount pursuant to the terms of an escrow agreement in the form attached as Exhibit E (the “ Escrow Agreement ”) to serve as a source of payment and remedy for (i) any claim for Losses for which any Indemnified Party is entitled to recovery pursuant to Article X and (ii) to fund any adjustment to the Initial Merger Consideration pursuant to Section 3.4(f) .

 

(b)            Allocation of Escrow Payments .  Any amounts that are required to be paid from the Escrow Amount in accordance with this Agreement and the Escrow Agreement shall be allocated to and paid to such Persons in such amounts in accordance with the manner set forth on the Payment Schedule.

 

(c)            Release of Escrow Amount .

 

(i)             Escrow Amount .  Promptly following the Escrow Expiration Date, the Escrow Agent shall release to the Stockholder’s Representative the Escrow Amount for distribution to the Participating Rights Holders, subject to Section 3.1 and the Escrow Agreement, and in accordance with the manner set forth on the Payment Schedule; provided , that any amounts paid to such holders will be less the amount of any amounts paid from such escrow

 

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account prior to the Escrow Expiration Date (and in accordance with Section 3.3(b) ) and less the amount of any then pending and unresolved claims for indemnity made pursuant to Article X .

 

(ii)            Pending and Unresolved Claims .  Any portion of the Escrow Amount that remains in the Escrow Account for the satisfaction of any unresolved and then pending claims pursuant to Section 3.3(c)(i)  above that is subsequently not required to satisfy any such claims, shall be distributed by the Escrow Agent to the Stockholders’ Representative for distribution in accordance with Section 3.3(c)(i) .

 

3.4            Working Capital Adjustment to Initial Merger Consideration .

 

(a)            Delivery of Estimated Closing Balance Sheet .  At least two Business Days prior to the Closing, the Company will, in good faith and in accordance with the terms of this Section 3.4 , prepare and deliver to Ticketmaster (i) an estimated closing balance sheet of the Company determined as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (the “ Estimated Closing Balance Sheet ”), which Estimated Closing Balance Sheet shall include a reasonably detailed estimation of Working Capital as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (“ Estimated Working Capital ”).  At least two Business Days prior to the Closing, the Company shall provide to Ticketmaster a good faith estimate of the Closing Date Cash as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (the “ Estimated Closing Date Cash ”).  At least two Business Days prior to the Closing Date, the Company shall provide to Ticketmaster a schedule setting forth the Company’s good faith estimate of the amount of outstanding Indebtedness of the Company and the Subsidiaries determined as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (the “ Estimated Closing Date Indebtedness ”).

 

(b)            Delivery of Closing Balance Sheet .  Within 60 Business Days following the Closing, the Surviving Corporation will, in good faith and in accordance with the terms of this Section 3.4 , prepare and deliver to the Stockholders’ Representative (i) a closing balance sheet of the Company determined as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (the “ Final Closing Balance Sheet ”), which Final Closing Balance Sheet shall include a reasonably detailed calculation of Working Capital as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (the “ Final Working Capital ”), (ii) a calculation of the Closing Date Cash determined as of 11.59 p.m. on the Business Day immediately preceding the Closing Date (the “ Final Closing Date Cash ”) and (iii) a schedule setting forth a calculation of the amount of outstanding Indebtedness of the Company and the Subsidiaries determined as of 11:59 p.m. on the Business Day immediately preceding the Closing Date (the “ Final Closing Date Indebtedness ”).

 

(c)            Review of Final Closing Balance Sheet; Objection .  The Stockholders’ Representative shall have 30 Business Days from the date of receipt of the Final Closing Balance Sheet to review the computation of Final Working Capital, Final Closing Date Cash and Final Closing Date Indebtedness.  In connection with the review of the Final Closing Balance Sheet, Ticketmaster and the Surviving Corporation will make available to the Stockholders’ Representative and its Representatives (if any) all records and work papers that the Stockholders’ Representative and its Representatives (if any) reasonably request in reviewing the Final Closing Balance Sheet.  In the event that the Stockholders’ Representative disagrees with the Final

 

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Closing Balance Sheet and/or the Final Working Capital and/or the Final Closing Date Cash and/or the Final Closing Date Indebtedness, the Stockholders’ Representative shall deliver a written notice of such disagreement to Ticketmaster and the Surviving Corporation, which notice shall include the Stockholders’ Representative’s reasonably detailed explanation of the basis of the disagreement and a reasonably detailed calculation of its proposed Final Closing Balance Sheet and/or Final Working Capital and/or Final Closing Date Cash and/or Final Closing Date Indebtedness; provided , that the parties hereto agree that any such disagreement shall be limited to whether the preparation of the Final Closing Balance Sheet and the calculations of Final Working Capital, Final Closing Date Cash and Final Closing Date Indebtedness were done in a manner consistent with the preparation of the Base Balance Sheet and the terms of this Section 3.4 and whether there were mathematical errors in the preparation of the Final Closing Balance Sheet or the calculations of Final Working Capital, Final Closing Date Cash and Final Closing Date Indebtedness (an “ Objection Notice ”).  If the Stockholders’ Representative has delivered an Objection Notice to Ticketmaster and the Surviving Corporation, Ticketmaster on the one hand and the Stockholders’ Representative on the other hand will endeavor to resolve any disagreements noted in the Objection Notice in good faith as soon as practicable after the delivery of such Objection Notice.  If such parties do not obtain a final resolution within 30 days after Ticketmaster has received the Objection Notice, the Stockholders’ Representative and Ticketmaster shall submit the matter for resolution to a mutually acceptable nationally recognized independent accounting firm that is not a current service provider to Ticketmaster, the Surviving Corporation or any of its affiliates (the “ Firm ”) to resolve any remaining disagreements; provided , however , that if at such time either the Stockholders’ Representative or Ticketmaster shall discover a bona fide conflict with respect to the Firm, the parties shall submit the matter to another mutually agreeable independent accounting firm of national reputation that is not a current service provider to Ticketmaster, the Surviving Corporation or any of its affiliates to resolve the remaining matters in dispute, and such firm shall be the Firm for all purposes of this Section 3.4 .  Ticketmaster on the one hand and the Stockholders’ Representative on the other hand will direct the Firm to use its reasonable best efforts to render a determination within 30 days of submitting the matters set forth in the Objection Notice to it for resolution and the Surviving Corporation, the Stockholders’ Representative and Ticketmaster and their respective Representatives will cooperate with the Firm during its resolution of any disagreements included in the Objection Notice.  The Firm will consider only those items and amounts set forth in the Objection Notice that Ticketmaster on the one hand and the Stockholders’ Representative on the other hand are unable to resolve.  In resolving any such disputed item, the Firm may not assign a value to any item greater than the greatest value for such item claimed by any party or less than the smallest value for such item claimed by any party.  The scope of the disputes to be arbitrated by the Firm is limited to whether the preparation of the Final Closing Balance Sheet and the calculations of Final Working Capital, Final Closing Date Cash and Final Closing Date Indebtedness were done in a manner consistent with the preparation of the Base Balance Sheet and the terms of this Section 3.4 and whether there were mathematical errors in the preparation of the Final Closing Balance Sheet or the calculations of Final Working Capital, Final Closing Date Cash and Final Closing Date Indebtedness and the Firm is not to make any other determination, including any determination as to whether GAAP was followed in the preparation of the Final Closing Balance Sheet or whether the amounts of Final Working Capital, Final Closing Date Cash and Final Closing Date Indebtedness are correct.  The fees and expenses of the Firm, and the cost of any arbitration (including the fees of the Firm and reasonable attorney

 

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fees and expenses of the parties) incurred pursuant to this Section 3.4(c) , shall be paid Ticketmaster and the Stockholders’ Representative in inverse proportion as they may prevail on matters resolved by the Firm (provided that the Stockholders’ Representative shall be entitled to reimbursement by the Material Stockholders pursuant to Article XI for any fees and expenses paid by it hereunder).  The determination of the Firm as to any disputed matters shall be set forth in a written statement delivered to Ticketmaster, the Surviving Corporation and the Stockholders’ Representative and shall be final, conclusive and binding on the parties.  The parties hereto agree that judgment may be entered upon the arbitral award of the Firm in any court having jurisdiction pursuant to Section 12.10 hereof.

 

(d)            Final and Binding Determination .  The closing balance sheet and amounts of Working Capital, Closing Date Cash and outstanding Indebtedness of the Company and the Subsidiaries as of 11:59 p.m. on the Business Day immediately preceding the Closing Date as agreed to by the Surviving Corporation, the Stockholders’ Representative and Ticketmaster or as determined by the Firm, as applicable, shall be conclusive and binding on all of the parties hereto and shall be deemed the “ Actual Closing Balance Sheet ”, “ Actual Working Capital ”, “ Actual Closing Date Cash ” and “ Actual Closing Date Indebtedness ” respectively, for all purposes of this Agreement and the Escrow Agreement.

 

(e)            Accounting Principles .  The manner in which the Estimated Closing Balance Sheet and Final Closing Balance Sheet are to be prepared, and Estimated Working Capital and Final Working Capital, Estimated Closing Date Cash and Final Closing Date Cash, and Estimated Closing Date Indebtedness and Final Closing Date Indebtedness are to be calculated, pursuant to this Section 3.4 , shall be in the same way, and using the same accounting principles, methods, practices, categories, estimates, judgments and assumptions as were used in preparing the Base Balance Sheet and Working Capital as of the date of the Base Balance Sheet, (provided that all such amounts shall be prepared in accordance with GAAP consistently applied).  Such accounting principles, methods, practices, categories, estimates, judgments and assumptions are set forth in reasonable detail on Exhibit I .

 

(f)             The Initial Merger Consideration shall be increased (i) by the amount by which the Actual Working Capital exceeds the Estimated Working Capital, if any, (ii) by the amount by which the Actual Closing Date Cash exceeds the Estimated Closing Date Cash, if any, and (iii) by the amount by which the Estimated Closing Date Indebtedness exceeds the Actual Closing Date Indebtedness, if any.  The Initial Merger Consideration shall be decreased (i) by the amount by which Actual Working Capital is less than the Estimated Working Capital, if any, (ii) by the amount by which the Actual Closing Date Cash is less than the Estimated Closing Date Cash, if any, and (iii) by the amount by which the Estimated Closing Date Indebtedness is less than the Actual Closing Date Indebtedness, if any.  The Initial Merger Consideration as so increased or decreased shall hereinafter be referred to as the “ Adjusted Merger Consideration .”  If the Initial Merger Consideration is less than the Adjusted Merger Consideration, Ticketmaster shall, and if the Initial Merger Consideration is more than the Adjusted Merger Consideration, the Stockholders’ Representative shall, within three Business Days after the Actual Closing Balance Sheet becomes final and binding on the parties hereto, make payment by wire transfer to an account specified in writing by Ticketmaster or the Stockholders’ Representative, as the case may be, in immediately available funds of the amount of such difference.  Notwithstanding the foregoing, in the event that the Stockholders’

 

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Representative is required to make a payment to Ticketmaster pursuant to the terms of this Section 3.3(f) , such payment shall be satisfied first , with all or any portion of the Escrow Amount by withdrawal from the Escrow Account, and second , only after the funds in the Escrow Account have been exhausted, by the Material Stockholders individually on a pro-rata basis.

 

3.5            Dissenting Shares .  Any holder of Shares issued and outstanding immediately prior to the Effective Time with respect to which appraisal and/or dissenter’s rights, if any, are available by reason of the Merger pursuant to Section 262 of the DGCL (“ Company Dissenting Shares ”) shall not be entitled to receive any portion of the Initial Merger Consideration or Aggregate Liquidation Preference, as applicable, pursuant to Article III , unless such holder fails to perfect, effectively withdraws or loses its appraisal rights and/or rights to dissent from the Merger under the DGCL.  Such holder shall be entitled to receive only such rights as are granted under Section 262 of the DGCL.  If any such holder fails to perfect, effectively withdraws or loses such appraisal and/or dissenter’s rights under the DGCL, such Company Dissenting Shares shall thereupon be deemed to have been converted as of the Effective Time into the right to receive that portion of the Initial Merger Consideration or Aggregate Liquidation Preference, as applicable, due pursuant to the provisions of Article III .  The Company shall deliver prompt notice to Ticketmaster of any demands for appraisal of any shares of Common Stock or any shares of Preferred Stock.  The Stockholders’ Representative shall control all negotiations and Proceedings with respect to demands for appraisal under the DGCL.  Prior to the Effective Time, the Company shall not, without the prior written consent of Ticketmaster, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.  Any payments made with respect to Company Dissenting Shares shall be made solely by the Surviving Corporation, and no funds or other property have been or shall be provided by Ticketmaster, Merger Sub or any of Ticketmaster’s Affiliates for such payment.

 

3.6            Withholding Rights .   Ticketmaster and Merger Sub shall be entitled to deduct and withhold from the Initial Merger Consideration such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of United States federal, state or local, or any foreign, tax Law.  To the extent that amounts are so withheld or paid over to or deposited with the relevant Governmental Body by Ticketmaster or Merger Sub, such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Participating Rights Holder or holder or Rollover Holder, as applicable, in respect of which Ticketmaster or Merger Sub made such deduction and withholding.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY

 

In order to induce Ticketmaster and Merger Sub to enter into this Agreement and consummate the Transactions, the Company hereby makes the representations and warranties contained in this Article IV to Ticketmaster and Merger Sub, in each case as of the date hereof and as of the Closing Date.  Such representations and warranties are subject to the exceptions set forth in the disclosure schedule delivered to Ticketmaster pursuant to this Agreement (the “ Disclosure Schedule ”).  Each exception set forth in the Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual Article of this Agreement and shall be deemed to qualify the particular Article or Articles of Article IV

 

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specified for such item, unless it is reasonably apparent that such exception is relevant to another Article or Articles of Article IV , in which case such exception shall also be deemed to qualify such other Article or Articles.

 

4.1            Organization and Corporate Power .  The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and is duly qualified, registered to do business and is in good standing as a foreign corporation in each other jurisdiction in which it conducts business (except as set forth on Schedule 4.1 ), except where the failure to be so qualified, registered to do business or in good standing has not had, nor would it reasonably be expected to have, a Material Adverse Effect. The Company has all requisite power and authority to carry on its Business as presently conducted, to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party, or specified to be one, and the performance of the transactions contemplated hereby and thereby.

 

4.2            Due Authorization and No Conflict .  This Agreement is, and, upon execution and delivery by the Company pursuant to the terms hereof, all other Transaction Documents required to be executed and delivered by the Company pursuant hereto at Closing will be, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the effect, if any, of (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and (b) general principles of equity, including Laws governing specific performance, injunctive relief and other equitable remedies, whether considered in a proceeding at Law or in equity (sub-clauses (a) and (b), collectively, the “ Bankruptcy and Equity Exception ”).  The execution, delivery and performance of this Agreement and all other Transaction Documents to be executed and delivered by the Company pursuant hereto, and the performance by the Company of the Transactions contemplated to be performed by the Company have been duly authorized by all necessary corporate and stockholder action of the Company.  No further action by the Stockholders is necessary to authorize this Agreement or any of the other Transaction Documents or to consummate any of the Transactions.  Except (a) as set forth in Schedule 4.2 , and (b) the pre-merger notification requirements of the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “ HSR Act ”), the execution and delivery by the Company of this Agreement and all other Transaction Documents executed and delivered by the Company pursuant hereto and the performance by the Company of the Transactions contemplated to be performed by the Company, do not and will not: (i) violate or result in a violation of, conflict with or constitute or result in a violation of or default (whether after the giving of notice, lapse of time or both) or loss of benefit under any provision of the Company’s or any of the Subsidiaries’ Fundamental Documents, or cause the creation of any Encumbrance upon any of the assets of the Company or any of the Subsidiaries; (ii) violate, conflict with or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any Law applicable to the Company or any of the Subsidiaries; (iii) require from any Governmental Body or other third party any Consent; or (iv) materially violate or result in a material violation of, or materially conflict with or constitute or result in a material violation of or material default (whether after the giving of notice, lapse of time or both) under, accelerate or modify any material right or obligation under, or give rise to a right of termination, acceleration or modification of, any Material Contract or material Permit or other material obligation to

 

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which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries or its or their assets are bound, subject to or affected.

 

4.3            Corporate Records/Fundamental Documents .  The corporate record books of the Company and each of the Subsidiaries accurately reflect all material corporate actions taken by such Person’s stockholders and board of directors and committees thereof.  The copies of the corporate records of the Company and each of the Subsidiaries, as made available to Ticketmaster, are true, correct and complete copies of the originals of such documents.  Copies of the Fundamental Documents of the Company and each of the Subsidiaries have been made available to Ticketmaster and are true, correct and complete and in effect as of the date of this Agreement.

 

4.4            Capitalization .

 

(a)            The authorized capital stock of the Company as of the date of this Agreement consists of (i) 12,000,000 shares of Common Stock, of which 3,860,110 shares are issued and outstanding as of the date of this Agreement and owned by the Persons listed on Schedule 4.4 and (ii) 4,000,000 shares of Preferred Stock, of which 3,396,937 shares are issued and outstanding as of the date of this Agreement and owned by the Persons listed on Schedule 4.4 .  All of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued, and are fully paid and non-assessable, and have been offered, issued, sold and delivered in compliance with applicable federal and state securities Laws (or pursuant to exemptions from such Laws) and without giving rise to preemptive rights of any kind that have not been satisfied or waived prior to the date hereof.

 

(b)            Except as set forth on Schedule 4.4 , there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance, redemption or sale of, nor are there any outstanding securities convertible into, redeemable or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of the Company, nor is the Company subject to any obligation, agreement, commitment or understanding to enter into any such subscription, option, warrant, commitment, preemptive rights, agreement, arrangement or other commitment of any kind or to issue any of such securities.  Except as set forth on Schedule 4.4 , the Company has no obligation to purchase, redeem, or otherwise acquire any of its capital stock or any interests therein.  No option to purchase Preferred Stock or Common Stock was granted with an exercise price less than the fair market value of one share of Preferred Stock or Common Stock, as applicable, on the date the option was granted.

 

(c)            Schedule 4.4 sets forth a true and complete list as of the date hereof of all holders of outstanding Company Options, including with respect to each holder thereto (i) whether each such Company Option is vested or unvested as of the date of this Agreement, (ii) the exercise price per underlying share, (iii) the term of each such Company Option, (iv) whether such Company Option is a nonqualified stock option or incentive stock option, (v) whether the optionee is an employee of the Company on the date of this Agreement and (vi) any restrictions on the exercise or sale of such Company Option or the underlying shares.

 

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(d)            Schedule 4.4 sets forth a true and complete list as of the date hereof of all holders of outstanding Company Warrants, including with respect to each holder thereto (i) the exercise price per underlying share, (iii) the term of each such Company Warrant, and (iii) any restrictions on the exercise or sale of such Company Warrant or the underlying shares.

 

(e)            After giving effect to the Transactions, other than as set forth in the Stockholders’ Agreement, there will be (i) no preemptive rights, rights of first refusal, put or call rights or obligations, or anti-dilution rights with respect to the issuance, sale or redemption of the Surviving Corporation’s capital stock or any interests therein, (ii) no rights to have the Surviving Corporation’s capital stock registered for sale to the public in connection with the Laws of any jurisdiction, and (iii) no documents, instruments or agreements relating to the voting of the Surviving Corporation’s voting securities or restrictions on the transfer of the Surviving Corporation’s capital stock.

 

4.5            Subsidiaries .

 

(a)            Each Subsidiary: (i) is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, (ii) is duly qualified, registered to do business and in good standing as a foreign corporation in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except in which the failure to be so duly qualified, registered to do business and in good standing has had, or would reasonably be expected to have, a Material Adverse Effect, and (iii) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted.

 

(b)            Neither the Company nor any of the Subsidiaries owns or has the right to acquire any stock, limited liability company interest, partnership interest, joint venture interest or other equity ownership interest in any other Person.  Except as set forth on Schedule 4.5(b) , all of the outstanding capital stock and other equity interests of each of the Subsidiaries (each of which is set forth on Schedule 4.5 ) are owned by the Company, free and clear of all Encumbrances.  All of the outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and issued, and are fully paid and non-assessable, and have been offered, issued, sold and delivered in compliance with applicable federal and state securities and other Laws (or pursuant to exemptions from such Laws) and without giving rise to preemptive rights of any kind.  Except as set forth on Schedule 4.5(b) , there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance or sale of, nor are there any outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of any Subsidiary, nor is any Subsidiary subject to any obligation, agreement, commitment or understanding to enter into any such subscription, option, warrant, commitment, preemptive rights, agreement, arrangement or commitment or to issue any of such securities.  Neither the Company nor any of the Subsidiaries has any obligation to purchase, redeem, or otherwise acquire any of the capital stock or any interests therein.

 

4.6            Financial Statements .  The Company has previously furnished to Ticketmaster (i) the audited consolidated balance sheet of the Company and the Subsidiaries as of December 31, 2005 and December 31, 2006 and the related audited consolidated statements of operations,

 

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Contract with any other director, officer, stockholder or other Affiliate of the Company or any of the Subsidiaries (not including the Company or any of the Subsidiaries) that relates directly or indirectly to any matters involving the Company and the Subsidiaries.

 

4.10                            Properties .  Neither the Company nor any of the Subsidiaries currently owns nor has ever owned any real property or any interests therein.  Subject to the immediately preceding sentence, the Company and each of the Subsidiaries has (i) good and valid title to each item of tangible personal property used, held for use or intended for use in the business of the Company and the Subsidiaries as currently conducted, and (ii) a valid leasehold interest in all assets and real property leased by it, except for assets disposed of in the Ordinary Course of Business, free and clear of Encumbrances, except for Permitted Encumbrances.  All items of tangible personal property which, individually or in the aggregate, are material to the operation of the business of the Company and the Subsidiaries are in good condition and in a state of good maintenance and repair (ordinary wear and tear excepted) and are suitable for the purposes used.  Schedule 4.10 sets forth a true and complete list of all real property leased by the Company and each of the Subsidiaries.

 

4.11                            Sufficiency of Assets .  The assets and properties of the Company and the Subsidiaries, together with the rights of the Company and the Subsidiaries under Material Contracts to which the Company and the Subsidiaries are currently a party, are sufficient to conduct the Business as currently conducted and are sufficient for the conduct of such Business in substantially the same manner immediately following the Closing as conducted on the date hereof.  No assets, properties or rights used, held for use or intended for use in the Business as currently conducted are owned or licensed by any Person (including any Material Stockholder or any Affiliate thereof), other than the Company and the Subsidiaries.

 

4.12                            Tax Matters .

 

(a)                                   The Company and each of the Subsidiaries have timely and properly filed all Tax Returns required to be filed by it through the date hereof, and all such Tax Returns are true, correct and complete in all material respects.  The Company and each of the Subsidiaries have paid or caused to be paid all Taxes required to be paid by it (whether or not shown on any Tax Return) whether disputed or not, except Taxes which have not yet accrued or otherwise become due.  Neither the Company nor any of the Subsidiaries are presently the beneficiary of any extension of time within which to file any Tax Return.  No claim, or notice of claim, has ever been made in writing, or, to the Knowledge of the Company, otherwise, by an authority in a jurisdiction where the Company or any of the Subsidiaries do not file Tax Returns, that the Company or any of the Subsidiaries is or may be subject to taxation by that jurisdiction.  There are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or any of the Subsidiaries.

 

(b)                                  The Company and each of the Subsidiaries have delivered or made available to Ticketmaster (i) true, correct and complete copies of all Tax Returns filed by or with respect to the Company and each Subsidiary since January 1, 2003, (ii) all ruling requests, (iii) all private letter rulings, (iv) all closing agreements, (iv) all settlement agreements, (v) all formal tax opinions, (vi) all examination reports, (vii) all statements of deficiencies and (viii) all other

 

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documents or communications relating to material Tax Liabilities of the Company or any Subsidiary,  with respect to the Company or any of the Subsidiaries relating to Taxes.

 

(c)                                   Neither the Company nor any of the Subsidiaries have waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax payment, assessment, deficiency or collection.  Neither the Company nor any of the Subsidiaries is a party to any Tax allocation, indemnity or sharing arrangement.

 

(d)                                  Neither the Company nor any of the Subsidiaries is a party to any claim, dispute, audit, pending action or proceeding, nor is any such claim, dispute, action or proceeding threatened in writing or, to the Knowledge of the Company, otherwise, by any Governmental Body, for the assessment or collection of any Taxes, and no claim for the assessment or collection of any Taxes has been asserted in writing or, to the Knowledge of the Company, otherwise, against the Company or any of the Subsidiaries that has not been settled with all amounts due having been paid.  Neither the Company, the Subsidiaries, nor any officer, director or employer responsible for Tax matters of the Company or any Subsidiary of the Company has Knowledge that any authority will propose or assess any additional Taxes with respect to the Company or any Subsidiary.  Neither the Company nor any of the Subsidiaries have been notified in writing or, to the Knowledge of the Company, otherwise, that either the IRS or any other taxing authority has raised any issues, or intends to raise such issues, in connection with any Tax Return of the Company or any of the Subsidiaries.

 

(e)                                   Neither the Company nor any of the Subsidiaries has been a member of an affiliated group of corporations within the meaning of Section 1504(a) of the Code filing a combined federal income Tax Return nor does the Company or any of the Subsidiaries have any Liability for Taxes of any other Person under Treasury Regulations § 1.1502-6 (or any similar provision of foreign, state or local Law) or otherwise, other than the consolidated group of which the Company is currently the parent corporation.  In addition, neither the Company, nor any of the Subsidiaries has engaged in any deferred intercompany transactions as such term is defined in the Treasury Regulations for which there remains any unrecognized deferred intercompany gain.

 

(f)                                     Neither the Company nor any of the Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

(g)                                  Neither the Company nor any of the Subsidiaries is a party to any Contract, agreement, plan or arrangement covering any employee or former employee thereof, that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to (i) Section 280G or (ii) as an ordinary and necessary compensatory expense under Section 162 of the Code.

 

(h)                                  The Company and each of the Subsidiaries has disclosed to the IRS all positions taken on their federal income Tax Returns which, to the Knowledge of the Company, could give rise to a substantial understatement of Tax under Section 6662 of the Code and the Company and each of the Subsidiaries have not engaged in any transaction that, could give rise

 

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to a disclosure obligation as a “reportable transaction” under Section 6011 of the Code and Treasury Regulations promulgated thereunder.

 

(i)                                      The unpaid Taxes of the Company and each of the Subsidiaries will not, as of the Closing Date, exceed the reserve for Taxes (other than any reserve for deferred Taxes established to reflect timing differences between GAAP and Tax income) set forth on the face of the Base Balance Sheet, as such reserve may be adjusted to reflect operations in the ordinary course through the Closing Date.  The Company and each of the Subsidiaries has paid all estimated Taxes required to be paid as of the date such estimated Taxes became due, and such Taxes fully reflect the taxable income and gain of the Company and such Subsidiary for the periods to which such estimated Taxes relate.

 

(j)                                      Neither the Company nor any of the Subsidiaries will be required to include any adjustment under Section 481(c) of the Code (or any corresponding provision of state, local or foreign Law) in taxable income for any Tax period ending after the Closing as a result of a change in accounting method , other than any such adjustment arising solely as a result of the Merger, for a Tax period beginning on or before the Closing.

 

(k)                                   Neither the Company nor any of the Subsidiaries has any income or gain (other than any such income or gain for which the resulting taxes have been included in the Financial Information or as a liability in the determination of Actual Working Capital) reportabl