EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

byandamong
CBW/SK SPORTS VENTURES II, INC.,CBW/SKSPORTS VENTURES,LP,
CBWINL SPORTS VENTURES,LLC
and
NY ICE, LLC
DatedMarch_,2014
FILED: NEW YORK COUNTY CLERK 08/11/2014 01:37 PM
INDEX NO. 652450/2014
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 08/11/2014
TABLE OF CONTENTS
ARTICLEITHECLOSING;PURCHASEANDSALEOFINTERESTS..................................1
1.1. Purchaseof Interests..............................................................................................1
1.2. Consideration.........................................................................................................1
1.3. Closing..................................................................................................................2
104. Withholding...........................................................................................................2
1.5. DeferredTicketRevenueAdjustment.................................................................... 3
ARTICLEIIREPRESENTATIONSANDWARRANTIESOFBUYER.................................... 3
2.1. Organization;PowerandAuthorization................................................................. 3
2.2. BindingEffect;Noncontravention;Consents.........................................................3
2.3. InvestmentIntent...................................................................................................4
204. BrokerFees............................................................................................................4
2.5. Owners..................................................................................................................4
2.6. QualificationsofOwnersandtheBuyer................................................................4
2.7. Buyer'sReliance.................................................................................................... 5
ARTICLEIIIREPRESENTATIONSAND WARRANTIES WITHRESPECTTOTHE
SELLERS.............................................................................................................. 6
3.1. PowerandAuthorization.......................................................................................6
3.2. BindingEffectandNoncontravention;Consents...................................................6
3.3. Ownershipof theInterests;Capitalization............................................................. 7
304. NoForeignPerson..................................: ..............................................................7
3.5. OtherTeams.......................................................................................................... 7
3.6. LoanDocuments....................................................................................................7
3.7. BrokerFees............................................................................................................ 7
ARTICLEIVREPRESENTATIONSANDWARRANTIES WITHRESPECTTOTHE
ACQUIREDCOMPANIES................................................................................... 8
4.1. Organization;PowerandAuthorization;Qualification.......................................... 8
4.2. BindingEffectandNoncontravention;Consents................................................... 8
4.3. Capitalization;Subsidiaries...................................................................................9
4.4. FinancialStatements............................................................................................10
4.5. NoUndisclosedLiabilities...................................................................................11
4.6. Assets..................................................................................................................12
4.7. CompliancewithLaws;Permits;LeagueApprovals...........................................12
4.8. TaxMatters..........................................................................................................12
4.9. EnvironmentalMatters........................................................................................15
4.10. IntellectualProperty.............................................................................................15
4.11. RealEstate...........................................................................................................16
4.12. Litigation.............................................................................................................18
4.13. EmployeeandLaborRelations............................................................................18
4.14. EmployeePlans...................................................................................................20
4.15. AffiliateTransactions..........................................................................................21
4.16. Insurance............................................................................................................. 21
4.17. MaterialContracts...............................................................................................22
4.18. TransactionBonuses,ExpensesandPayments.................................................... 24
4.19. BrokerFees.......................................................................................................... 24
4.20. BankAccounts..................................................................................................... 24
4.21. Relocationto BarclaysCenter.............................................................................. 25
4.22. MinuteBooksandRecords..................................................................................25
ARTICLEVCOVENANTS ANDOTHERAGREEMENTS....................................................25
5.1. General................................................................................................................25
5.2. OperationofBusiness..........................................................................................25
5.3. AccesstoRecords................................................................................................ 28
5.4. Public Announcements........................................................................................28
5.5. NHL,AHL,RegulatoryandOtherConsents;HSR.............................................. 29
5.6. Exclusivity...........................................................................................................29
5.7. TaxMatters..........................................................................................................30
5.8. FurtherAssurances.............................................................................................. 33
5.9. NotificationofCertainMatters............................................................................33
5.10. Release................................................................................................................34
5.11. Financing.............................................................................................................35
5.12. ObtainingNHLApproval.................................................................................... 36
5.13. ComplyingwithNHLRules................................................................................ 37
5.14. NHL RelatedCosts.............................................................................................. 37
5.15. NHLBoardof Governors....................................................................................37
5.16. FailuretoObtainConsentsRelatingtotheARL................................................. 37
5.17. EmployeeMatters................................................................................................ 37
5.18. OfficerandDirectorIndemnificationand Insurance............................................ 38
5.19. OutstandingLoans............................................................................................... 38
ARTICLEVI INDEMNIFICATIONS; SURVIVAL..................................................................38
6.1. IndemnificationbySellers................................................................................... 38
6.2. Indemnificationbythe Buyer..............................................................................38
6.3. TerminationofIndemnification...........................................................................39
6.4. ProceduresRelatingtoIndemnification............................................................... 39
6.5. SurvivalofRepresentations, Warranties,CovenantsandIndemnification
Obligations..........................................................................................................40
6.6. LimitationsonIndemnificationLiability.............................................................41
6.7. ExclusiveRemedies.............................................................................................41
6.8. OtherIndemnificationLimitations.......................................................................41
6.9. AssignmentofClaims..........................................................................................42
6.10. Mitigation............................................................................................................42
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6.11. MitigationTaxTreatmentofIndemnificationPayments......................................42
6.12. RightofSetoff.....................................................................................................42
ARTICLEVIICONDITIONSTOTHECLOSING....................................................................43
7.1. ConditionsofBuyer'sObligation........................................................................43
7.2. ConditionsofSellers'Obligation.........................................................................45
ARTICLEVIIIDEFINITIONS..................................................................................................46
ARTICLEIXTERMINATION..................................................................................................60
9.1. Termination......................................................................................................... 60
9.2. EffectofTermination.......................................................................................... 62
ARTICLEXMISCELLANEOUS..............................................................................................63
10.1. Expenses.............................................................................................................. 63
10.2. GoverningLaw.................................................................................................... 63
10.3. Jurisdiction;ServiceofProcess........................................................................... 64
10.4. WaiverofJuryTrial.............................................................................................64
10.5. Waiver;RemediesCumulative............................................................................ 64
10.6. Notices................................................................................................................. 64
10.7. Assignment ..........................................................................................................65
10.8. NoThird-PartyBeneficiaries...............................................................................66
10.9. Amendments........................................................................................................66
10.10. SpecificPerformance........................................................................................... 66
10.11. Construction........................................................................................................ 66
10.12. EntireAgreement................................................................................................. 67
10.13. Severability..........................................................................................................67
10.14. MutualDrafting................................................................................................... 67
10.15. Counterparts;Facsimile....................................................................................... 67
10.16. NoThird-PartyRights.........................................................................................67
10.17. ConflictsandPrivilege........................................................................................68
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of March
_, 2014, by and among NY Ice, LLC, a Delaware limited liability company ("Buyer"),
CBWINL Sports Ventures, LLC, a Delaware limited liability company ("CBW LLC"), CBW/SK
Sports Ventures II, Inc., a Delaware cmporation ("CBW Inc") and CBW/SK Sports Ventures,
LP, a Delaware limited partnership ("CBW LP", and together with CBW LLC and CBW Inc,
each a "Seller" and collectively the "Sellers"). Buyer and Sellers are sometimes referred to
individually as a "Party" and collectively as the "Parties." Capitalized terms that are used herein
and are not otherwise defined have the meanings ascribed to such terms in ARTICLE VIII.
WHEREAS, (i) CBW LLC owns and controls 100% of the membership interests of
HYSE (the "CBW LLC Owned Interest"), (ii) CBW Inc owns and controls 1% of the
membership interests of CIP and a 1% general partner interest in NYIHC (collectively, the
"CBW Inc Owned Interest"); and (iii) CBW LP owns and controls 99010 of the membership
interests of CIP and a 99% limited partnership interest in NYIHC (collectively, the "CBW LP
Owned Interest", and collectively with the CBW LLC Owned Interest and the CBW Inc Owned
Interest, the "Interests");
WHEREAS, the Parties desire that, subject to the terms and conditions of this
Agreement, Buyer shall purchase from Sellers, the Interests; and
WHEREAS, Sellers have agreed to effect a rollover simultaneously with the Closing
pursuant to the terms of the Subscription Agreement, such that immediately following the
Closing, Sellers will own 25% of the issued and outstanding equity interest in Buyer.
NOW, THEREFORE, in consideration of the premises and the mutual promises made
herein, and in consideration of the representations, warranties, covenants and agreements herein
contained, intending to be legally bound, the Parties hereby agree as follows:
ARTICLE I
mE CLOSING; PURCHASE AND SALE OF INTERESTS
1.1. Purchase ofInterests. At the Closing, subject to the terms and conditions of this
Agreement, including the conditions precedent to Closing set forth in Section 7.1 and
Section 7.2, as applicable, Buyer shall purchase and accept from each applicable Seller, and each
applicable Seller shall sell, transfer and deliver to Buyer, the Interests, free and clear of Liens
except for Permitted Liens described in clauses (i) or G) ofthe definition of"Perrnitted Liens".
1.2. Consideration. In consideration for the purchase and sale of the Interests and for
all other covenants and agreements of the Sellers hereunder, Buyer and Sellers hereby agree as
follows, and it is hereby acknowledged that the aggregate purchase price for the Interests has
been determined based on an agreed upon enterprise value of the Acquired Companies in the
amount of Four Hundred and Twenty Million Dollars ($420,000,000):
(a) $100,000,000 in cash, subject to adjustment as set forth in Section 1.5 (the
"Closing Purchase Price"), shall be paid by Buyer to Sellers on the Closing Date in accordance
with the percentages provided in writing by Sellers to Buyer at least two (2) Business Days prior
to the Closing Date by wire transfer of immediately available funds;
(b) Buyer shall cause NYIHC to issue and deliver to Sellers on the Closing
Date, a promissory note in the form attached hereto as Exhibit 1.2(b) (the "Note") in the
principal amount of $84,000,000 (the "Deferred Purchase Price");
(c) CBW LP shall rollover a 25% limited partnership interest in NYIHC and
shall contribute same to Buyer in a tax-free transaction under Section 721 of the Code in
consideration for the issuance to CBW LP on the Closing Date of "Units" of the Buyer
representing 25% of the issued and outstanding equity interest in Buyer as of the Closing Date,
all pursuant to the terms of the Subscription Agreement;
(d) One of the following shall occur: (A) assumption by Buyer and release of
the Sellers of the "Obligations" of the Sellers under, and as defined in that certain Third
Amended and Restated Credit Agreement dated as of October 30, 2013 among NYIHC, as
borrower, CBW Inc, as general partner and guarantor, CBW LP, as limited partner and
guarantor, the financial institutions a party thereto as lenders and Bank of America, N.A., in its
capacity as agent for the lender (as amended, restated, supplemented or otherwise modified on or
prior to the date hereof, the "Credit Agreement") and each of the other Loan Documents under
and as defined in the Credit Agreement (the "Loan Documents") (the "Credit Agreement
Assumption"), pursuant to which the Acquired Companies borrowed a term loan in the principal
amount of $125,000,000 (including, if so required in connection therewith, the issuance by
Buyer or one or more of the Owners of replacement guaranties for the guaranties currently
provided by Sellers thereunder, or (B) repayment of such "Obligations" contemporaneously with
Closing with the proceeds of an Alternative Financing; and
(e) It is hereby acknowledged (without limiting or adding to any of the
representations, warranties, covenants and indemnification obligations hereunder), that, after
Closing, the Acquired Companies will continue to be subject to Liabilities, which were taken
into account in the calculation of the enterprise value.
1.3. Closing. The closing of the Transactions (the "Closing") shall take place at the
offices of Blank Rome LLP, located at One Logan Square, 130 N. 18
th
Street, Philadelphia, PA
19103, commencing at 10:00 a.m. Eastern Standard Time ("EST") (or at such other location as
the Parties may agree or via the electronic exchange of execution versions of the Transaction
Documents and the signature pages thereto via facsimile or via email by .pdf) on (unless
otherwise agreed to in writing by the Parties) the second Business Day following the satisfaction
or waiver in writing of all conditions to the obligations of the Parties to consummate the
Transactions (other than conditions which, by their nature, are to be satisfied on and as of the
Closing Date or at the Closing itself). Notwithstanding the above, the Closing shall not occur
without Buyer's and Sellers' prior written consent, in their respective sole discretion, prior to
July 1,2014 (and subject to all other terms of this Agreement). The date and time of the Closing
are referred to as the "Closing Date."
1.4. Withholding. Buyer shall be entitled to deduct and withhold from any
consideration payable pursuant to this Agreement to any Person such amounts as may be
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6IS83456.. 17.tioo
required to be deducted or withheld therefrom under any provision of U.S. federal, state, local or
non-U.S. Tax Law or under any other applicable legal requirement. To the extent such amounts
are so deducted or withheld, such amounts shall be (a) promptly remitted to the appropriate
taxing authority and (b) treated for all purposes as having been paid to the Person to whom such
amounts would otherwise have been paid.
1.5. Deferred Ticket Revenue Adjustment. Sellers shall provide to Buyer, on a date
no earlier than two (2) Business Days prior to the Closing, written notice (the "Deferred Ticket
Revenue Notice") of the aggregate dollar amount of pre-sold tickets for the 2014-20 IS hockey
season collected by NYIRC as of the date of such notice (such amount, the "Deferred Ticket
Revenue Amount"). On the Closing Date, Sellers shall provide Buyer with evidence of the
aggregate amount of Cash on Hand as of the close of business on the day immediately prior to
the Closing Date ("Closing Cash Amount"). In the event that the Deferred Ticket Revenue
Amount exceeds the Closing Cash Amount (such difference, the "Adjustment Amounf'), the
Closing Purchase Price shall be reduced by an amount equal to Adjustment Amount.
Furthermore, Sellers acknowledge and agree that they shall cause NYIRC to refrain from
processing any additional presales of tickets for the 2014-2015 hockey season between the date
of the Deferred Ticket Revenue Notice and the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each Seller that the following representations
and warranties are true and correct as of the date hereof.
2.1. Organization: Power and Authorization. Buyer is a limited liability company,
duly organized, validly existing and in good standing under the Laws of the State of Delaware.
Buyer has the requisite company power and authority necessary to enter into, deliver and carry
out its obligations pursuant to each of the Transaction Documents to which it is a party. Buyer is
duly authorized to conduct business and is in good standing under the Laws of each jurisdiction
where such authorization is required, except where the failure to be so authorized or in good
standing would not result in a Buyer Material Adverse Change. Buyer's execution, delivery and
performance of each Transaction Document to which it is a party has been duly authorized by
Buyer and no other company action on the part of Buyer is necessary to authorize the
Transaction Documents and the Transactions, and Buyer has duly executed and delivered this
Agreement and will have, as of the Closing Date, duly executed and delivered each other
Transaction Document to which it is a party.
2.2. Binding Effect: Noncontravention; Consents.
(a) Each Transaction Document to which Buyer is a party constitutes, or when
executed will constitute, a valid and binding obligation of Buyer enforceable (assuming the
Transaction Document to which Buyer is a party will be duly authorized, executed and delivered
by the other parties thereto) against Buyer in accordance with its terms, except as such
enforceability may be limited by the General Enforceability Exceptions.
3
(b) The execution, delivery and performance by Buyer of the Transaction
Documents to which Buyer is a party and the consummation ofthe Transactions do not and shall
not (with or without notice or lapse oftime or both): (i) conflict with or result in a Breach ofthe
terms, conditions or provisions of the Organizational Documents of Buyer; Oi) result in a
material Breach by Buyer of any of the terms, conditions or provisions of any Law or Order to
which Buyer or any of its properties or assets is subject; and (iii) except for any Consents
disclosed or required to be disclosed pursuant to Section 3.2 or Section 4.2 below and for
compliance with and filings under the HSR Act, require any Consents to be obtained or made by
Buyer from or to any third Person which has not been obtained as ofthe date hereof.
2.3. Investment Intent. Buyer understands that the Interests have not been registered
under the Securities Act of 1933, as amended (the "Act"), and that the Interests may not be sold,
transferred or otherwise disposed of, without registration under the Act and any other applicable
state securities laws ("Other Securities Laws"), or pursuant to an exemption therefrom. Buyer is
an "accredited investor" within the meaning of Rule 50 I promulgated under the Act. Buyer is
acquiring the Interests for its own account for investment and not with a view to the resale or
distribution of any part thereof within the meaning of the Act or any Other Securities Laws.
Buyer acknowledges that (i) there is no public market for the Interests and there can be no
assurance that such a public market will develop, and (ii) it must bear the economic risk of its
investment in the Interests for an indefinite period of time.
2.4. Broker Fees. No broker, finder, financial advisor or investment banker is entitled
to any brokerage, finder's, financial advisor's or investment banker's fee or commission or
similar payment in connection with the transactions contemplated by this Agreement based on
Contracts made by or on behalf of Buyer or any of its Affiliates for which Sellers may become
liable.
2.5. Owners. Section 2.5 of the Buyer Disclosure Schedule sets forth a list of all
persons who have a direct or indirect record or beneficial ownership interest in Buyer as of the
date of this Agreement ("Owners"). No other Person will have any direct or indirect record or
beneficial ownership in the Buyer at the Closing and on the Closing Date without the consent of
the Sellers, if the change in the direct or indirect ownership in the Buyer would reasonably be
expected to result in a failure or delay in obtaining League Approvals or the NHL Consent
Agreement.
2.6. Qualifications of Owners and the Buyer.
(a) Neither Owners nor the Buyer nor any Affiliate of any of the foregoing,
has {i) an ownership interest in any professional sports franchise, including a franchise of the
NHL, or any minor league team affiliated with an NHL franchise, or in any gambling business or
operation, in all of the above cases that would be prohibited by any NHL Rules or AHL Rules,
(ii) an agency relationship with any NHL player or AHL player that would be prohibited by any
NHL Rules or AHL Rules or (iii) a control or financial relationship that is, or immediately after
the Closing would be, prohibited by the NHL Rules or the AHL Rules.
(b) The Owners and Buyer are legally, financially and otherwise qualified
under the NHL Rules and the AHL Rules to acquire the Interests and operate the Business.
4
(c) The Buyer understands the NHL Rules and the AHL Rules with respect to
League Approvals of the Buyer and Owners and the Transactions. To Buyer's knowledge, there
are no facts about Owners or the Buyer or their Affiliates, including without limitation
provisions of their Organizational Documents or other applicable agreements, that could
reasonably be expected to disqualify Owners or the Buyer under the NHL Rules or the AHL
Rules from consummating the Transactions, acquiring the New York Islanders and the
Bridgeport Sound Tigers or operating the Business or that would reasonably be expected to cause
the NHL or the AHL not to approve, or to materially delay the approval of, the Transactions and
the Transaction Documents. Neither the Buyer nor any Owner is party or subject to any
agreement or other restriction that would limit its ability to provide a guaranty in compliance
with Section 5.l2(a).
2.7. Buyer's Reliance. Buyer acknowledges that it and its Representatives have been
permitted full and complete access to the books and records, facilities, equipment, Tax Returns,
Contracts, insurance policies (or summaries thereof) and other properties and assets of the
Acquired Companies that it and its Representatives have desired or requested to see or review,
and that it and its Representatives have had a full opportunity to meet with the officers and
employees of the Acquired Companies to discuss the business of the Acquired Companies.
Buyer acknowledges that none of Sellers, the Acquired Companies or any other Person has made
any representation or warranty, expressed or implied, as to, and that Buyer has not relied on, the
accuracy or completeness of any information regarding the Acquired Companies furnished or
made available to Buyer and its Representatives (except as expressly and specifically set forth in
ARTICLE III or ARTICLE IV), and none of Sellers, the Acquired Companies or any other
Person (including any stockholder, member, partner or other Representative of Sellers or the
Acquired Companies) shall have or be subject to any liability to Buyer or any other person
resulting from the provision to Buyer, or Buyer's use of, any such information, regardless of the
form in which it was provided. Buyer (i) has relied solely on the results of its own independent
investigation and verification and the representations and warranties expressly and specifically
set forth in ARTICLE III and ARTICLE IV and (ii) has not relied on the accuracy or
completeness of any other information provided to (or otherwise acquired by) Buyer. Buyer
acknowledges that, except for the representations and warranties contained in ARTICLE III and
ARTICLE IV, (i) Buyer is acquiring the Acquired Companies on an "as is, where is" basis and
(ii) none of Sellers, the Acquired Companies or any other Person has made, and Buyer has not
relied on any other express or implied representation or warranty by or on behalf of any Seller or
the Acquired Companies, and that none of Sellers, the Acquired Companies nor any other
Person, directly or indirectly, has made, and Buyer has not relied on, any representation or
warranty regarding any pro forma financial information, financial projections or other forward-
looking statements of the Acquired Companies, and neither Buyer, the Acquired Companies, or
any Affiliate of any of them will make any claim with respect thereto, and all other
representations, warranties, and statements (including by omission) of any kind or nature
expressed or implied in connection with the Transactions are specifically disclaimed by the
Sellers, including, for the avoidance of doubt, with respect to the accuracy or completeness of
any other information provided to (or otherwise acquired by) Buyer.
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618S3451j 17.doc
ARTICLEIII
REPRESENTATIONSANDWARRANTIES
WITH RESPECTTOTHESELLERS
Exceptas expressly setforth in the SellerDisclosure Schedule (and subjecttothe terms
set forth in the following sentence), eachofSellers,jointlyandseverally, hereby represents and
warrantstoBuyerthatthefollowing representationsandwarrantiesare trueandcorrectas of the
date hereof. The Seller Disclosure Schedule is arranged in sections corresponding to the
numberedandletteredsectionsandsubsectionscontainedinthisARTICLEIII.
3.1. Power and Authorization. Each Seller is validly existing and in good standing
undertheLawsof the stateofitsincorporationorformation, asapplicable, andhastherequisite
entitypowerandauthoritynecessarytoenterinto,deliverandperformitsobligationspursuantto
eachoftheTransactionDocumentstowhich it isaparty. EachSeller'sexecution, deliveryand
performanceofeach Transaction Document to which it is a party has been duly authorized by
such Seller and no other corporate, limited liability company or partnership action (ifand as
applicable) on the part ofsuch Seller is necessary to authorize the Transaction Documents to
whichsuchSelleris aparty, andeachSellerhas dulyexecutedanddeliveredthis Agreementand
willhave, as ofthe ClosingDate, dulyexecutedand deliveredeachotherTransactionDocument
towhichit isaparty.
3.2. BindingEffectandNoncontravention;Consents.
(a) EachTransactionDocumentto whicheachSelleris a partyconstitutes,or
when executed will constitute, a valid and binding obligation ofsuch Seller (assuming the
Transaction Document to which such Seller is a party will be duly authorized, executed and
delivered by the other parties thereto) enforceable against such Seller in accordance with its
terms,exceptas suchenforceabilitymaybelimitedbytheGeneralEnforceabilityExceptions.
(b) The execution, delivery, and performance by each Seller of the
Transaction Documents to which such Seller is a party and the consummation of the
Transactions do not andshall not (with orwithout noticeorlapse oftime orboth): (i) conflict
with or result in a Breach of the terms, conditions, or provisions of the Organizational
Documents ofsuch Seller; (ii) result in a material Breach by such Sellerofany ofthe terms,
conditions or provisions ofany Lawor Order to which such Seller or any ofits properties or
assets is subject;(iii) subjectto the receipt ofConsents set forth inSection 3.2(b) ofthe Seller
DisclosureLetter,resultinamaterialBreachofanyof theterms,conditionsorprovisionsof any
Contracttowhichsuch Sellerisa partyorbywhichsuchSeller'sassetsorpropertiesare bound;
or (iv) except as set forth in Section 3.2(b) ofthe Seller Disclosure Schedule, require any
ConsentstobeobtainedormadebysuchSellerfromortoanythirdPerson.
(c) There is no Action or Proceeding pending or, to Sellers' Knowledge,
threatened in writing, against any Seller(i) challenging orseekingto restrain, delay orprohibit
any ofthe transactions contemplated by this Agreement or (ii) preventing any Seller from
performing in all material respects its obligations under the Transaction Documents to which
suchSellerisaparty.
6
3.3. Ownership of the Interests; Capitalization.
(a) Except as set forth in Section 3.3(a) of the Seller Disclosure Schedule:
(i) CBW Inc holds of record, owns beneficially and has good and marketable title to all of the
CBW Inc Owned Interest, free and clear of any and all Liens, except for Permitted Liens, CBW
LP holds of record, owns beneficially and has good and marketable title to all of the CBW LP
Owned Interest, free and clear of any and all Liens, except for Permitted Liens, and CBW LLC
holds of record, owns beneficially and has good and marketable title to all of the CBW LLC
Owned Interest, free and clear of any and all Liens, except for Permitted Liens; (ii) no Seller is a
party to any voting trust, proxy or other agreement or understanding with respect to the voting of
any Interest that will survive the Closing Date; and (iii) no Seller is a party to any option,
warrant, purchase right or other contract that could require Seller to sell, transfer or otherwise
dispose of any Interests (other than to Buyer pursuant to the terms of this Agreement). Except
for the Interests, no Seller owns any securities of any Acquired Company or otherwise has any
right to acquire any securities of any Acquired Company.
(b) Section 3.3(b) of the Seller Disclosure Schedule sets forth the identity and
ownership of all of the Sellers (and to the extent any entities are identified thereon, the identity
and ownership of all such entities) and except as set forth on Section 3.3(b) of the Seller
Disclosure Schedule, no Person owns any equity securities or other ownership interest in any
Sellers and there are no Contracts relating to the issuance, sale or transfer of any equity securities
or other ownership interest of the Sellers.
(c) Except as set forth in Section 3.3(c) of the Seller Disclosure Schedule,
except for any ownership interest in any Acquired Companies, none of the Sellers controls,
directly or indirectly, or has or had any direct or indirect equity ownership of or participation in
any Person, in any such case that is prohibited by any NHL Rules or AHL Rules.
3.4. No Foreign Person. No Seller is a "foreign person" as such term is described in
Section 1445 of the Code.
3.5. Other Teams. Neither Seller nor any Affiliate of such Seller has any ownership or
other economic or pecuniary interest in any professional hockey team other than the New York
Islanders or the Bridgeport Sound Tigers (except for any indirect economic or pecuniary interest
in any other professional NHL hockey team by virtue of owning the New York Islanders or any
other minor league AHL hockey team by virtue of owning the Bridgeport Sound Tigers), in any
such case that is prohibited by any NHL Rules or AHL Rules.
3.6. Loan Documents. As of the date hereof and, immediately after giving effect to
the Transactions, as of the Closing Date, no Seller is in Breach of the Credit Agreement or any
other Loan Document and no "Default" or "Event of Default" under and as defined in the Credit
Agreement has occurred and is continuing.
3.7. Broker Fees. Except as set forth on Section 3.7 of the Seller Disclosure Schedule,
no Seller has entered into any Contract with any Person which would result in the obligation of
any Seller to pay any fees or commissions to any broker, fmder, or agent with respect to the
Transactions, and in any event, no such Contract would result in the obligation of any Acquired
7
Company or Buyer to pay any fees or commissions to any broker, finder, or agent with respect to
the Transactions.
ARTICLE IV
REPRESENTATIONSANDWARRANTIES
WITHRESPECTTOTHEACQUIREDCOMPANIES
Except as expressly set forth in the Company Disclosure Schedule (and subject to the
terms set forth in the following sentence), each of Sellers, jointly and severally, hereby
represents and warrants to Buyer that the following representations and warranties are true and
correct as of the date hereof. The Company Disclosure Schedule is arranged in sections
corresponding to the numbered and lettered sections and subsections contained in this
ARTICLE IV.
4.1. Organization: Power and Authorization; Oualification.
(a) Each Acquired Company is a corporation, limited partnership or limited
liability company (as applicable) duly incorporated or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or formation.
(b) Each Acquired Company is duly authorized to: (i) conduct business in the
manner in which its business is currently being conducted; (li) own and use its assets in the
manner in which its assets are currently owned and used; and (iii) execute and deliver the
Transaction Documents to which it is a party and perform its obligations hereunder and
thereunder. Each Acquired Company is duly qualified to conduct business and is in good
standing in each jurisdiction in which the failure to so qualifY would have a Company Material
Adverse Change. Section 4.1 of the Company Disclosure Schedule accurately sets forth each
jurisdiction where each Acquired Company is qualified to conduct business. Each Acquired
Company has the requisite entity power necessary to enter into, deliver and carry out its
obligations pursuant to each of the Transaction Documents to which it is a party. The execution,
delivery and performance ofeach Transaction Document by each Acquired Company to which it
is a party has been duly authorized by such Acquired Company (as applicable) and no other
action on the part of such Acquired Company is necessary to authorize the Transaction
Documents and the Transactions.
4.2. Binding Effect and Noncontraventionj Consents.
(a) Each Transaction Document to which any Acquired Company is a party
constitutes a valid and binding obligation of such Acquired Company (as applicable) (assuming
the Transaction Document to which such Acquired Company is a party will be duly authorized,
executed and delivered by the other parties thereto) enforceable against such Acquired Company
(as applicable) in accordance with its terms, except as such enforceability may be limited by the
General Enforceability Exceptions.
(b) Except as otherwise set forth in Section 4.2(b) of the Company Disclosure
Schedule, the execution, delivery, and performance by each Seller or each Acquired Company of
any Transaction Documents to which such Seller or any Acquired Company is a party and the
8
consummationoftheTransactionsdonotand shallnot(withorwithoutnoticeorlapseoftimeor
both): (i) conflict with or result in a Breach of the terms, conditions, or provisions of
Organizational Documents ofanyAcquired Company; (ii) result in theimposition ofany Lien
(otherthanaPermittedLien)uponanyofthepropertiesorassetsof anyAcquiredCompany;(iii)
result in a material Breach by any Acquired Company ofany ofthe terms, conditions or
provisions ofany Law orOrder to which such Acquired Company is subject or by which any
such Acquired Company's assets or properties are bound; or (iv) require any Consents to be
obtained or made by any Acquired Companies from or to any third Person or any League
Approvals.
4.3. Capitalization;Subsidiaries.
(a) The entireauthorizedand issuedequitysecuritiesofeachoftheAcquired
Companies are set forth in Section 4.3(a) ofthe Company Disclosure Schedule. All ofthe
Interests and all ofthe other issued and outstanding shares, membership interest or equity
securities ofthe Acquired Companies (as applicable andall as set forth in Section 4.3(a) ofthe
Company Disclosure Schedule) have been duly authorized, are validly issued, fully-paid, and
non-assessable and are held ofrecordand beneficiallyby a SelleroranAcquiredCompany(all
as setforthin Section4.3(a)oftheCompanyDisclosureSchedule)andare notsubjecttoorhave
not been issued in violation ofany preemptive or subscription rights or any option, call option,
right offirst refusal, or any similar right under the Organizational Documents ofeach ofthe
Acquired Companies or any Contract to which any ofthe Acquired Companies or Sellers is a
party or otherwise bound, in each case that has not been waived. There are no outstanding or
authorized options, warrants, puts, calls, purchase rights, subscription rights, conversion rights,
exchangerights, orothercontractsorcommitmentsthat couldrequireanyAcquiredCompanyto
issue, sell or otherwise cause to become outstandinganyofits membership interest, ownership
interest, capital stock or other equity securities (as applicable). There are no outstanding or
authorizedstockappreciation, phantomstock,profitparticipation,earnoutrights orsimilarrights
withrespectto anyAcquiredCompanies. Thereare no, andattheClosingthereshallnotbeany,
voting agreements, registration rights, rights offirst refusal, preemptive rights, co-salerights or
other restrictions applicable to any outstanding securities ofany ofthe Acquired Companies.
There is no Liability for dividends accrued and unpaid by any Acquired Companies. No
AcquiredCompanythatis acorporationholdsanytreasuryshares.
(b) Exceptas set forth inSection4.3(b)oftheCompanyDisclosureSchedule,
immediatelyaftertheClosing,Buyershall notrequiretheConsentofanyPerson, otherthanthe
NRLandARL,toamendandrestatetheOrganizationalDocumentsoftheAcquiredCompanies.
(c) Exceptassetforth inSection4.3(c)oftheCompanyDisclosureSchedule,
except for any ownership interest that any Acquired Companies have in any other Acquired
Companies, none oftheAcquired Companies controls, directlyor indirectly, orhas or had any
directorindirectequityownershipof orparticipationin anyPersonandnoAcquiredCompanyis
obligatedtomakeanyinvestmentinorcapitalcontributioninoronbehalfofanyotherPerson.
9
4.4. Financial Statements.
(a) Attached as Section 4.4(a) of the Company Disclosure Schedule are the
following financial statements (collectively, the "Financial Statements"):
(i) the audited consolidated balance sheet of NYIHC as of June 30,
2012 and the related consolidated statement of operations and partners' accumulated deficit, and
the related consolidated statement of cash flows, for the year then ended;
(ii) the audited consolidated balance sheet of NYIHC as of June 30,
2013 and the related consolidated statement of operations and partners' accumulated deficit, and
the related consolidated statement of cash flows, for the year then ended;
(iii) (A) for CI, the unaudited balance sheet as of December 31, 2013
and the related unaudited statement of operations for the six-month period then ended; (B) for
HYSE, the unaudited statement of operations for the fiscal year ended December 31, 2013; and
(C) for CIP, the unaudited balance sheet as of December 31, 2013 and the related unaudited
statement ofoperations for the six -month period then ended; and
(iv) the unaudited consolidated balance sheet of the Acquired
Companies as of December 31, 2013 (the "Unaudited Balance Sheet") and the related unaudited
consolidated statement of operations and partners' accumulated deficit, and the related
consolidated statement of cash flows as prepared by management for the six-month period then
ended.
(b) Except as set forth in Section 4.4(b) of the Company Disclosure Schedule,
each Financial Statement (including the notes thereto) (i) has been prepared in accordance with
GAAP, consistently applied throughout the periods covered thereby, and (ii) fairly presents in all
material respects the consolidated financial condition of the applicable Acquired Companies,
taken as a whole, as of the respective dates thereof and the results of the applicable Acquired
Companies' operations for the periods specified, except as disclosed therein; provided, however,
that the unaudited financial statements are subject to normal year-end audit adjustments and do
not contain all the footnotes required under GAAP.
(c) All accounts and notes receivable of any of the Acquired Companies that
are reflected on the Financial Statements and all accounts and notes receivable of any of the
Acquired Companies arising subsequent to the date of the Unaudited Balance Sheet (collectively,
the "Receivables") represent or will represent at the Closing, valid obligations arising from
transactions actually made or services actually performed in the ordinary course of business
consistent with past practice.
(d) Since the date of the Unaudited Balance Sheet, (a) no Company Material
Adverse Change has occurred, and (b) except as set forth in Section 4.4(d) of the Company
Disclosure Schedule, there has been no (i) termination of any employee or consultant of any
Acquired Company, except for any such termination of any employee or consultant (A) made in
the usual and ordinary course of business consistent with past practice or (B) who received a
salary or compensation of less than $150,000 in 2012 or 2013, (ii) material change to the
10
compensation of any individual employee or consultant (other than any Team Player or Team
coach) (except for any change generally made in the usual and ordinary course of business
consistent with past practice to the compensation of all employees or consultants) who received a
salary or compensation of more than $150,000 in 2012 or 2013, (iii) termination of any Contract
(other than a Contract of any Team Player or Team coach) with any Acquired Company that
would otherwise constitute a Material Contract or a Company Lease if such Contract were in
existence as of the date hereof, other than any Contract that terminated in accordance with its
terms without any action by Sellers or any Acquired Company, (iv) modification to any Material
Contract (other than a Player Contract or Contract of any Team coach) or Company Lease that is
materially adverse to any Acquired Company, (v) change in accounting methods used by any
Acquired Company, except as required by GAAP, and (vi) settlement of any material Action or
Proceeding.
(e) Since the date of the Unaudited Balance Sheet, no Cash on Hand has been
transferred or paid to any of the Sellers or their respective Affiliates by any Acquired
Companies, whether as a distribution, dividend or otherwise (including using or by directing any
proceeds or consideration paid or payable under any Contract between any Acquired Company
and other Person).
(f) Section 4.4(f) of the Company Disclosure Schedule sets forth a listing, as
of the date hereof, of any and all amounts (i) accrued by any of the Acquired Companies to the
NHL or AHL, and (ii) accrued by the NHL or AHL to any of the Acquired Companies, that, in
each case, have not yet been paid.
(g) Section 4.4(g) of the Company Disclosure Schedule sets forth a listing, as
of the date hereof, of any and all advances, prepayments, deposits, prepaid expenses or similar
payments (other than those in amounts of not more than $100,000 individually, all of which in
the aggregate are not more than $500,000), that any of the Acquired Companies have received
from any Person, pursuant to a Contract or otherwise, with respect to any obligations of any of
the Acquired Companies (including obligations to render services, deliver products, make
available for use any Company Facilities or otherwise) that have not been satisfied in full as of
the date hereof.
(h) Except as set forth in Section 4.4(h) of the Company Disclosure Schedule,
the Financial Statements accurately reflect any and all deferred Liabilities of any of the Acquired
Companies to any current or former employees of any of the Acquired Companies, including
players, coaches, general managers and other staffwith respect to any ofthe Teams.
4.5. No Undisclosed Liabilities. Except as set forth in Section 4.5 in the Company
Disclosure Schedule, no Acquired Company has any Liabilities of the type required in financial
statements prepared in accordance with GAAP to be reflected in a balance sheet or described as a
contingency in the notes thereto, other than Liabilities (i) reserved against in the Unaudited
Balance Sheet or referred to in the notes thereto, (ii) that have arisen in the usual and ordinary
course of business consistent with past practice since the date of the Unaudited Balance Sheet, or
(iii) with respect to any Transaction Expenses.
II
4.6. Assets.
(a) Except as set forth in Section 4.6 of the Company Disclosure Schedule,
each of the Acquired Companies has good and valid title to, or a valid leasehold interest in, all of
its material assets, free and clear of any and all Liens, other than Permitted Liens. The Acquired
Companies' assets (including tangible assets, Contracts and Intellectual Property Rights)
collectively represent in all material respects all assets necessary for the conduct of the Business
in the manner currently conducted.
(b) NYIHC is the legal, valid and beneficial owner ofthe New York Islanders,
and CI is the legal, valid and beneficial owner ofthe Bridgeport Sound Tigers.
4.7. Compliance with Laws: Permits; League Approvals.
(a) Each of the Acquired Companies is in compliance in all material respects,
with all Laws and Orders applicable to the Business, the Iceworks Facility and, to the extent
applicable to the Acquired Companies, the Nassau Coliseum, and none of the Acquired
Companies has received written notice alleging any actual or possible material violations of
applicable Laws within the last three-year period, and, to the Sellers' Knowledge, no Acquired
Company is under investigation with respect to a material violation of any Law or Order.
(b) Each of the Acquired Companies has in effect all Permits necessary for
them to own and operate the Iceworks Facility, to sublease the Nassau Coliseum and to carry on
their businesses as now conducted. All material Permits of each of the Acquired Companies are
in full force and effect and no Proceeding is pending or threatened to revoke or limit any such
Permit.
(c) Each of the Acquired Companies has at all times complied in all material
respects with all applicable Laws regarding the use of funds for political activity or commercial
bribery. To the Sellers' Knowledge, none of the Acquired Companies, with respect to the
operation ofthe Business, has: (i) used or allocated for use any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to political activity; (ii) made any direct
or indirect unlawful payments to government officials or others from funds or the establishment
or maintenance of any unlawful or unrecorded funds; or (iii) offered or received any illegal
discounts, rebates or kickbacks in violation of applicable Law.
(d) Each of the Acquired Companies has all League Approvals and all such
League Approvals are in full force and effect. Each ofthe Acquired Companies is in compliance
with all applicable rules and regulations of the NHL, the AHL and any other professional or
minor league sports league applicable to the Business. NYIHC is an existing Member Club of,
and in good standing with, the NHL and is in compliance, in all material respects, with the NHL
Rules. CI is an existing member of and in good standing with the AHL.
4.8. Tax Matters. Except as set forth on Section 4.8 of the Company Disclosure
Schedule:
12
(a) All Tax Returns of the Acquired Companies have been timely filed in
accordance with applicable Law, and each such Tax Return is true, correct and complete in all
material respects. Each Acquired Company has timely paid all Taxes (whether or not shown on
any Tax Return). No Acquired Company has requested an extension of time within which to file
any Tax Return which has not since been filed. Sellers have made available to Buyer true,
correct and complete copies of all material federal and state Tax Returns of each Acquired
Company for the prior four tax years.
(b) No Acquired Company has for any Tax year remaining subject to audit:
(i) executed a waiver or consent extending any statute of limitations for the assessment or
collection of any Taxes that remains outstanding; (ii) applied for a ruling relative to Taxes;
(iii) entered into a closing agreement with any Tax Authority; or (iv) entered into any tolling
agreement regarding a statute oflimitations applicable to any Tax Return.
(c) Each Acquired Company has complied with the provisions of the Code
relating to the withholding and payment of Taxes, including the withholding and reporting
requirements under Code sections 1441 through 1464, 3401 through 3406, and 6041 through
6049, as well as similar provisions under any other Laws, and has, within the time and in the
manner prescribed by Law, withheld from employee wages and paid over to the proper Taxing
Authority all amounts required. Each Acquired Company has undertaken in good faith to
appropriately classifY all service providers as either employees or independent contractors for all
Tax purposes. Except as set forth in Section 4.8(c) of the Company Disclosure Schedule, each
Acquired Company (x) has collected and remitted all applicable sales or use Taxes to the
appropriate Tax Authority or (y) has obtained, in good faith, any applicable sales or use Tax
exemption certificates.
(d) No Tax Return of any Acquired Company with respect to any Tax year
has been or is currently being examined by the IRS or other relevant Tax Authority. There are
no examinations or other administrative or court proceedings relating to Taxes in progress or
pending with respect to which any Acquired Company has received written notice. There is no
written claim against any Acquired Company for any Taxes which are owed by such Acquired
Company and due under applicable law, but have not been paid in full, and no material
assessment, deficiency, or adjustment has been asserted, proposed, or threatened with respect to
any Tax Return of or with respect to any Acquired Company. No written claim has ever been
received by an Acquired Company from any Tax Authority in a jurisdiction where such
Acquired Company does not file Tax Returns that it is or may be subject to taxation in the
jurisdiction. All Tax deficiencies that have been claimed, proposed, or asserted in writing
against any Acquired Company have been fully paid or finally settled, and no issue has been
raised in writing in any examination which, by application of similar principles, could be
expected to result in the proposal or assertion of a Tax deficiency for any other year not so
examined.
(e) Except as set forth in Section 4.8(e) of the Company Disclosure Schedule,
no Acquired Company is (i) a party to any written agreement providing for the allocation or
sharing of Taxes other than commercial agreements entered into in the ordinary course of
business not primarily related to Taxes, or (ii) liable for the Taxes of any other Person under
Section 1.1502-6 of the Treasury Regulations (or any similar provision of foreign, state or local
13
Law), as a transferee or successor, by contract or otherwise. None of the Acquired Companies is
nor has been a member of an Affiliated Group.
(t) No Acquired Company is or has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during the period
specified in Section 897( c)(1 )(A)(ii) of the Code. Each Seller is not a "foreign person" as such
term is defined in Section 1445 of the Code.
(g) No position has been taken on any Tax Return with respect to any
Acquired Company for a taxable period for which the statute of limitations for the assessment of
any Taxes with respect thereto has not expired that is substantially similar to any position which
a Tax Authority has successfully challenged in the course of an examination of a Tax Return of
such Acquired Company. No Acquired Company participated in a "reportable transaction"
within the meaning of Treasury Regulation Section 1.6011-4(b)(I) (other than such transactions
that have been properly reported), or transactions that constitute "listed transactions" as such
term is defined in Treasury Regulation Section 1.6011-4(b)(2).
(h) There are no Liens upon any properties or assets of any of the Acquired
Companies arising from any failure or alleged failure to pay any Tax (other than Permitted
Liens).
(i) None of the Acquired Companies will be required to include any material
item of income in, or exclude any material item of deduction from, taxable income for any period
(or any portion thereot) ending after the Closing Date as a result of any (i) installment sale or
other transaction on or prior to the Closing Date, (ii) "Tax Closing Agreement" pursuant to
Section 7121 of the Code or any corresponding provision of state, local or foreign Tax law,
(iii) accounting method change or agreement with any Tax Authority, (iv) prepaid amount
received on or prior to the Closing Date or (v) income from discharge of indebtedness deferred
pursuant to Section I08(i) of the Code or any corresponding provision of state, local or foreign
Tax law.
U) No Acquired Company has constituted either a "distributing corporation"
or a "controlled corporation" in a distribution of stock intended to qualify for tax-free treatment
under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.
(k) Section 4.8(k) of the Company Disclosure Schedule contains a true,
correct and complete list of all Tax Returns with respect to each Acquired Company's last three
fiscal years.
(I) The Financial Statements fully accrue in accordance with GAAP all
Liabilities for Taxes that are owed but have not been paid to the applicable Tax Authority with
respect to all periods through the dates thereof Since the date of the Financial Statements, no
Acquired Company has incurred any Liabilities for Taxes except in the usual and ordinary course
of business consistent with past practice.
14
(m) Each Acquired Company has been treated as either a partnership for U.S.
federal income Tax purposes, or disregarded as an entity separate from its owner under U.S.
Treasury regulations section 301.7701-3(b)(I)(ii) or U.S. Treasury regulations section 301.7701-
3(b)(2)(i)(C) for U.S. federal income Tax purposes at all times since their respective inceptions
and will be partnerships or disregarded entities, as the case may be, through the Closing Date.
4.9. Environmental Matters. All of the Acquired Companies and each of the
Company Facilities are, to Sellers' Knowledge, in compliance, in all material respects, with all
applicable Environmental Laws. None of the Acquired Companies has received any written
notice of a violation of applicable Environmental Laws that remains outstanding. There is no
Action or Proceeding pending or, to the Sellers' Knowledge, threatened against any of the
Acquired Companies or, to Sellers' Knowledge, with respect to the Company Facilities pursuant
to Environmental Laws; and, to the Sellers' Knowledge, there are no past or present events,
conditions, circumstances, activities, or agreements, which would reasonably be expected to
prevent material compliance with, or which have given rise to, or would reasonably be expected
to give rise to any material Liability of any of the Acquired Companies under Environmental
Laws. Except in compliance with Environmental Laws and in a manner that would not subject
any of the Acquired Companies to a Liability, to Sellers' Knowledge, no Hazardous Materials
are present on any Company Facilities or other real property (including the soil, groundwater and
surface water on or under the property) currently or previously owned, operated, occupied, or
leased by any of the Acquired Companies (including the soil, groundwater and surface water on
or under the property) that were released into the environment by any of the Acquired
Companies. All of the Acquired Companies have provided to Buyer all material environmental
site assessments, audits or reports in their possession, custody or control relating to any real
property owned, leased, occupied, or operated by any ofthe Acquired Companies at any time.
4.10. Intellectual Property.
(a) Section 4.l0(a) of the Company Disclosure Schedule sets forth a true and
complete list of all (i) patented and registered Company Intellectual Property Rights, (ii) pending
patent applications, and applications for registration of other material Company Intellectual
Property Rights filed by or on behalf of any of the Acquired Companies, (iii) all material
Software owned or used by any of the Acquired Companies other than Off-The-Shelf Software,
(iv) trade, corporate or fictitious names used by any of the Acquired Companies in the Business
as currently conducted, (v) material unregistered trademarks and service marks owned or used by
any of the Acquired Companies in the Business as currently conducted and (vi) all Domain
Names owned or used by any ofthe Acquired Companies in the Business as currently conducted.
(b) Except with respect to any Off-The-Shelf Software or as set forth in
Section 4.1 Orb) ofthe Company Disclosure Schedule, to the Sellers' Knowledge: (i) each of the
Acquired Companies owns all right, title and interest to, or has the right to use, free and clear of
all Liens (except Permitted Liens and restrictions contained in any applicable license), all
material Company Intellectual Property Rights and Licensed Intellectual Property used by such
Acquired Company in the conduct of the Business as of the Closing Date; and (ii) to the Sellers'
Knowledge, any and all licenses, sublicenses and other Contracts covering or relating to the same
or to which any Acquired Company is a party under which such Acquired Company uses any of
the same, is legal, valid, binding, enforceable and in full force and effect. To the Sellers'
15
Knowledge, no Acquired Company is in Breach of any license, sublicense or other Contract
covering or relating to any ofthe foregoing Intellectual Property Rights.
(c) All registered Marks, issued Patents and registered Copyrights identified
in Section 4.10(a) of the Company Disclosure Schedule ("Company Registered IP") are
subsisting and, to Sellers' Knowledge, valid and enforceable, and no Acquired Company has
received any written notice or claim challenging the validity or enforceability of any Company
Registered IP.
(d) To the Sellers' Knowledge, none of the Acquired Companies or any
operation of the Business (i) since January 1, 2013, has infringed upon or otherwise violated, (ii)
is subject to any pending claim, demand, or threatened judicial, administrative or other legal
proceeding alleging infringement or violation of, or (iii) is currently infringing upon or otherwise
violating, in any respect, the Intellectual Property Rights ofany third party.
(e) Except as set forth in Section 4.10{e) of the Company Disclosure
Schedule, to Sellers' Knowledge, no Person is violating or infringing upon, or has violated or
infringed upon at any time since January 1,2013, any Company Intellectual Property Rights. No
action or activity is pending to challenge rights to, suspend, cancel or disable any Domain Name,
the registration therefor, or any right of any Acquired Company thereto (including the right to
use a domain name or internet address).
(1) Each of the Acquired Companies has taken commercially reasonable steps
in accordance with standard industry practices as known by such Acquired Company to protect
its rights in its material Company Intellectual Property Rights.
(g) Except as set forth in Section 4.10(g) of the Company Disclosure
Schedule, the execution and delivery of this Agreement and the consummation of the
Transactions will not result in any of the Acquired Companies granting to any third party any
rights or licenses to any Company Intellectual Property Rights, except as would not result in a
Company Material Adverse Change.
4.11. Real Estate.
(a) (i) Section 4.1Ha) of the Company Disclosure Schedule is a complete
and correct copy ofthe original of the Barclays Center License Agreement (including all exhibits
thereto), and there has been no amendment, modification or supplement of any kind or nature
with respect thereto. The Barclays Center License Agreement has been executed and delivered,
and is binding on the parties thereto.
(ii) NYIHC owns and holds the entire interest ofthe licensee under the
Barclays Center License Agreement and has not assigned or otherwise transferred (either
absolutely or collaterally, except as collateral security under the Loan Documents), in whole or
in part, its interest as licensee under the Barclays Center License Agreement to any Person.
(iii) NYIHC has received no written notice of a default under the
Barclays Center License Agreement, and, to Sellers' Knowledge, no event or action has occurred
16
which, after the giving of notice or the lapse of time or both, would constitute or result in a
breach or default in any respect by NYIHC under the Barclays Center License Agreement. All
fees and all other payments of any type or nature presently due and payable by NYIHC pursuant
to the Barclays Center License Agreement have been paid through and including the date of this
Agreement. To the Sellers' Knowledge, Barclays Center Licensor has no offsets, counterclaims
or defenses against NYIHC with respect to the Barclays Center License Agreement. Sellers have
received no written notice that the Barclays Center Licensor has not paid and/or performed all of
its obligations under the Barclays Center License Agreement as ofthe date hereof.
(iv) To the Sellers' Knowledge, there has been no assignment or
transfer (either absolutely or collaterally) by Barclays Center Licensor of its interest in the
Barclays Center License Agreement or of its interest in the Barclays Center Master Lease.
(b) (i) Section 4.Il(b) ofthe Company Disclosure Schedule is a complete
and correct copy of the Nassau Coliseum Sublease (including all exhibits thereto), and there has
been no amendment, modification or supplement of any kind or nature with respect thereto
except as disclosed on Section 4.ll(b) of the Company Disclosure Schedule. The Nassau
Coliseum Sublease is presently in full force and effect.
(ii) NYIHC has not assigned or otherwise transferred (either absolutely
or collaterally, except as collateral security under the Loan Documents), or sublet its interest in
and to the Nassau Coliseum Sublease to any Person and there are no Liens, other than Permitted
Liens, on NIYHC's interest in and to the Nassau Coliseum Sublease.
(iii) NYIHC has received no written notice of a default under the
Nassau Coliseum Sublease, and, to Sellers' Knowledge, no event or action has occurred which,
after the giving of notice or the lapse of time or both, would constitute or result in a material
breach or default in any respect by NYIHC under the Nassau Coliseum Sublease. All fees and
all other payments of any type or nature presently due and payable by NYIHC pursuant to the
Nassau Coliseum Sublease have been paid through and including the date of this Agreement. To
Sellers' Knowledge, Nassau Coliseum Sublessor has paid and/or performed all of its obligations
under the Nassau Coliseum Sublease through the date ofthis Agreement.
(iv) Sellers have received no written notice of the assignment or
transfer (either absolutely or collaterally) by Nassau Coliseum Sublessor of its interest in the
Nassau Coliseum Sublease.
(c) Except for the Parking Lot owned by NYIHC, none of the Acquired
Companies owns any real property, nor is any Acquired Company party to any agreement to
purchase or sell any real property. Section 4.1 I (c)(i) of the Company Disclosure Schedule sets
forth all real property that each of the Acquired Companies has a right to lease, license, sublease,
sublicense, use or occupy, as applicable, including with respect to the Arenas (together with the
Iceworks Facility, the "Company Facilities") and a listing of all lease, license, sublease, or
sublicense documents pertaining thereto to which either Seller is a party, and Sellers have
provided the Buyer with true, correct and complete copies of all such documents, including all
amendments, terminations and modifications thereof (collectively, "Company Leases"). Except
as set forth in Section 4.1 Hc)(ii) ofthe Company Disclosure Schedule, with respect to each lease
17
or sublease listed in Section 4.1l(c}(i) of the Company Disclosure Schedule, (a) each of the
Acquired Companies (as applicable) has a valid leasehold or license interest, such leasehold or
license interest being free and clear of any Liens other than Permitted Liens and (b) there is not,
under any Company Leases, any existing default or event of default (or, to Sellers' Knowledge,
any event which, with notice or lapse of time, or both, would constitute an event of default) of
any ofthe Acquired Companies, or to the Sellers' Knowledge, any other party thereto.
4.12. Litigation. Except as set forth in Section 4.12(i) of the Company Disclosure
Schedule, there is no Action or Proceeding pending or, to the Sellers' Knowledge, threatened in
writing, against (a) any ofthe Acquired Companies, (b) any oftheir respective officers, directors,
employees or shareholders, in their capacity as such, or (c) any of the Acquired Companies'
assets, properties or businesses involving in any such case a claim exceeding $100,000 which
would not be covered by insurance or seeking injunctive or similar relief which if granted would
be material to the operation of the Business. Except as set forth in Section 4.12(ii) of the
Company Disclosure Schedule, no Acquired Company is subject to any outstanding Order.
Except as set forth in Section 4. 12(iii) ofthe Company Disclosure Schedule, there is no material
Action or Proceeding pending or threatened by or on behalf of any Acquired Company against
any other Person. There is no Action or Proceeding pending or, to the Sellers' Knowledge,
threatened in writing against any Acquired Company which challenges the validity of this
Agreement or the Transactions or otherwise seeks to delay, limit or enjoin the Transactions.
4.13. Employee and Labor Relations.
(a) Section 4.I3(a) of the Company Disclosure Schedule sets forth an accurate
and complete list, as of the date hereof, of all current employees of any Acquired Company,
other than Team Players, who received a base salary or base wages of more than $150,000,
together with such Persons' position or function, date of hire, current annual cash compensation
(base salary and any target bonus), outstanding loans or advances, and exempt or non-exempt
status under the Fair Labor Standards Act.
(b) Section 4.13(b) of the Company Disclosure Schedule sets forth: (i) an
accurate and complete list, as of the date hereof, of all independent contractors or consultants
currently engaged by any Acquired Company who received cash remuneration of at least
$150,000 in calendar year 2013; and (ii) their Contracts with any Acquired Company (if not set
forth in a Material Contract listed or described in Section 4.17 of the Company Disclosure
Schedule).
(c) Except (i) for Player Contracts, (ii) as set forth in Section 4.13(c) of the
Company Disclosure Schedule, and (iii) for any limitations of general application which may be
imposed under (x) labor Law or any applicable collective bargaining agreements or (y)
applicable employment Laws independent of the terms of any Contract, all of the Acquired
Companies have the right to terminate the employment ofeach oftheir employees at will without
incurring any penalty or material Liability.
(d) All of the Acquired Companies have complied in all material respects
with, and are in current compliance in all material respects with, all applicable Laws relating to
employment of employees and the engagement of consultants, including properly classifying
18
consultants as "independent contractors" and properly classifying and treating employees as
either "exempt" or "non-exempt." Without limiting the foregoing, all of the Acquired
Companies are in material compliance with all applicable Laws relating to employment,
employment practices, discrimination, harassment, wages, hours, workplace safety, and terms
and conditions of employment and, except as set forth on Section 4.l3(d) of the Company
Disclosure Schedule, there have been no charges of discrimination filed against any Acquired
Company with the Equal Employment Opportunity Commission or a state or local fair
employment practices agency or lawsuit alleging any violation of the Fair Labor Standards Act
or state wage and hour law during the last 12 months prior to the date of this Agreement. All of
the Acquired Companies have paid or caused to be paid to all employees in all material respects
all wages, salaries, bonuses, benefits, commissions, and other compensation due to them or
otherwise arising under any Law, plan, policy, practice, program, or Contract and have not
unlawfully withheld any such wages, salaries, bonuses, benefits, commissions or other
compensation, and to all officers and directors who are not employees, any amounts due to such
officers and directors.
(e) Except as set forth in Section 4.l3(e)(i) of the Company Disclosure
Schedule, none of the Acquired Companies is a party to or bound by any union, collective
bargaining, or similar Contract with any union or other labor organization. Except as set forth in
Section 4.13(e)(ii) of the Company Disclosure Schedule, there is not presently pending or
existing, nor has there been during the 12-month period preceding the date of this Agreement,
and, to the Sellers' Knowledge, there is not threatened (i) any strike, slowdown, picketing,
boycott, work stoppage or lockout involving any of the Acquired Companies; (ii) any organizing
effort, question concerning representation, or application for certification of a collective
bargaining agent involving any of the Acquired Companies; or (iii) any unfair labor practice
involving any ofthe Acquired Companies.
(f) Except as set forth in Section 4.13(1) of the Company Disclosure
Schedule, to the Sellers' Knowledge, (i) except with respect to Team Players, no employee who
received a base salary or base wages of more than $150,000 in 2013 has provided or plans to
provide notice ofresignation from employment with any ofthe Acquired Companies; and (ii) no
employee or independent contractor is a party to or is bound by any confidentiality agreement,
nonsolicitation agreement, noncompetition agreement or other Contract (with any Person other
than any of the Acquired Companies) that will have an adverse effect on (x) the performance by
such employee or independent contractor of any of his or her duties or responsibilities as an
employee or independent contractor of any of the Acquired Companies, or (y) the business of
any Acquired Company.
(g) Section 4.13(g) of the Company Disclosure Schedule identifies any
layoffs, or "employment loss," as defined by the Worker Adjustment and Retraining Notification
Act of 1988, as amended, and any similar state or local Law (together "WARN Act"), of any
employees in the 90-day period prior to the date hereof, including employee name, location of
employment, and date of "employment loss."
19
4.14. Employee Plans.
(a) Section 4.14{a) of the Company Disclosure Schedule sets forth each of the
Employee Plans and Employee Benefit Arrangements. All of the Acquired Companies have
provided or made available to Buyer the most recently effective copies of the Employee Plans
and Employee Benefit Arrangements and all amendments thereto, together with, where
applicable, (i) each Employee Plan's summary plan description and any summaries of material
modifications thereto, (ii) each Employee Plan's most recent Form 5500 filing, (iii) if any
Employee Plan or Employee Benefit Arrangement is funded, the most recent annual accounting
of assets, (iv) all material written agreements and contracts with respect to each Employee Plan
and Employee Benefit Arrangement, including service agreements and insurance contracts, (v)
all material correspondence since December 31, 2012 to or from, if applicable, any Government
Entity relating to any Employee Plan or Employee Benefit Arrangement, and (vi) the most recent
IRS determination or opinion letter with respect to each Employee Plan.
(b) Except as set forth in Section 4.l4(b) of the Company Disclosure
Schedule, none of the Acquired Companies, (i) maintains, participates in, contributes to, or has
any Liability under any plan covered or previously covered by Title IV of ERISA, (ii) has any
current Liability under Sections 412,430,431 or 432 of the Code or Part III of Title I of ERISA,
or (iii) has any current Liability as a result of the failure to comply with the continuation of
coverage requirements of Section 601 et seq. ofERISA and Section 4980B of the Code.
(c) Except as set forth in Section 4.l4(c) of the Company Disclosure
Schedule, none of the Employee Plans or Employee Benefit Arrangements covering the
employees of any of the Acquired Companies provides for retiree medical or retiree life
insurance benefits, other than coverage mandated by applicable Law or continuation or
conversion coverage which any retiree may purchase at his or her own expense.
(d) Except as set forth in Section 4.l4(d) of the Company Disclosure
Schedule, none of the Acquired Companies contributes to or is obligated to contribute to any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA ("Multiemployer Plan")
or mUltiple employer plan within the meaning of Section 413 of the Code ("Multiple Employer
Plan") with respect to the employees ofthe Acquired Companies.
(e) All of the Acquired Companies have administered each of the Employee
Plans and Employee Benefit Arrangements in material compliance with the terms thereof,
including timely contributions and payments thereunder, and each of the Employee Plan and
Employee Benefit Arrangement is in material compliance with applicable laws (including
ERISA). All contributions to any Multiemployer Plan required to be made by the Acquired
Companies by a collective bargaining agreement or by any applicable NHL Rules have been
timely made.
(f) Each Acquired Company has made in all material respects all
contributions and other payments required by and due under the terms of each Employee Plan
and Employee Benefit Arrangement as ofthe date hereof.
20
(g) Each Employee Plan intended to be qualified under Section 401(a) of the
Code is the subject of a favorable determination letter (or opinion or advisory letter, if
applicable) as to its qualified status under the Code, and there has been no event, condition or
circumstance that has adversely affected or is likely to adversely affect such Employee Plan's
tax-qualified status. Except as would not reasonably be expected to result in material liability to
any Acquired Company, (i) no "prohibited transaction," within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Sections
4975( c )(2) and 4975( d) of the Code or Section 408 of ERISA, has occurred with respect to any
Employee Plan and (ii) none of the Acquired Companies is subject to any penalty or tax with
respect to any Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of
the Code.
(h) There are no actions, suits or claims pending or, to the Sellers'
Knowledge, threatened (other than routine claims for benefits) against or in connection with any
Employee Plans or Employee Benefit Arrangements.
(i) Except as provided in Section 4.14(i) of the Company Disclosure
Schedule, none of the Employee Plans nor any other compensatory arrangement with employees
of any of the Acquired Companies will, or could reasonably be expected to, (i) entitle any
individual to severance payor other benefits or compensation, or (ii) give rise directly or
indirectly to the payment of any amount that would be characterized as a "parachute payment,"
within the meaning of Section 280G(b )(2) of the Code, or to an obligation to provide a "gross-
up" or other compensation attributable to the imposition of any excise tax under Section 4999 of
the Code, in the case of each of (i) and (ii) partially or solely as a result of the transactions
contemplated by this Agreement.
G) Each Employee Plan or Employee Benefit Arrangement that is a
"nonqualified deferred compensation plan" (as such term is defined under Section 409A(d)(I) of
the Code and the guidance thereunder) complies in all material respects, in both form and
operation, with the requirements of Section 409A ofthe Code and the guidance thereunder.
4.15. Affiliate Transactions. Except as set forth in Section 4.15 of the Company
Disclosure Schedule, neither the Sellers nor any of their respective Affiliates, nor any officer,
director or employee of any of the Acquired Companies or any Immediate Family Member of
any such individual (collectively, the "Related Parties"), is a party to any Contract or
commitment with any of the Acquired Companies (other than (i) for salary or other
compensation or benefits paid or payable in the ordinary course of business to employees of the
Acquired Companies, in each case, in consideration for bona fide services performed by such
employees, which, ifin excess of $100,000, is set forth on the Company Disclosure Schedule or
(ii) Contracts or commitments solely between or among any ofthe Acquired Companies).
4.16. Insurance. Section 4.16 of the Company Disclosure Schedule sets forth a list of
each insurance policy currently maintained by each of the Acquired Companies with respect to
its respective properties, assets and business, and a complete list of all material insurance claims
made by each of the Acquired Companies during the past twelve (12) months, other than
insurance policies maintained by the NHL on behalf of all Member Clubs. There is no material
claim by any Acquired Company pending under any such policies as to which coverage has been
21
denied or disputed by the insurer. Such insurance policies are in full force and effect, all
premiums with respect thereto are currently paid, and the applicable Acquired Company is in
compliance in all material respects with the terms thereof. None of the current limits ofIiability
under such policies has been exhausted.
4.17. Material Contracts.
(a) Section 4.17(a) of the Company Disclosure Schedule sets forth as of the
date of this Agreement each of the following Contracts to which one or more Acquired
Companies are a party or by which they are bound or by which one or more Acquired
Companies' assets are subject (other than any Contract which is generally applicable to all NHL
teams) (collectively, the "Material Contracts" and each, a "Material Contract"):
(i) any Contract that is a Player Contract;
(ii) any Contract with the NHL, the AHL or any other professional or
minor league sports league or minor league sports team to operate the Business (including any
pending applications);
(iii) any Contract providing any Person with television, radio or other
broadcasting or media rights;
(iv) any Contract granting any material naming rights or material
sponsorship rights of any kind to any Person;
(v) any Contract, other than Company Leases, related to suite rentals
or license agreements at the Arenas or any other Contract providing any Person other than the
Acquired Companies with the right to use any Company Facilities or any portion thereof for any
period oftime, in each case involving payment to the Acquired Companies in excess of $100,000
per annum;
(vi) the Employee Plans and Employee Benefit Arrangements;
(vii) any collective bargaining agreements or any Contract with any
labor union or other employee representative of a group of employees relating to wages, hours
and other terms and conditions of employment;
(viii) management agreements or agreements for the employment of any
current or former officer, individual, director or employee or other Person on a full-time, part-
time, consulting or other basis (A) which provides annual cash or other compensation in excess
of $150,000 during calendar year 2012 or 2013, (8) providing for the payment of any cash or
other compensation or benefits upon the consummation of the Transactions, or (C) otherwise
restricting its ability to terminate the employment of any employee at any time for any lawful
reason or for no reason without penalty or Liability in excess of $150,000;
(ix) any Contract under which any Acquired Company has borrowed
money, or incurred other Indebtedness or mortgaged or pledged any material asset of such
Acquired Company;
22
6IgSJ45f) ... i I.duc
(x) except for limitations imposed by the NHL Rules, any Contract
limiting the freedom of any Acquired Company to engage or participate, or compete with any
other Person, in any line of business, market or geographic area, including any Contract under
which any Acquired Company grants most favored nation pricing, exclusive sales, exclusive
distribution, exclusive marketing or other exclusive rights, rights of refusal, exclusive rights of
first negotiation or similar exclusive rights or terms to any Person, or otherwise limiting the right
ofany Acquired Company to sell or distribute any products or services;
(xi) any Contract affecting the ownership of, leasing of, title to, use of
or any leasehold or other interest in any real or personal property, excluding the Company Leases
(other than any Contract under which any Acquired Company leases any personal property
which involve payment obligations of, individually or in the aggregate, ofless than $150,000);
(xii) any power of attorney or agency agreement or arrangement with
any Person pursuant to which such Person is granted the authority to act for or on behalf of any
Acquired Company;
(xiii) any Contract relating to any disposition of all or any material
portion of the assets or business of any Acquired Company not in the usual and ordinary course
of business consistent with past practice (whether by merger, sale of equity, sale of assets or
otherwise);
(xiv) any Contract relating to the acquisition of the business or capital
stock or other ownership interest, including material assets or properties, of another Person
(whether by merger, sale ofequity, sale of assets or otherwise);
(xv) any Contract relating to material Company Intellectual Property
Rights, except for any perpetual, paid-up licenses for Off-The-Shelf Software under which any
Acquired Company is the licensee;
(xvi) any Contract granting any Person an option, right of first refusal or
preferential or sinrilar right to purchase any of the assets of an Acquired Company other than in
the usual and ordinary course ofbusiness consistent with the past practice;
(xvii) any Contract providing a written warranty, guaranty (including so-
called "keepwell agreements") or other similar undertaking with respect to contractual
performance extended by any Acquired Company other than in the usual and ordinary course of
business consistent with past practice;
(xviii) any Contract that is a joint venture or partnership agreement or
similar Contract;
(xix) any Contract providing for the indemnification of any Person or
the assumption of any Liabilities, in each case other than in the usual and ordinary course of
business consistent with past practice (including any such Liabilities included in any commercial
Contract entered into in the ordinary course of business consistent with past practice), but
excluding Company Leases;
23
(xx) any Contract pursuant to which any Seller or any of the Acquired
Companies are obligated or required to make any investments, capital contributions or other
similar payments that have not been made or otherwise satisfied in full by such Seller or
Acquired Companies;
(xxi) any Contract with any Government Entity, including any Contract
pursuant to which a Government Entity has provided or has agreed to provide any grants or
subsidies (or similar matters) to any Acquired Companies; and
(xxii) any Contract, other than Company Leases, not of a type listed
above involving reasonably anticipated payments to or from an Acquired Company or rebates,
discounts or other allowances, credits or deductions, in any such case in excess of $150,000 per
annum, that cannot be terminated by an Acquired Company without penalty upon ninety (90)
days or less notice.
(b) With respect to each of the Material Contracts, except as set forth in
Section 4.17(b) of the Company Disclosure Schedule: (i) such Material Contract is legal, valid,
binding, enforceable, and in full force and effect with respect to any Acquired Company that is a
party thereto, except as such enforceability may be limited by the General Enforceability
Exceptions; (ii) no Acquired Company is in material Breach under any Material Contract; (iii) to
the Sellers' Knowledge, no other party to any Material Contract is in material Breach thereof;
(iv) to Sellers' Knowledge, no event has occurred or circumstance exists (including in
connection with this Agreement and the Transactions) that (with or without notice or lapse of
time) may contravene, conflict with or result in a Breach of, or give any Acquired Company or
other Person the right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate or modify, any such
Material Contract; (v) there are no material disputes pending or, to Sellers' Knowledge,
threatened in writing under any such Material Contracts; and (vi) no Acquired Company has
received written notice that another party to any Material Contract will, or intends to, terminate
any such Material Contract, elect not to renew such Material Contract upon completion of its
current term or make any material modification to any such Material Contract. The Sellers have
provided to Buyer true, correct, and complete copies of all Material Contracts (including all
amendments, supplements and modifications thereto).
4.18. Transaction Bonuses, Expenses and Payments. None of the Acquired Companies
has any Liability to pay any Transaction Bonuses, Transaction Expenses or Transaction
Payments.
4.19. Broker Fees. None of the Acquired Companies has any Liability to pay any fees
or commissions to any broker, finder, or agent with respect to the Transactions.
4.20. Bank Accounts. Section 4.20 of the Company Disclosure Schedule sets forth
(a) a true and complete list of the names and locations of all banks, trust companies, securities
brokers and other financial institutions at which any Acquired Company has a deposit, lock box
or cash collection, management, securities or other account or a safe deposit box or maintains a
banking, custodial, trading or other similar relationship, and (b) a true and complete list of each
such account, box or relationship, indicating in each case the account number and the names of
24
the respective officers, employees, agents or other similar representatives ofany Acquired
Companyhavingsignatorypowerwithrespectthereto.
4.21. RelocationtoBarclaysCenter. oftheCompanyDisclosureSchedule
identifies any fee, expense, charge, or other payment payable by any Acquired Company, any
SellerorBuyer, oranyoftheirrespective Affiliates, in excess of$250,000 in theaggregate for
all such fees, expenses and charges that will be triggered or accelerated under any Material
ContractorCompanyLease as aresult of, orinconnectionwith,therelocationoftheNewYork
Islanders to the Barclays Center for the 2015-2016 NHL season, excluding any fee, expense,
charge,orotherpaymentexplicitlysetforthintheBarclaysCenterLicenseAgreement.
4.22. Minute Books and Records. The minute books and stock record books ofeach
Acquired Company have been maintained in accordance with applicable prudent business
practices. The minutebooksand stockrecordbooksandothersimilarrecordsofeachAcquired
Company have been provided to the Buyer or its counsel prior to the execution ofthis
Agreement.
ARTICLEV
COVENANTSANDOTHERAGREEMENTS
5.1. General. Eachofthe Parties shall use itscommerciallyreasonableeffortstotake
all action(includingas setforth inSection5.5)andto do allthingsreasonablynecessary,proper,
oradvisableinorderto consummateandmakeeffectivethe Transactions(includingsatisfaction,
but not waiver, ofthe closing conditions set forth in ARTICLE VII), including to obtain all
ConsentsandPermitsand makeall noticesand filings thatare otherwise required to be made or
obtainedinconnectionwiththetransactionscontemplatedbythisAgreement.
5.2. Operation ofBusiness. From the date ofthis Agreement through the Closing,
except as Buyer mayapprove in writing otherwise (with such approval notto be unreasonably
conditioned, withheld ordelayed),oras otherwiserequiredbyapplicableLaw, NHLRules oras
contemplated or permitted by the Transaction Documents, Sellers shall use their commercially
reasonable efforts to, and shall use their commercially reasonable efforts to cause all ofthe
Acquired Companies to, conduct the Business in the usual and ordinary course ofbusiness
consistent with past practice, and without limiting the foregoing, Sellers shall cause all ofthe
AcquiredCompaniestonotdoanyofthe following withoutthe priorwrittenapprovalofBuyer
(withsuchapprovalnottobeunreasonablyconditioned,withheldordelayed):
(a) (A)transferorpayanyCashonHandtoanySellersoranyAffiliateof any
Seller (other than in accordance with Section 5.19), whether as a distribution, dividend or
otherwise (including to declare, set aside orpay same and including using orbydirecting any
proceeds orconsiderationpaid orpayable underanyContractbetween anyAcquired Company
andotherPerson),orotherwisetomakeanydistributionsordividendsonorin respectof,anyof
its outstanding securities, otherthan distributions tothe Sellers to pay Taxes on theirallocable
share ofthe income from the Acquired Companies inaccordance with pastpractices, provided,
however, that notwithstandingthe foregoing oranyother provisiontothe contrarycontained in
25
the Transaction Documents, each Acquired Company shall be entitled to: (i) transfer funds to
any other Acquired Company or to a subsidiary of an Acquired Company without restriction or
requiring the consent of Buyer, (ii) pay salary or benefits in the ordinary course of business to
any Affiliate who is an employee of any Acquired Company as of the date hereof, for bona fide
services performed in such capacity provided that the employment arrangement is listed or
described on Schedule 4.15 if required by Section 4.15, and (iii) make payments pursuant to the
terms of any Contract between any Acquired Company and an Affiliate that is in effect as of the
date hereof and listed or described on Schedule 4.15; (B) split, combine or reclassifY any of its
outstanding securities or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for such securities; (C) purchase, redeem or otherwise acquire any
securities of any Acquired Company or any other securities thereof or any rights, warrants or
options to acquire any such securities; or (D) adopt a plan of or effect any complete or partial
liquidation or adopt resolutions providing for or authorizing such liquidation or adopt a plan of
or effect any dissolution, merger, consolidation, restructuring, recapitalization or reorganization
of any Acquired Company;
(b) authorize for issuance, issue, deliver, sell, pledge, dispose of or grant
(A) any equity or voting securities, (B) any securities convertible into or exchangeable for, or
any options, warrants or rights to acquire, any such shares, equity or voting securities or
convertible or exchangeable securities or (C) any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units;
(c) amend any Acquired Company's Organizational Documents (as each are
currently in effect);
(d) acquire or agree to acquire (i) by merging or consolidating with, or by
purchasing all or a substantial portion of the assets of, any business of any Person or any
corporation, limited liability company, partnership, association or other business organization or
division thereof, (ii) any material assets other than those acquired in the usual and ordinary
course of business consistent with past practice, or (iii) capital stock or equity interests in any
Person;
(e) (A) except as set forth in Section 5.2(e) of the Company Disclosure
Schedule, grant to any present or former employee, officer or director of any Acquired Company
any increase in compensation or benefits, except for any grants made in the usual and ordinary
course of business consistent with past practice or which are contractually required, (B) grant to
any present or former employee, officer or director of any Acquired Company any increase in
severance or termination pay, (C) enter into or amend any employment, consulting,
indemnification, severance or termination agreement with any Person, except for any
employment or consulting agreements entered into in the usual and ordinary course of business
consistent with past practice with any employee or consultant with total Liabilities of the
Acquired Companies under such contract not to exceed $75,000 and agreements pursuant to
which the Acquired Companies have the right to terminate the employment of any employee at
will and to terminate the engagement of any of consultant without payment to such employee or
independent contractor other than for services rendered through termination and without
incurring any penalty or Liability in excess of$150,000, (D) establish, adopt, enter into or amend
in any material respect any Employee Plan (or arrangement that, had it been in existence on the
26
date of this Agreement, would be a Employee Plan) other than any amendment required to cause
such Employee Plan to comply with applicable Law or any Employee Benefit Arrangements or
as contemplated by this Agreement, (E) take any action to accelerate any rights or benefits, or
make any material determinations not in the usual and ordinary course of business consistent
with past practice, under any Employee Plan, (F) loan or advance money or other property to any
present or former employee, officer or director of any Acquired Company, other than employee
advances for travel, business or entertainment expenses made in the usual and ordinary course of
business consistent with past practice or (G) terminate for any reason, other than misconduct, any
employee or independent contractor of any Acquired Company, except for any termination made
in the usual and ordinary course of business consistent with past practice; provided, however,
that none ofthe foregoing shall apply in respect of Team Players or the general manager, head
coach or president of business operations with respect to any ofthe Teams;
(f) make any material change in accounting methods, principles or practices
affecting the reported consolidated assets, Liabilities or results of operations of the Acquired
Companies, except insofar as may have been required by a change in GAAP;
(g) sell, lease, license, mortgage, encumber or otherwise dispose of or impose
any Lien, other than a Permitted Lien, on any material properties or assets, tangible or intangible,
of the Acquired Companies, other than in the usual and ordinary course of business consistent
with past practice;
(h) except as set forth in Section 5.2(h) of the Company Disclosure Schedule,
enter into any transaction with an Affiliate or other Related Party other than in the usual and
ordinary course of business consistent with past practice;
(i) incur any Indebtedness or guarantee any Indebtedness of another Person or
make any loans, advances or capital contributions to, or investments in, any other Person (other
than employee advances for travel, business or entertainment expenses made in the usual and
ordinary course of business consistent with past practice, or as contemplated under the Credit
Agreement or as required by the NHL);
(j) make or change any Tax election, adopt or change any Tax accounting
method, consent to the extension or waiver of the limitations period applicable to any Tax claim
or assessment, enter into any closing agreement with respect to Taxes, settle or compromise any
material Tax Liability or file any amended Tax Return;
(k) intentionally violate or fail to perform any current material obligation or
current material duty imposed upon it by any material applicable Law;
(1) initiate, settle or compromise any material Action or Proceeding;
(m) terminate or extend (except any automatic extension arising pursuant to an
"evergreen" provision), waive, modify, rescind or make (or agree to) any material amendments
to any Material Contract, other than (i) relating to a Player Contract or Contract of any Team
coach) or (ii) in the usual and ordinary course of business consistent with past practices;
27
(n) enter into any Contract that, if it were effective on the date of this
Agreement, would constitute a Material Contract or a Company Lease;
(0) incur or agree to incur marketing expenses of any Acquired Company
outside ofthe usual and ordinary course of business consistent with past practice; and
(p) authorize any Acquired Company to do any of the foregoing, or enter into
any Contract to do any ofthe foregoing.
Without limiting the foregoing, during the period beginning on the date hereof and
ending as of the earlier of the Closing Date and the termination of this Agreement pursuant to
ARTICLE IX, Sellers shall, and shall cause the Acquired Companies to, give reasonable notice
to Buyer, and to consult with and give reasonable consideration to the views of Buyer, with
respect to material decisions affecting the hockey operations of the New York Islanders beyond
the 2013-2014 NHL season, including any action to (x) trade, trade for, or waive any Team
Player, (y) trade any future draft pick relating to a potential Team Player, or (z) make any change
in the general manager, head coach or president of business operations with respect to any ofthe
Teams.
5.3. Access to Records. At any time after the date of this Agreement until the earlier
of the Closing or the termination of this Agreement pursuant to ARTICLE IX, subject to the
terms of the Confidentiality Agreement, Buyer shall be entitled, through its employees and
Representatives, to enter upon and make such reasonable investigation of the assets, properties,
business and operations of the Acquired Companies, and such examination of the books and
records, financial condition and operations of the Acquired Companies as Buyer may reasonably
request upon reasonable prior written notice to the Sellers; provided, however, that the Sellers
shall not be required to afford such access or other information if such disclosure would
reasonably be expected to result in the loss ofattorney-client privilege, or would contravene any
applicable Laws, fiduciary duty or binding agreement entered into prior to the date hereof. Any
such investigation and examination shall be conducted at times mutually agreed to by Buyer and
Sellers during normal business hours and shall be conducted in a manner so as not to interfere
with the business or operations ofthe Acquired Companies.
5.4. Public Announcements. Prior to the Closing, none of the Acquired Companies
and Sellers, on the one hand, or Buyer, on the other hand, shall make, or permit any agent or
Affiliate to make, any public statements, including any press releases, with respect to this
Agreement or the Transactions without the prior written consent of the other Party (which
consent shall not be unreasonably withheld or delayed). Notwithstanding the foregoing, (i) the
Parties may make disclosures required by any applicable Law or Order, and (ii) the Parties shall
not be prohibited from releasing any communications related to this Agreement or the
Transactions to the NHL or as reasonably necessary to consummate the Closing, including by
disclosing the Transactions and related information to creditors of the Acquired Companies, in
which cases the Party making the release or announcement or disclosure shall allow the other
Party reasonable time to comment on, or participate in, such release or announcement or
disclosure in advance of such issuance. Following the Closing, the Parties shall jointly agree on
the content and substance of all public announcements concerning the Transactions other than
those that are permitted pursuant to the foregoing sentence.
28
618S3456 ... t 7 . d ) ~
5.5. NHL, AHL, Regulatory and Other Consents; HSR.
(a) NHL, AHL, Regulatory and Other Consents. Subject to the tenns of
Section 5.12, as promptly as practicable after the date hereof, Sellers shall (or shall cause the
Acquired Companies to) and the Buyer shall make all filings with Government Entities and use
commercially reasonable efforts to obtain all Pennits, League Approvals and Consents of all
third Persons (including the NHL and the AHL) required to consummate the Transactions.
Sellers shall (and shall cause the Acquired Companies to) and the Buyer shall furnish promptly
to each other all information that is not otherwise available to the other Party and that such Party
may reasonably request in connection with such Permits, League Approvals and Consents.
(b) HSR. Without limiting the generality of subsection (a) above, Sellers and
Buyer shall, at such time as mutually agreed by the Parties, but in no event later than May 15,
2014, file with the Antitrust Authority, the notification and report form, if any, required for the
consummation of the Transactions and any supplemental infonnation, if any, requested in
connection therewith pursuant to the HSR Act. Any such notification and report form and
supplemental infonnation will be in substantial compliance with the requirements of the HSR
Act or any other applicable antitrust laws. Each of the Parties shall coordinate and cooperate
with the other in exchanging such infonnation and providing such assistance as the other may
reasonably request in connection with the preparation of any filing or submission to the Antitrust
Authority that is necessary. Each of Sellers and the Buyer shall comply with any additional
requests for infonnation, including requests for production of information, documents or
witnesses for interviews or depositions by the Antitrust Authority. Notwithstanding anything to
the contrary, no Party shall request early tennination of the applicable waiting period under the
HSR Act, unless all Parties agree to do so in writing prior. Each of the Parties hereto shall
promptly infonn the other Party of any material communication between itself and any
Governmental Entity with respect to the transactions contemplated hereby. If the Sellers or any
Acquired Company, on the one hand, or the Buyer, on the other hand, receive a request for
information or documentary material from the Antitrust Authority with respect to the
Transactions, then such party shall use commercially reasonable efforts to make, or cause to be
made, as soon as reasonably practicable and after reasonable consultation with the other Party, an
appropriate response in compliance with such request. The Parties shall keep each other
apprised of the status of matters relating to the completion of the Transactions and work
cooperatively in connection with obtaining the requisite consents of the Antitrust Authority.
Buyer shall pay, at the time of filing, all applicable fees relating to the filings pursuant to the
HSR Act contemplated by this Agreement.
5.6. Exclusivity. Sellers shall not (and shall cause the other Acquired Companies to
not), nor shall they permit any Representative of the Acquired Companies or Sellers or any of
their respective Affiliates to, directly or indirectly (i) submit, solicit, initiate, facilitate, discuss or
negotiate with any Person (whether such discussions or negotiations are initiated by the Acquired
Companies, Sellers, the NHL or otherwise) or take any other action intended or designed to
facilitate any inquiry or effort of any Person (other than Buyer) relating to any Acquisition
Proposal, (ii) provide infonnation with respect to the Acquired Companies to any Person, other
than Buyer, relating to an Acquisition Proposal by any Person, other than Buyer, or (iii) enter
into any Contract or accept any offer relating to any Acquisition Proposal. "Acquisition
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Proposal" means any inquiry, proposal or offer relating to or involving: (x) the acquisition,
directly or indirectly, of all or substantially all of the equity securities or assets of the Acquired
Companies (including any acquisition structured as a merger, consolidation, share exchange,
restructuring, license or similar transaction); (y) the acquisition or purchase of any equity
securities or ownership interest of any Acquired Company; or (z) reorganization, liquidation,
dissolution or initial public offering of the Acquired Companies. Sellers shall (and shall cause
the Acquired Companies to), and shall cause their respective Representatives to, immediately
cease all discussions and negotiations that occurred or may have occurred on or prior to the date
of this Agreement relating to any Acquisition Proposal. Sellers shall (and shall cause the
Acquired Companies to) promptly orally and in writing notifY the Buyer of any Acquisition
Proposal received after the date hereof. The Parties hereto agree that irreparable damage would
occur in the event that the provisions of this Section 5.6 were not performed in accordance with
their specific terms or were otherwise Breached. It is accordingly agreed by the parties hereto
that Buyer shall be entitled to an injunction or injunctions to prevent Breaches of the provisions
of this Section 5.6 and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which Buyer may be entitled at law or in equity.
5.7. Tax Matters.
(a) Tax Periods Ending on or Before the Closing Date.
(i) Non-Income Tax Returns. The Buyer shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Acquired Companies for all periods
ending on or prior to the Closing Date (the "Pre-Closing Tax Period") which are filed after the
Closing Date, other than income Tax Returns for such periods. Such Tax Returns shall be
prepared consistently with the past practice of the Acquired Companies, unless otherwise
required by applicable Law. Buyer shall permit Sellers to review and comment on each such
Tax Return described in the preceding sentence prior to filing and shall make any reasonable
changes requested.
(ii) Income Tax Returns. Sellers shall prepare or cause to be prepared
all income Tax Returns for the Acquired Companies for all Pre-Closing Tax Periods. Such
income Tax Returns shall be prepared consistently with the past practice of the Company, unless
otherwise required by applicable Law. Sellers shall permit Buyer to review and comment on
each such income Tax Return described in the preceding sentence prior to filing and shall accept
all comments that are reasonable. Buyer or the Acquired Companies shall file such income Tax
Returns promptly at the direction of Sellers. The cost of preparing such income Tax Returns
shall be borne by the Acquired Companies.
(b) Tax Periods Beginning Before and Ending After the Closing Date. Buyer
shall prepare or cause to be prepared and file or cause to be filed any Tax Returns of the
Acquired Companies for Tax periods that begin before the Closing Date and end after the
Closing Date (each, a "Straddle Tax Period"). Such Tax Returns shall be prepared consistently
with the past practice of the Acquired Companies unless otherwise required by applicable Law.
Buyer shall permit Sellers to review and comment on each such Tax Return described in the
preceding sentence prior to filing and shall accept all comments that are reasonable to the extent
such comments relate to the portion ofthe Straddle Tax Period ending on the Closing Date. For
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purposes ofthis Section 5.7, in the case of any Taxes that are imposed on a periodic basis and are
payable for a taxable period that includes (but does not end on) the Closing Date, the portion of
such Tax which relates to the portion of such taxable period ending on the Closing Date shall
(i) in the case of any property Taxes, be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of days in the
taxable period ending on the Closing Date and the denominator of which is the number of days
in the entire taxable period, and (ii) in the case of any other Taxes, including any Taxes based
upon or related to income or receipts be deemed equal to the amount which would be payable if
the relevant taxable period ended on the Closing Date. For purposes of this Section 5.7, any
exemptions, allowances or deductions that are calculated on an annual basis (including
depreciation and amortization deductions), other than with respect to property placed in service
after the Closing, shall be allocated on a per diem basis.
(c) Cooperation on Tax Matters.
(i) Buyer and the Sellers shall (and Sellers shall cause the Acquired
Companies to) cooperate fully, as and to the extent reasonably requested by the other Party, in
connection with the filing of Tax Returns pursuant to this Section 5.7 and any audit, Action or
Proceeding, with respect to Taxes. Such cooperation shall include the retention and (upon the
other Party's request) the provision of records and information which are reasonably relevant to
any such audit, Action or Proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided hereunder.
Buyer and Sellers agree to (Sellers and Buyer shall cause the Acquired Companies to) (A) retain
all books and records with respect to Tax matters pertinent to the Acquired Companies relating
to any taxable period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Sellers, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) give the other Party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other Party so requests, the
Acquired Companies or Sellers, as the case may be, shall allow the other Party to take possession
of such books and records.
(ii) Buyer and Sellers further agree, upon request, to use their
commercially reasonable efforts to obtain any certificate, or other document from any
Government Entity or any other Person as may be necessary to mitigate, reduce or eliminate any
Tax that could be imposed (including with respect to the transactions contemplated by this
Agreement).
(d) Audits.
(i) Buyer shall provide Sellers with written notice of any inquiries,
audits, examinations or proposed adjustments by the IRS or any other Tax Authority, which
relate to any Pre-Closing Tax Periods within 20 days of the receipt of such notice. Sellers shall
have the sole right to represent the interests of the Acquired Companies in any Tax audit or other
Tax Action or Proceeding relating to any Pre-Closing Tax Periods, to employ counsel of its
choice at its own expense, and to settle any issues and to take any other actions in connection
with such Tax Action or Proceeding relating to such taxable periods; provided, however, that
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Sellers shall infonn Buyer of the status of any such Tax Action or Proceeding, shall provide
Buyer (at Buyer's sole cost and expense) with copies of any pleadings, correspondence, and
other documents as Buyer may reasonably request and shall consult with Buyer prior to the
settlement of any such Tax Action or Proceeding and shall obtain the prior written consent of
Buyer prior to the settlement of any such Tax Action or Proceeding that could reasonably be
expected to adversely affect in a material manner Buyer in any Taxable period ending after the
Closing Date (which consent shall not be unreasonably withheld, conditioned or delayed);
provided further, however, that Buyer and counsel of its own choosing shall have the right to
participate in, but not direct, the prosecution or defense of such Tax Action or Proceeding at
Buyer's sole expense.
(ii) Buyer shall have the right to control other Tax audits or other
Actions or Proceedings of the Acquired Companies relating to Taxes. Buyer shall obtain the
prior written consent of Sellers prior to the settlement of any such Action or Proceeding that
could reasonably be expected to increase the Tax Liabilities of Sellers (or any direct or indirect
partner thereof) for a Pre-Closing Tax Period (which consent shall not be unreasonably withheld,
conditioned or delayed).
(iii) Buyer and the Acquired Companies shall execute and deliver to
Sellers such powers of attorney and other documents as may be necessary or appropriate to give
effect to the foregoing participation rights.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp, registration,
value added and other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by the Buyer, and the Buyer shall file, at its own
expense, all Tax Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees. The Sellers will cooperate with the
Buyer in filing any such Tax Returns.
(f) Income Tax Treatment of the Transactions. The Parties agree that, for all
United States federal and applicable state and local income tax purposes the purchase by the
Buyer of the equity securities (i) in HYSE is intended to be treated as a purchase of all of the
assets ofHYSE and (ii) in NYIHC and CIP is intended to be treated in accordance with Revenue
Ruling 99-6, 1999-1 C.B. 432 (Situation 1, in the case of the sale ofNYIHC and Situation 2 in
the case of the sale of CIP) as a sale by Sellers of their partnership interests in CIP and NYIHC
(other than the interests contributed to Buyer by CBW LP) and a purchase by Buyer from Sellers
of the assets of each ofNYIHC and CIP (other than the interests contributed to Buyer by CBW
LP) and the Parties shall report on their respective Tax Retums the Buyer's acquisition of
NYIHC, CIP and HYSE in a manner consistent with the foregoing, and shall not take a position
in any administrative or judicial proceeding with respect to any such Tax Return inconsistent
with the foregoing, unless otherwise required by applicable Law.
(g) Allocation of Purchase Price. The purchase price (as determined for U.S.
federal income tax purposes which, for the avoidance of doubt, shall include the liabilities of
NYIHC, CIP and HYSE that are deemed to be assumed) shall be allocated among the assets of
NYIHC, CIP and HYSE in accordance with Schedule 5.7(g) (the "Purchase Price Allocation),
The Parties, based upon the Purchase Price Allocation, shall prepare and file their respective Tax
32
Returns consistent with the reporting requirements of Section 1060 including IRS Form 8594, to
the extent applicable, unless otherwise prohibited by applicable Law. The Parties shall take no
positions contrary thereto in any Tax Return or other Tax filing or proceeding unless otherwise
required by applicable Law.
(h) Tax Dispute Resolution Mechanism. Any dispute among the Parties
involving Taxes arising under this Agreement shall be resolved as follows: (i) the Parties will in
good faith attempt to negotiate a prompt resolution of the dispute; (ii) if the Parties are unable to
negotiate a resolution of the dispute within 30 days, the dispute will be submitted to the national
office of a firm of independent accountants of nationally recognized standing reasonably
satisfactory to Seller and Buyer (the "Tax Dispute Accountant"); (iii) the Tax Dispute
Accountant shall resolve the dispute, in a fair and equitable manner and in accordance with
applicable Tax Law and the provisions of this Agreement, within 30 days after the Parties have
submitted the dispute to the Tax Dispute Accountant, whose decision shall be final, conclusive
and binding on the Parties, absent fraud or manifest error; (iv) any payment to be made as a
result of the resolution of a dispute shall be made, and any other action taken as a result of the
resolution of a dispute shall be taken, on or before the fifth (5
th
) day following the date on which
the dispute is resolved (except that if the resolution requires the filing ofan amended Tax Return,
such amended Tax Return shall be filed within 30 days following the date on which the dispute
is resolved); and (v) the fees and expenses of the Tax Dispute Accountant shall be split equally
between Buyer on the one hand and Sellers on the other hand; provided, however, that, (A) if the
Parties are unable to agree on a national office ofa firm of independent accountants of nationally
recognized standing to act as Tax Dispute Accountant, Seller and Buyer shall each select a
national office of a firm of independent accountants of nationally recognized standing and such
firms together shall select the national office of a firm of independent accountants of nationally
recognized standing to act as the Tax Dispute Accountant and (B) if any Party does not select a
national office of a firm of independent accountants of nationally recognized standing within 10
days of written demand therefor by the other Party, the firm selected by the other Party shall act
as the Tax Dispute Accountant.
5.8. Further Assurances. From and after the Closing, Buyer and Sellers shall execute
and deliver such further instruments of conveyance and transfer and take such other action as
reasonably may be necessary to further effectuate the Transactions.
5.9. Notification of Certain Matters. Sellers, on the one hand, and Buyer, on the other
hand, shall give notice as soon as reasonably practicable to the other party, of (i) the occurrence
or non-occurrence of any event that is reasonably likely to result in any ofthe Closing conditions
in Section 7.1 or Section 7.2, as applicable, not being satisfied; (ii) any failure of Sellers or
Buyer, respectively, to comply with or satisfY in any material respect any covenant, or agreement
to be complied with or satisfied by it hereunder such that the conditions set forth in Section 7.1
and Section 7.2, as applicable, would not be satisfied; and (iii) any Company Material Adverse
Change, Seller Material Adverse Change or Buyer Material Adverse Change, as applicable;
prOVided, however, that the delivery of any notice pursuant to this Section 5.9 shall not limit or
otherwise affect any remedies available to the party receiving such notice except as otherwise
provided herein. Notwithstanding the foregoing, should any such event, fact or condition require
any change to the Seller Disclosure Schedule or the Company Disclosure Schedule, Sellers shall
33
promptly deliver to Buyer a supplement to the Seller Disclosure Schedule or the Company
Disclosure Schedule, as applicable, specifYing such change. In the event that Sellers deliver one
or more supplements to the Seller Disclosure Schedule or the Company Disclosure Schedule, as
applicable, pursuant to this Section 5.9 which reflect events, facts or conditions which
individually or in the aggregate would cause the conditions set forth in Section 7.2(a) not to be
satisfied, Buyer shall have the right to terminate this Agreement by written notice to that effect
(specifYing the basis for such termination) within 10 Business Days of Buyer's receipt of any
such supplement to the Seller Disclosure Schedule or the Company Disclosure Schedule, as
applicable; provided that, if Buyer does not exercise such right to terminate this Agreement, (A)
Buyer will be deemed to have accepted such supplemented Seller Disclosure Schedule or the
Company Disclosure Schedule, as applicable, (B) the delivery of any such supplement will be
deemed to have cured any misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of such events, facts or conditions for purposes of the conditions to
Closing set forth in Section 7.1, provided, however, same shall not be deemed to have cured any
misrepresentation or breach of warranty or otherwise limited Buyer's rights in connection with
any matter for which Buyer may have a claim for indemnification pursuant to Section 6.1.
5.10. Release. Effective as of and subject to the Closing, each of Sellers, on behalf of
itself and such Seller's Representatives, Affiliates, successors and assigns (collectively, the
"Seller Related Parties" and, together with the Sellers, collectively, the "Seller Releasing
Parties"), irrevocably and unconditionally, hereby fully releases, waives, acquits, remises and
forever discharges all Acquired Companies and each of their respective past and present
directors, managers, officers, Representatives, Affiliates, and agents, successors and assigns
(collectively, the "Buyer Released Persons") from any and all Actions or Proceedings, causes of
Action or Proceeding, Orders, judgments, Losses, damages, deficiencies, obligations and
Liabilities of whatsoever kind or nature, fixed or contingent, whether known or unknown,
suspected or unsuspected, both at law and in equity (collectively, the "Claims") which such
Seller or their respective Seller Related Parties now have, have ever had or may hereafter have
against the respective Buyer Released Persons on account of, arising out of or relating to or in
connection with any matter, cause or event relating to time periods on or prior to the Closing
Date, including Claims relating to or in connection with (i) ownership of the Interests or (ii) such
Seller Releasing Parties' status as an officer or director of any Acquired Company; provided,
however, that nothing contained in this Section 5.10(a) will be interpreted to release any Buyer
Released Persons from any (A) Claims arising under this Agreement or any Transaction
Document or (B) any right of contribution, indemnification or advancement of expenses under
the Organizational Documents of the Acquired Companies as in effect on the date hereof, under
any Contract listed on Schedule 4.17 or under any directors' and officers' insurance policy of the
Acquired Companies that was in effect immediately prior to the Closing, except in each case
with respect to Claims against any Seller Releasing Party under ARTICLE VI. For the
avoidance of doubt, Seller Releasing Parties are releasing Buyer Released Persons from any
Claims Seller Releasing Parties may have to contribution or indemnification from any Acquired
Company with respect to any Claim for indemnification from any Buyer Indemnified Person
under ARTICLE VI. For the avoidance of doubt, neither the NHL nor any other NHL Affiliated
Party (as defined below) shall be considered a Seller Releasing Party or a Buyer Released
Person. "NHL Affiliated Party" means the NHL Commissioner, William Daly, David
Zimmerman, each of the NHL Entities and each of the Member Clubs (except the New York
34
Islanders, but including future Member Clubs) and each of their respective subsidiaries and other
Affiliates and each of their respective predecessors, successors and assigns and each of their
respective past, present or future, direct or indirect, owners, partners, members, shareholders,
directors, officers, agents, trustees, employees and governors. For the avoidance of doubt, no
Seller shall be considered an NHL Affiliated Party. For the avoidance of doubt, neither Buyer
nor any of its Affiliates (as of immediately prior to the Closing) shall be considered a Buyer
Released Person.
5.11. Financing.
(a) Sellers shall use their respective commercially reasonable efforts to, and
shall cause the other Acquired Companies and its and their respective Representatives and
Affiliates to reasonably cooperate with Buyer and to provide on a timely basis all such
reasonable assistance in connection with Buyer's commitments for and the arrangement of debt
and equity financing in connection with the Transactions, including with respect to an
Alternative Financing or an Assumed Financing, all as may be reasonably requested by Buyer at
the sole expense of the Buyer (except as described in the last sentence of this Section). Such
commercially reasonable efforts shall include (i) making senior management of Sellers and the
Acquired Companies reasonably available for customary lender and investor meetings and
"roadshow" presentations and cooperating with prospective lenders and investors in performing
their due diligence, (ii) providing reasonable and customary due diligence materials to potential
financing sources and equity and debt investors, (iii) furnishing all financial statements and
financial and other information that are reasonably required in connection with such debt and
equity financing, (iv) assisting Buyer and its financing sources and equity and debt investors in
the preparation of, any offering documents for such debt and equity financings, (v) reasonably
cooperating with the marketing efforts of Buyer and its financing sources and equity and debt
investors for such financings, (vi) providing such other documents as may be reasonably
requested by Buyer in connection therewith and (vii) facilitating the pledge of collateral
(including the release of any Liens on the assets of the Acquired Companies) to secure such
financings at and after the Closing Date. Buyer shall, promptly upon request by Sellers, whether
made prior to or in connection with the Closing or at any time following termination of this
Agreement, reimburse Sellers for all reasonable out-of-pocket costs and expenses (other than
fees of Sellers' attorneys for reviewing commitment papers and other loan documentation)
incurred by Sellers in connection with providing such cooperation, and Buyer shall indemnify
and hold harmless the Sellers and their respective Affiliates, and each of their Representatives,
advisors and directors and officers and employees from and against any and all Liabilities,
Losses, costs, expenses, interest, awards, judgments and penalties (other than fees of Sellers'
attorneys for reviewing commitment papers and other loan documentation) suffered or incurred
by them in connection with the arrangement of the debt financing and/or equity financing.
(b) Buyer shall use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to (i)
enter into commitment letters with the requisite lenders in connection with the Alternative
Financing or (ii) enter into the Assumed Financing with the requisite lenders in which the
requisite lenders consent to the Transactions (including the Credit Agreement Assumption),
35
including any "change of control" (as defined in the Credit Agreement and applicable Loan
Documents) occurring as a result thereof, without any requirement for any prepayment.
5.12. Obtaining NHL Approval.
(a) Buyer acknowledges that it and the Owners understand the NHL Rules
and shall promptly provide such information, file such documents, execute or amend such
Contracts, Organizational Documents or trust agreements (in each case subject to the approval by
the Buyer and Owners of the terms thereof which approval shall not be unreasonably withheld or
delayed), make such appearances, answer such questions and comply with such procedures and
take such other actions as may be customarily required by the NHL, in order to obtain the
League Approvals and the NHL Consent Agreement. Buyer agrees to accept and enter into an
NHL Consent Agreement acknowledging and affirming Buyer's and the Owners' agreement and
to abide by all NHL Rules, including the following but in all cases subject to, and only to the
extent required pursuant to, the NHL Rules (i) to guaranty, in such proportions among the
Owners as the NHL may reasonably require under customary terms and conditions, solvency,
minimum working capital requirements and the full and punctual payment of all operating
expenses of the New York Islanders, (ii) to identifY an acceptable "governor" and one or more
"alternate governors" of the New York Islanders, (iii) that the aggregate amount of debt that can
be incurred and the type of security that can be granted as it relates to the transactions
contemplated by this Agreement and future financing of the New York Islanders will be limited,
(iv) that it and they must be satisfactory to the NHL after the personal background check, (v) that
it and they may not have an ownership interest in, or affiliation with or participation in, any other
Member Club, any minor league team affiliated with any other Member Club or in any gambling
business, operation or activity or other gaming venture, (vi) that it and they may not, and may not
permit, direct or indirect sales, transfers or pledges of the assets of, or direct or indirect
ownership interests in, the New York Islanders without NHL approval, (vii) to execute a
guaranty under customary terms and conditions, in favor of the NHL, of the obligations of the
New York Islanders in such proportions as the NHL may reasonably require, (viii) to the release,
limitation of liability and indemnification of the NHL Entities and all of the NHL Member Clubs
and any future NHL Member Club (except the New York Islanders) and each of their respective
subsidiaries and other affiliates and their respective successors and assigns and their respective
past, present or future direct or indirect owners, directors, officers, agents, trustees and
employees (but only to the extent they are acting as agents for, or acting on behalf of any of the
foregoing entities Qr in their individual capacities) and (ix) to such other terms and conditions as
are customarily provided in the NHL Consent Agreement. After the execution of this
Agreement, Buyer shall promptly commence discussions with the NHL regarding the definitive
NHL Consent Agreement to be executed by Buyer. Buyer will use its reasonable best efforts to
conclude such negotiations and finalize such NHL Consent Agreement not later than 30 days
after the date of this Agreement.
(b) Buyer agrees to provide the Sellers with a contemporaneous copy of all
filings, correspondence and other communications between the NHL and Buyer and/or Owners
and will inform the Sellers of its status and progress with respect to League Approval and the
NHL Consent Agreement upon request by the Sellers.
36
(c) Sellers agree to as promptly as practicable provide any documentation
which the NHL Commissioner shall reasonably prescribe to be delivered by Sellers for the
transfer ofthe New York Islanders to Buyer.
5.13. Complying with NHL Rules. Owners and Buyer are aware of the NHL Rules and
acknowledge that the NHL Rules provide that the approval of this Agreement and the
transactions contemplated hereby is in the sole discretion ofthe NHL Board of Governors.
5.14. NHL Related Costs. Any costs incurred by the NHL, or any filing, application or
other fees payable to the NHL in connection with its consideration of the transactions
contemplated by this Agreement, including costs associated with any background investigations,
that are required to be paid by any of the Parties hereto in accordance with the NHL Rules, shall
be paid in full by Buyer promptly when due.
5.15. NHL Board of Governors. For so long as Charles Wang owns an equity interest
in Buyer or any amount remains outstanding on the Note, Buyer agrees that Charles Wang or his
designee shall be appointed as one of the New York Islander's alternates on the NHL Board of
Governors (unless otherwise instructed by Charles Wang), provided that Charles Wang shall not
have the right to exercise any voting rights in such capacity without the express prior written
consent of Buyer, andprovidedfurther that during such period there has been no material breach
of any Transaction Documents by any Seller.
5.16. Failure to Obtain Consents Relating to the AHL. In the event that the Parties have
not received all Consents required to be issued by the AHL in order to permit the transfer of
control of the Bridgeport Sound Tigers as contemplated hereby prior to the date on which all of
the conditions to Closing have been satisfied, the Parties agree that (i) the membership interests
in CI shall be transferred to Sellers prior to Closing and Buyer shall not acquire any direct or
indirect ownership interest in CI, and CI shall cease to be included as an Acquired Company
hereunder, (ii) all other terms and provisions of this Agreement shall nonetheless remain
unmodified and in full force and effect and (iii) following the Closing, the Parties shall negotiate
in good faith to enter into an affiliation agreement with respect to an ongoing affiliation between
the New York Islanders and the Bridgeport Sound Tigers upon terms and conditions reasonably
satisfactory to both Parties (the "Affiliation Agreement"); provided, however, that following the
Closing, the Parties shall use their commercially reasonable efforts to obtain all Consents
required to be issued by the AHL in order to permit the transfer of control of the Bridgeport
Sound Tigers to Buyer. If such Consents are obtained after the Closing, the Sellers shall
promptly convey, transfer, assign and deliver the membership interests in CI to Buyer for no
additional consideration, and the Affiliation Agreement shall thereupon terminate and be of no
further force and effect.
5.17. Employee Matters. Buyer agrees that each employee of any Acquired Company,
other than the Team Players, who continues employment with Buyer or any Acquired Company
after the Closing Date (each, a "Continuing Employee") will, for a period of at least twelve (12)
months following the Closing Date, be provided with (i) a rate of base salary or wages and bonus
opportunity that is not less favorable than the rate of base salary or wages and bonus opportunity
paid by the Acquired Companies to such Continuing Employee as of the Closing Date and
37
(ii)otherbenefits thatareofsubstantiallysimilarvalue inthe aggregate to the benefits provided
bytheAcquiredCompaniesto suchContinuingEmployeeas oftheClosingDate.
5.18. Officer and Director Indemnification and Insurance. Buyeragrees that all rights
to indemnification and exculpation from liability for acts oromissions occurring on or priorto
the Closing Date now existing in favor ofthe current or former directors, officers, managers,
general partners, committee members or employees ofthe Acquired Companies (the "Covered
Persons"), as provided in their respective Organizational Documents or in indemnification
agreements set forth on Schedule 4.17 (collectively, the "IndemnityProvisions"), except as set
forth inSection5.10, shall survivetheClosingDateand shallcontinue infull force and effectin
accordancewiththeirrespectiveterms for aperiodofnotlessthansix(6)years aftertheClosing
Datenotwithstandinganytermination,modificationoramendmentofanyofsuchOrganizational
Documents.
5.19. Outstanding Loans. Sellers agree that any outstanding loans made by Charles
Wangtoanyofthe AcquiredCompaniesshallhavebeensatisfied and paid in full orreleasedby
CharlesWangpriortothe Closing.
ARTICLEVI
INDEMNIFICATIONS;SURVIVAL
6.1. Indemnification by Sellers. Following the Closing Date, subject to the terms,
conditions and limitations contained herein, the Buyer, its Affiliates, and their respective
successors, assigns, officers, directors, managers, members, shareholders, employees and agents
(collectively,the"BuyerIndemnifiedPersons"andeach, a"BuyerIndemnifiedPerson")shallbe
indemnifiedbyeachSeller,jointlyandseverally, from andagainstanyLosssufferedorincurred
byanyBuyerIndemnifiedPersonarisingorresulting from orbasedupon: (i)anyBreachofany
representation or warranty ofany Seller contained in ARTICLE III or ARTICLE IV or any
Seller in any other Transaction Document to which it or he is a party or in any certificate
delivered to Buyer hereunder or thereunder; (ii) the Breach ofany covenant of any Seller
contained in this Agreement or ofany Seller contained in any other Transaction Document to
which any of same is a party; (iii) any Transaction Bonuses, Transaction Expenses or
Transaction Payments (or portions thereof) paid by Buyer or any Acquired Company after the
Closing;and(iv)anyPre-ClosingTaxesoftheAcquiredCompanies;provided, however, thatfor
as long as Buyerowes SellersanyDeferredPurchase Price,totheextentthatSellersowe Buyer
anyamountsas aresultofanyindemnificationLiabilityunderSection6.1(i), suchamounts shall
be set offagainst any outstanding Deferred Purchase Price in accordance with the provisions
contained in Section6.11 provided further that suchrequired setoffshall not apply to any Loss
arisingfrom fraudorwillful misconduct
6.2. Indemnificationbythe Buyer. Subjecttotheterms, conditions and limitations of
this ARTICLE VI, the Buyer shall indemnify Sellers and their respective successors, assigns,
officers, directors, shareholders, employees and agents (collectively, the "Seller Indemnified
Persons" and each, a "Seller Indemnified Person"), against, and hold them harmless from, any
Loss suffered or incurred by any such Seller Indemnified Person arising or resulting from or
based upon: (a) any Breach ofany representation or warranty ofthe Buyer contained in this
Agreement or in any other Transaction Document to which the Buyer is a party or in any
38- --------------------------------
certificate delivered by the Buyer hereunder or thereunder, or (b) any Breach of any covenant of
the Buyer contained in this Agreement or in any other Transaction Document to which the Buyer
is a party;
6.3. Termination of Indemnification. The obligations to indemnify and hold harmless
an Indemnified Person pursuant to Section 6.1 and Section 6.2 herein shall terminate on the date
that the applicable representation, warranty or covenant or indemnification obligation expires
pursuant to Section 6.5 herein; provided, however, that such obligations to indemnify and hold
harmless shall not terminate with respect to any specific matter as to which the Indemnified
Person shall have, before the expiration of the applicable period, previously made a claim by
delivering a Claim Notice (as defined below) to the Indemnifying Person.
6.4. Procedures Relating to Indemnification.
(a) Claims Procedure. An Indemnified Person shall give prompt written
notice (a "Claim Notice") to the Indemnifying Person after the Indemnified Person becomes
aware of any event or other facts that have resulted or that might result in any Loss for which the
Indemnified Person is entitled to any indemnification under this Agreement; provided, however,
that failure to give such notification promptly shall not affect the indemnification provided
hereunder except to the extent, and only to the extent, that the Indemnifying Person shall have
been actually materially prejudiced as a result of such failure. Such notice shall include
reasonably and readily available relevant information respecting the claim set forth in such
Claim Notice, and if available, a good faith reasonable estimate of the amount of Losses relating
to the claim identified in such Claim Notice, the method of computation of such estimate and a
specific reference to the provision of this Agreement upon which such claim is based.
(b) Third-Party Claims.
(i) If an Indemnified Person is entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a claim or demand
made by any Person against the Indemnified Person (a "Third-Party Claim"), such Indemnified
Person shall provide the Indemnifying Person with a Claim Notice regarding the Third-Party
Claim promptly after receipt by such Indemnified Person of written notice of the Third-Party
Claim; prOVided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent, and only to the extent that, the
Indemnifying Person shall have been actually materially prejudiced as a result of such failure.
Such notice shall include reasonably and readily available relevant information respecting the
claim set forth in such Claim Notice, and a good faith reasonable estimate of the amount of
Losses relating to the claim identified in such Claim Notice, the method of computation of such
estimate and a specific reference to the provision of this Agreement upon which such claim is
based. Notwithstanding the foregoing, any Third-Party Claims with respect to Taxes shall be
addressed in the manner set forth in Section 5.7(d) herein.
(ii) If a Third-Party Claim is made against an Indemnified Person,
following receipt of the Claim Notice, the Indemnifying Person will be entitled to participate in
the defense thereof and, if it so chooses, to assume and thereafter conduct the defense thereof
with counsel of the Indemnifying Person's choice and each Indemnified Person shall cooperate
39
in all respects with the conduct of such defense by the IndemnifYing Person. Should an
Indemnifying Person elect to assume the defense of a Third-Party Claim, the Indemnifying
Person shall not be liable to the Indemnified Person for legal expenses subsequently incurred by
the Indemnified Person in connection with the defense thereof (unless such Indemnified Person's
counsel is to be at the expense of the IndemnifYing Person pursuant to the terms in this section).
If (i) the IndemnifYing Person is also a Person against whom the Third-Party Claim is made and
the Indemnified Person receives an opinion of counsel that joint representation would be a
conflict of interest, (ii) the IndemnifYing Person does not, within 30 days following receipt of a
Claim Notice from the Indemnified Person, notifY the Indemnified Person in writing of its
election to assume the defense of the Third-Party Claim, (iii) the IndemnifYing Person fails to
provide reasonable assurance to the Indemnified Person of its financial capacity to defend such
Third-Party Claim and provide indemnification with respect to such Third-Party Claim, (iv) the
IndemnifYing Party fails to diligently conduct the defense of the Third-party Claim, (v) the
Third-Party Claim involves the NHL, AHL (or any other professional or minor league sports
league), any Team Players or any Government Entities, or (vi) the Third-Party Claim seeks an
injunction or other equitable relief that would be reasonably likely to have a material adverse
impact on the Indemnified Person or its business, then the Indemnified Person may, at its
election, either assume or participate in the defense of such Third-party Claim at the expense of
the IndemnifYing Person. If the conditions in clauses (i)-(vi) above do not apply, the
Indemnified Person may nonetheless participate in the defense of the Third-Party Claim at its
own expense. Neither the IndemnifYing Person nor the Indemnified Person may settle any such
proceeding, which settlement obligates the other party to pay money, to perform obligations, to
be subject to any equitable remedies or injunctive relief, or to admit liability or any violation of
any applicable Law without the written consent of the other party, such consent not to be
unreasonably withheld or delayed; provided that the consent of the Indemnified Person shall not
be required if the IndemnifYing Person agrees in writing to pay any amounts payable pursuant to
such settlement and such settlement includes a full release ofthe Indemnified Person.
(iii) With respect to any Third-Party Claim subject to indemnification
under this ARTICLE VI: (i) both the Indemnified Person and the Indemnifying Person, as the
case may be, shall keep the other Person fully informed of the status of such Third-Party Claim
at all stages thereof where such Person is not represented by its own counsel, and (ii) the Parties
agree to render to each other such assistance as they may reasonably require of each other and to
cooperate in good faith with each other in order to ensure the proper and adequate defense of any
Third-Party Claim.
6.5. Survival of Representations. Warranties, Covenants and Indemnification
Obligations. The representations, warranties, covenants and agreements and certain
indemnification obligations contained in this Agreement and the other Transaction Documents
shall survive the Closing as follows: (a) the representations and warranties contained in this
Agreement and any Transaction Documents shall survive the Closing and remain in full force
and effect for a period of 18 months following the Closing Date; provided, that the Company
Fundamental Representations, Buyer Fundamental Representations and the representations and
warranties contained in Section 4.8 shall survive the Closing and remain in full force and effect
until 60 days following the expiration of their respective statutes of limitation applicable to the
underlying matters covered by such provisions, (b) each covenant and agreement contained in
40
this Agreement which by their terms contemplate full performance at or prior to the Closing shall
terminate upon the Closing and shall not survive the Closing, (c) each covenant and agreement
contained in this Agreement or any other Transaction Document to be performed following the
Closing Date shall survive until the last date on which such covenant or agreement is to be
performed or, ifno such date is specified, for a period of 18 months following the Closing Date,
and (d) Sellers indemnification obligation contained in (i) Section 6.l(iii) shall survive the
Closing for a period of 12 months following the Closing Date and (ii) Section 6.Hiv) shall
survive the Closing until 60 days following the expiration of the statute of limitations applicable
thereto (the respective expiration dates for the survival of the representations and warranties and
covenants and agreements and specified indemnification obligations shall be referred to herein as
the "Expiration Date").
6.6. Limitations on Indemnification Liability. Notwithstanding any provision hereof
to the contrary, (i) the Buyer Indemnified Persons shall not be entitled to indemnification
pursuant to Section 6.1 en with respect to any claim for indemnification unless the amount of
Losses incurred by the Buyer Indemnified Persons that are the subject of such claim exceeds
$10,000 (the "Per Claim Basket"), (ii) the Buyer Indemnified Persons shall only be entitled to
indemnification pursuant to Section 6.ICi) to the extent the aggregate amount of all Losses
incurred by Buyer Indemnified Persons for which Buyer Indemnified Persons are entitled to
indemnification pursuant to this ARTICLE VI exceeds $2,000,000 (the "Basket Amount"), in
which event the Buyer Indemnified Persons shall only be entitled to indemnification for the
amount of such Damages in excess of the Basket Amount and (ii) the aggregate amount of
Losses for which the Buyer Indemnified Persons shall be entitled to indemnification pursuant to
Section 6.W) will not exceed $18,000,000 (the "Cap"); provided, however, that the Per Claim
Basket, the Basket Amount and the Cap shall not apply to indemnity claims made by Buyer
Indemnified Persons with respect to breaches of Company Fundamental Representations;
provided, further, however that in no event shall Sellers' aggregate liability pursuant to Section
QJ. exceed $84,000,000. For the avoidance of doubt, only Losses that are the subject of an
indemnification claim made by the Buyer Indemnified Persons that exceed the Per Claim Basket
shall be included in the Basket Amount, in which event the full amount of such Loss shall be
included in the Basket Amount (and not just the amount in excess ofthe Per Claim Basket).
6.7. Exclusive Remedies. The Parties agree that, from and after the Closing Date, the
indemnification obligations of the Parties set forth in this ARTICLE VI shall constitute the sole
and exclusive remedies of the Parties for any Losses based upon, arising out of or otherwise in
respect of the matters set forth in this Agreement or any of the Transaction Documents and the
transactions contemplated hereby and thereby. The Parties may not avoid the limitations on
liability, recovery and recourse set forth in this ARTICLE VI by seeking damages for breach of
contract, tort or pursuant to any other theory or liability. The provisions of this ARTICLE VI
will not however restrict the right of any party to seek specific performance or other equitable
remedies in connections with any breach of any of the covenants or other terms contained in this
Agreement.
6.8. Other Indemnification Limitations.
(a) Losses Net of Insurance Proceeds. Notwithstanding any provision in this
Agreement to the contrary, all Losses for which any Indemnified Person would otherwise be
41
entitled to indemnification under this ARTICLE VI shall be reduced by the amount of net
insurance proceeds (after deduction of all costs and expenses incurred by the Indemnified Person
in obtaining such recovery) which any Indemnified Person receives or obtains in respect of any
Losses incurred by such Indemnified Person. In the event any Indemnified Person is entitled to
any insurance proceeds in respect of any Losses for which such Indemnified Person is entitled to
indemnification pursuant to this ARTICLE VI, such Indemnified Person shall use commercially
reasonable efforts to obtain, receive or realize such insurance proceeds. In the event that any
such net insurance proceeds are realized by an Indemnified Person subsequent to receipt by such
Indemnified Person of any indemnification payment hereunder in respect of the claims to which
such net insurance proceeds relate, appropriate refunds shall be made promptly by the relevant
Indemnified Persons of all or the relevant portion of such indemnification payment not to exceed
such net insurance payment.
6.9. Assignment of Claims. If any Indemnified Person receives any indemnification
payment pursuant to this ARTICLE VI, at the election of the Indemnifying Person, such
Indemnified Person shall assign to the Indemnifying Person all of its claims for recovery against
third Persons as to such Losses, whether by insurance coverage, contribution claims, subrogation
or otherwise.
6.10. Mitigation. Each of the Parties agrees to use their respective commercially
reasonable efforts to mitigate their respective Losses upon and after becoming aware of any
event or condition which could reasonably be expected to give rise to any Losses that are
indemnifiable hereunder; provided, however, that any failure to comply with this Section 6.10
shall not limit a Party's right to indemnification pursuant to this ARTICLE VI, except to the
extent such Party's Losses are increased as a result of such failure to comply.
6.11. Mitigation Tax Treatment of Indemnification Payments. Any indemnification
payments made to the Buyer pursuant to this Agreement shall be treated as an adjustment to the
final Aggregate Purchase Price, unless a "Final Determination" with respect to the Indemnified
Person causes any such payment not to be treated as an adjustment to the Aggregate Purchase
Price. For purposes of this agreement, "Final Determination" means (i) with respect to federal
income Taxes, a "determination" as defined in Section 1313(a) of the Code or execution of an
Internal Revenue Service Form 870 AD, and (ii) with respect to Taxes other than federal income
Taxes, any final determination of Liability in respect of a Tax that, under applicable Law, is not
subject to further appeal, review or modification through proceedings or otherwise (including the
expiration of a statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations).
6.12. Right of Setoff. If at any time Sellers shall become liable to any Buyer
Indemnified Person for any Losses pursuant to provisions of this ARTICLE VI, such Buyer
Indemnified Person (or any Affiliate thereof, including the Acquired Companies following the
Closing, as applicable) agrees that for as long as any amounts are owed pursuant to the Note,
such Loss shall first be recovered by setting off the amount of such Losses against any amounts
owed to the Sellers under the Note; provided, however, that the exercise of any such setoff right
in good faith, whether or not ultimately determined to be justified, shall not constitute a Breach
of this Agreement or the Note; provided further, however, that ifit is ultimately determined that
the Buyer Indemnified Person was not entitled to indemnification in the amount by which the
42
Note was set off, the amount of the principal that was improperly setoff shall, effective as of the
time of the improper setoff, bear interest at the rate existing under the Note as of the time of such
improper setoff increased by an additional ten percent (10%). Each and every offset to the Note
shall be applied against the principal payments under the Note in the inverse order of maturity
starting with payment due on the maturity date and then to any other obligations due under the
Note. Neither the exercise of nor the failure to exercise such right of setoff will constitute an
election of remedies or limit the Buyer in any manner in the enforcement of any other remedies
that may be available to it. No Seller Indemnified Person (or any Affiliate thereof) shall have
any right of setoff against any amounts any of them are required to pay to the Buyer hereunder.
ARTICLE VII
CONDITIONS TO THE CLOSING
7.1. Conditions of Buyer's Obligation. Buyer's obligation to effect the Transactions is
subject to the satisfaction as of the Closing ofthe following conditions precedent:
(a) Representations and Warranties. Each representation and warranty set
forth in ARTICLE III and ARTICLE IV (other than the Company Fundamental Representations)
shall be true and correct in all respects at and as of the Closing as though then made (provided,
however, that any representation and warranty that addresses matters only as of a certain date
shall be so true and correct in all respects as of that certain date) (it being understood that, for
purposes of determining the accuracy of such representations and warranties, all qualifications
based on the word "material" or similar phrases, including "Company Material Adverse Change"
or "Seller Material Adverse Change" set forth in such representations and warranties shall be
disregarded); except, in each case where the failure of such representations and warranties to be
so true and correct does not have a Company Material Adverse Change or Seller Material
Adverse Change, either alone or when taken in the aggregate with other breaches of any such
representations and warranties. Each of the Company Fundamental Representations shall be true
and correct in all respects other than de minimis inaccuracies at and as of the Closing as though
then made; provided, however, that any Company Fundamental Representation that addresses
matters only as of a certain date shall be so true and correct in all respects as of that certain date.
(b) Covenants. Sellers (and Acquired Companies, if applicable) shall have
performed and observed in all material respects each covenant and other obligation required to
be performed or observed by them pursuant to the Transaction Documents at or prior to the
Closing.
(c) No Injunctions or Restraints. No Law or Order enacted, promulgated,
issued, entered, amended or enforced by any Governmental Entity (collectively, "Restraints")
shall be in effect enjoining, restraining, preventing or prohibiting consummation of the
Transactions or making the consummation of the Transactions illegal.
(d) No Material Adverse Change. Since the date of this Agreement, there
shall not have been a Company Material Adverse Change or Seller Material Adverse Change.
(e) Consents. The following Consents shall have been obtained, made or
complied with (as applicable), all in form and substance reasonably satisfactory to Buyer:
43
(i) The NHL Consent Agreement and all League Approvals required
to be issued by the NHL, in order to effectuate the Transactions shall have been obtained; and
(ii) Consents to the Transactions from the Nassau Coliseum Sublessor
and from the County of Nassau, New York.
(f) Lender Matters. The Alternative Financing shall have closed and been
fully funded such that any amounts owed under the Credit Agreement and Loan Documents shall
have been paid in full, or in the alternative (referred to as the "Assumed Financing"), the
requisite lenders shall have (i) agreed in writing in favor of Buyer to consent to the Transactions
(including the Credit Agreement Assumption), including any "change of control" (as defined in
the Credit Agreement and applicable Loan Documents) occurring as a result thereof, without any
requirement for any prepayment, and (ii) entered into such amendments to the Credit Agreement
and Loan Documents reasonably requested by Buyer.
(g) [Intentionally Omitted]
(h) Expiration or Termination ofHSR Periods. All applicable waiting periods
under the HSR Act shall have expired or otherwise been terminated early under the HSR Act.
(i) Closing Documents. Sellers shall have delivered, or cause to be delivered,
to Buyer the following:
(i) a transfer document reasonably acceptable to Buyer evidencing the
sale of the Interests owned by each Seller being sold to Buyer;
(ii) a certificate of a duly authorized officer of Sellers, dated as of the
Closing Date, expressly certifying that the conditions set forth in Section 7.1(a), Section 7.1(b)
and Section 7. 1 (d) have been met;
(iii) a copy of the resolutions duly adopted by the board of directors or
managers (or other governing body) and stockholders or partners (as applicable) of each Seller
and applicable Acquired Company authorizing the execution, delivery and performance thereby
of each Transaction Document to which such Seller or Acquired Company is a party and the
consummation of the Transactions, as in effect as of the Closing, certified by a duly authorized
officer of such Seller and applicable Acquired Company (such certification shall include a
representation as to the incumbency and signatures of the officers or authorized signatories
executing the applicable Transaction Documents);
(iv) a certified copy (from the applicable Secretary of State) of the
certificate of incorporation (and each amendment thereto) or certificate of formation (as
applicable) of each of the Acquired Companies, and a true, correct and complete copy of all
other Organizational Documents of each ofthe Acquired Companies;
(v) the written resignations of all of the directors, managers and
corporate officers (if applicable) of each Acquired Company and ICF NP, effective as of the
Closing, in a form reasonably satisfactory to Buyer;
44
(vi) a certificate (from the applicable Secretary of State), dated not
more than ten Business Days prior to the Closing, as to the good standing of each of the
Acquired Companies;
(vii) a properly executed statement in a form reasonably acceptable to
Buyer for purposes of satisfYing Buyer's obligations under Treasury Regulation Section 1.1445-
2(c)(3).
0) Rollover. CBW LP shall have executed and delivered the form of
Subscription Agreement attached hereto as Exhibit 7.1(j)-1 (the "Subscription Agreement") and
the Operating Agreement of Buyer attached hereto as Exhibit 7.l(D-2 (the "Buyer Operating
Agreement") and shall have performed and complied with all obligations thereunder as of and at
the Closing.
Any condition set forth in this Section 7.1 may be waived in writing by Buyer.
7.2. Conditions of Sellers' Obligation. Sellers' obligation to effect the Transactions is
subject to the satisfaction as ofthe Closing ofthe following conditions precedent:
(a) Representations and Warranties. Each representation and warranty set
forth in ARTICLE II above shall be true and correct in all respects at and as of the Closing as
though then made (provided, however, that any representation and warranty that addresses
matters only as ofa certain date shall be so true and correct in all respects as of that certain date)
(it being understood that, for purposes of determining the accuracy of such representations and
warranties, all qualifications based on the word "material" or similar phrases, including "Buyer
Material Adverse Change," set forth in such representations and warranties shall be disregarded)
except, in each case, other than with respect to Buyer Fundamental Representations, where the
fuilure of such representations and warranties to be so true and correct does not have a Buyer
Material Adverse change, either alone or when taken in the aggregate with other breaches of any
such representations and warranties.
(b) The Buyer shall have performed and observed in all material
respects each covenant and other obligation required to be performed or observed by it pursuant
to the Transaction Documents at or prior to the Closing.
(c) No Injunctions or Restraints. No Restraints shall be in effect enjoining,
restraining, preventing or prohibiting consummation of the Transactions or making the
consummation ofthe Transactions illegal.
(d) The following Consents shall have been obtained, made or
complied with (as applicable), all in form and substance reasonably satisfactory to Sellers:
(i) The NHL Consent Agreement and all League Approvals required
to be issued by the NHL, in order to effectuate the Transactions shall have been obtained.
(e) Lender Matters. The Alternative Financing shall have closed and been
fully funded such that any amounts owed under the Credit Agreement and Loan Documents shall
45
have been paid in full, or in the alternative, the requisite lenders shall have (i) agreed in writing
in favor of Buyer to consent to the Transactions (including the Credit Agreement Assumption),
including any "change of control" (as defined in the Credit Agreement and applicable Loan
Documents) occurring as a result thereof, without any requirement for any prepayment, and (ii)
entered into such amendments to the Credit Agreement and Loan Documents reasonably
requested by Buyer.
(f) Expiration or Termination ofHSR Periods. All applicable waiting periods
under the HSR Act shall have expired or otherwise been terminated early under the HSR Act.
(g) Closing Documents. Buyer shall have delivered, or cause to be delivered,
to Sellers the following:
(i) the Note executed by NYIHC;
(ii) a certificate ofthe manager of Buyer, dated as of the Closing Date,
expressly certifying (as applicable) that the conditions in Section 7.2(a) and Section 7.2(b) have
been met; and
(iii) a Release, duly executed by the Acquired Companies, substantially
in the form attached hereto as Exhibit 7.2(g)(iii).
(h) Rollover. Buyer shall have executed, delivered and performed the
Subscription Agreement and Andrew Barroway and each applicable Owner shall have executed
and delivered the Buyer Operating Agreement.
(i) Termination of Guaranties and Indemnities. Charles Wang and Sellers
shall have been fully released from any and all guaranties and indemnities made by any of them
in favor ofthe NHL, or such guaranties and indemnities shall have been modified to provide that
Charles Wang and the Sellers are not collectively responsible at any given time for more than
their pro rata share (based on CBW LP's membership percentage interest in Buyer at such time)
ofthe obligations for which the NHL requires a guaranty or indemnity from Buyer.
Any condition set forth in this Section 7.2 may be waived in writing by Sellers.
ARTICLE VIII
DEFINITIONS
For the purposes of this Agreement, the following terms have the meanings set forth
below:
"Acquired Company" means any ofNYIHC, CI, CIP, HYSE and NYIEC and "Acquired
Companies" means, collectively, all ofthe foregoing.
"Acquisition Proposal" has the meaning set forth in Section 5.6.
"Act" has the meaning set forth in Section 2.3.
46
"Action or Proceeding" means any demand, action, suit, claim, complaint, charge,
grievance, hearing, proceeding or arbitration by any Person before the NHL Board of Governors
or any arbitrator, court, regulatory body or other Government Entity, or any inquiry,
investigation or audit by any ofthe foregoing.
"Affiliate" has the meaning given for that term in Rule 405 under the Securities Act of
1933, as amended. For all purposes of this Agreement, each of the NHL and the NHL
Commissioner shall not be an "Affiliate" of any Seller or Acquired Company.
"Affiliated Group" means any affiliated group within the meaning of Section 1504(a) of
the Code, or any consolidated, combined, unitary or similar group for Tax purposes.
"Affiliation Agreement" has the meaning set forth in Section 5.16.
"Agreement" has the meaning set forth in the Preamble.
"Agreement Date" means the date ofthis Agreement.
"AHL" means the American Hockey League, a joint venture organized as an
unincorporated association not for profit, and any successor thereto.
"AHL Rwes" means the constitution, by-laws, regulations and league policies of the
AHL, each as adopted and amended from time to time.
"Allocation Schedule" has the meaning set forth in Section 5.7(g).
"Alternative Financing" means debt financing with a principal amount not in excess of
$125 million entered into by Buyer or the Acquired Companies substantially contemporaneously
with Closing, the proceeds of which are used to repay all "Obligations" under and as defined in
the Credit Agreement and Loan Documents (other than contingent obligations for which no
claim has been asserted and any obligations which may be cash collateralized under the terms
thereof) in full at or prior to the Closing and complete release of Sellers from all Liabilities and
obligations with respect thereto whether by virtue of guarantees issued by them or otherwise.
"Antitrust Authority" means the United States Federal Trade Commission and the U.S.
Department of Justice.
"Arenas" means the Barclays Center, the Nassau Coliseum and any other facilities
(including the Iceworks Facility and all other practice facilities) owned, leased or otherwise used
by any of the Teams.
"Barclays Center" means that certain arena located at 620 Atlantic Ave., Brooklyn, NY
11217 and commonly referred to as the Barc1ays Center.
"Barclays Center License Agreement" means that certain License Agreement between
Barclays Center Licensor and NYIHC dated October 24, 2012.
"Barclays Center Licensor" means Brooklyn Events Center, LLC.
47
"Barclays Center Master Lease" means that certain Agreement ofArena Lease, effective
as of May 12, 20 I 0, between Barclays Center Master Lessor, as landlord, and Barclays Center
Licensor, as tenant.
"Barclays Center Master Lessor" means Brooklyn Arena Local Development
Corporation.
"Basket Amount" has the meaning set forth in Section 6.6.
"Breach" means any breach o( or any inaccuracy in, any representation or warranty or
any breach o( violation or default under or failure to perform or comply with, any covenant or
obligation, in or ofthis Agreement or any other Contract, or any event which with the passing of
time or the giving of notice, or both, would constitute such a breach, inaccuracy, violation,
default or failure.
"Bridgeport Sound Tigers" means the AHL hockey team known as the Bridgeport Sound
Tigers.
"Business" means the businesses of the Acquired Companies conducted on and as of the
date ofthis Agreement, including: (i) the operation of the New York Islanders; (ii) the operation
of all other Teams; and (iii) the operation of the Iceworks Facility.
"Business Day" means any day excluding Saturday, Sunday and any day that is a legal
holiday under the Laws of the State of New York or is a day on which banking institutions
located in such State are authorized or required by Law to close.
"Buyer" has the meaning set forth in the Preamble.
"Buyer Disclosure Schedule" means the disclosure schedule constituting exceptions to
and applicable disclosures associated with Buyer's representations and warranties set forth in
ARTICLE II hereof, prepared and delivered by the Buyer concurrently with the execution of this
Agreement.
"Buyer Indemnified Persons" has the meaning set forth in Section 6.1.
"Buyer Fundamental Representations" means Section 2.1 (Organization; Power and
Authorization), Section 2.3 (Investment Intent), Section 2.4 (Broker Fees) and Section 2.7
(Buyer's Reliance).
"Buyer Material Adverse Change" means any change, event, circumstance, condition or
effect that is or is reasonably likely to be, individually or in the aggregate, a material impairment
in the ability of Buyer to perform its respective obligations under this Agreement and the
Transaction Documents to which it is a party or on the ability of Buyer to consummate the
Transactions.
"Buyer Operating Agreement" means the limited liability company operating agreement
ofBuyer, dated as ofthe Closing Date, in the form attached hereto as Exhibit 7. 1 (j)-2.
48
"BuyerReleasedPersons"hasthemeaningsetforthinSection5.10.
"Cap"hasthemeaningsetforth inSection6.6.
"Cash on Hand" means, with respect to the Acquired Companies, all cash, all cash
equivalentsandallmarketablesecuritiesdeterminedinaccordancewithGAAP.
"CBWInc"hasthemeaningsetforth in thePreamble.
"CBWIncOwnedInterest"hasthemeaningsetforthinthePreamble.
"CBWLLC"hasthemeaningsetforthinthePreamble.
"CBWLLCOwnedInterest"hasthemeaningsetforth inthePreamble.
"CBWLP"hasthemeaningsetforth inthePreamble.
"CBWLPOwnedInterest"hasthemeaningsetforthinthePreamble.
"CJ"meansTheConnecticutIslanders,LLC,aDelawarelimitedliabilitycompany.
"CIP"meansCentral IslandProperties,LLC,aNewYorklimited liabilitycompany.
"Claims"hasthemeaningsetforth inSection5.10.
"ClaimNotice"hasthemeaningsetforthinSection6.4.
"Closing"hasthemeaningsetforthinSection 1.3.
"ClosingDate"hasthemeaningsetforth in Section 1.3.
"ClosingPurchasePrice"hasthemeaningsetforthinSection 1.2.
"Code"meanstheInternalRevenueCodeof1986,asamended.
"CompanyDisclosure Schedule" means the disclosure schedule constituting exceptions
toandapplicabledisclosuresassociatedwiththeSellers' representationsandwarrantiessetforth
inARTICLEIV hereof, preparedanddeliveredbySellersconcurrentlywiththeexecutionofthis
Agreement.
"CompanyFundamentalRepresentations"meansSection 3.1 (PowerandAuthorization),
Section 3.3 (Ownership ofthe Interests; Capitalization), Section 3.7 (Broker Fees), Section4.1
(Organization; Power and Authorization; Qualification), Section 4.3(a) (Capitalization;
Subsidiaries), andSection4.19(BrokerFees).
"CompanyFacilities"hasthemeaningsetforthinSection4.11(cl.
"Company Intellectual Property Rights" means all ofthe Intellectual Property Rights
ownedbytheAcquiredCompanies.
49
"Company Leases" has the meaning set forth in Section 4.11 (c).
"Company Material Adverse Change" means any change, event, circumstance, condition
or effect that is or is reasonably likely to be, individually or in the aggregate, materially adverse
to the condition (financial or otherwise), business, operations, assets or results of operations of,
the New York Islanders or the Acquired Companies taken as a whole, other than events, changes
or effects (either alone or in combination) (i) occurring generally in the economy, financial
markets or political situation in any jurisdiction in which the Acquired Companies do business;
(ii) occurring generally in, or generally affecting, the industries or the markets in which the
Acquired Companies do business, including the NHL and AHL; (iii) resulting from the entry into
or the transactions contemplated by this Agreement or the announcement to third parties or the
public of the entry into or the transactions contemplated by this Agreement; (iv) resulting from
the compliance with the terms of this Agreement or the taking of any action required or
contemplated by this Agreement; (v) resulting from changes in laws or in GAAP, or any
interpretation thereof, after the date hereof; (vi) resulting from an outbreak or escalation of
hostilities involving any country where the Acquired Companies do business, the declaration by
any country where the Acquired Companies do business or a national emergency or war, or the
occurrence of any acts of terrorism and any actions or reactions thereto; or (vii) resulting from
any natural disaster, provided, with respect to clauses (i) and (ii), that such changes do not have a
materially disproportionate effect on either (A) the New York Islanders or (B) the Acquired
Companies taken as a whole, as compared, in the case of New York Islanders to any other NHL
teams and in the case of the Acquired Companies, to other companies similarly situated and
operating in the industries in which the Acquired Companies operate. For the avoidance of
doubt, the occurrence of any of the following, either alone or taken together, shall not constitute
a Company Material Adverse Change: (A) the performance of either Team during such Team's
2013-2014 season, as evidenced by such Team's place in their respective standings at any time
during such Team's 2013-2014 season, the number of losses recorded by either Team during
such Team's 2013-2014 season, or otherwise or (B) any injury to, or other health related matter
affecting, any Team Player or Team coach, which impairs or prevents such Team Player or Team
coach from performing his services for his respective Team.
"Company Registered IP" has the meaning set forth in Section 4.1 O(c).
"Confidentiality Agreement" means the Confidentiality Agreement between Barroway
Sports LLC and NYIHC dated as of October 21,2013.
"Consent" means any authorization, consent, approval, filing, registration or notification.
"Continuing Employee" has the meaning set forth in Section 5.16.
"Contract Consent Payments" means any fee, expense, charge, or other payment
triggered, accelerated, made or required to be made (whether before or after the Closing) by any
Acquired Company, Seller or Buyer (assuming the consummation of the Closing), or any of their
respective Affiliates, to any Person as: (i) an inducement or consideration for any required
Consent from such Person in connection with the Transactions; or (ii) that result from or that is
triggered by the consummation of the Transactions, other than any fee, expense, charge, or other
payment that is contemplated by this Agreement.
50
"QQn!!1!&:i" means all written or oral contracts, agreements, employment agreements,
collective bargaining agreements, consulting agreements, independent contractor agreements,
subcontracts, indentures, notes, bonds (including surety bonds), loans, instruments, leases,
mortgages, franchises, licenses, purchase orders, sale orders, proposals, bids, understandings or
commitments, which are legally binding.
has the meaning set forth in Section 5.18.
has the meaning set forth in Section l.2(a).
"Credit Agreement Assumption" has the meaning set forth in Section l.2(a).
"Deferred Purchase Price" has the meaning set forth in Section 1.2(a).
"Disclosure Schedules" means, collectively, the Seller Disclosure Schedule and the
Company Disclosure Schedule.
"Employee Benefit Arrangements" means each and all pension, supplemental pension,
deferred compensation, option or other equity-based program, accidental death and
dismemberment, life and health insurance and benefits (including medical, dental, vision and
hospitalization), short- and long-term disability, fringe benefit, cafeteria plan, flexible spending
account programs, severance, employment, change of control, bonus and other arrangements,
plans, contracts, policies or practices providing compensation or benefits to any employee or
director of any of the Acquired Companies, or with respect to which any of the Acquired
Companies has or may have any Liability, or with respect to which any of the Acquired
Companies has or may have any Liability, other than the Employee Plans or any Multiemployer
Plan or Multiple Employer Plan.
"Employee Plans" means each and all "employee benefit plans," as defined in Section
3(3) of ERISA, currently maintained or contributed to by any of the Acquired Companies, or in
which any of the Acquired Companies participate or participated or for the benefit of employees
of any Acquired Company, or with respect to which the Acquired Companies has, have or may
have any Liability, other than any Multiemployer Plan or Multiple Employer Plan.
means all Laws concerning pollution or protection of the
environment, public health and safety with respect to exposure to Hazardous Material, and Laws
which prohibit, regulate or control Hazardous Material, including the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response and Compensation, and Liability Act of 1980.
means the Employee Retirement Income Security Act of 1974, as amended.
has the meaning set forth in Section 1.3.
"Expiration Date" has the meaning set forth in Section 6.5.
"Final Determination" has the meaning set forth in Section 6.10.
51
"Financial Statements" has the meaning set forth in Section 4.4(a).
"GAAP" means United States generally accepted accounting principles as in effect from
time to time.
"General Enforceability Exceptions" means those exceptions to enforceability due to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting
the enforcement of creditors' rights generally, and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
"Government Entity" means any court, tribunal, arbitrator or any government or political
subdivision thereof, whether federal, state, county, local or foreign, or any agency, authority,
contractor, official or instrumentality of such governmental or political subdivision, or any entity
exercising executive, legislative, judicial, regulatory or administrative functions of government.
"Hazardous Material" means any material, chemical, emission or substance that has been
designated by any Government Entity to be radioactive, toxic, hazardous, a pollutant, a
contaminant, or otherwise a danger to human health, or reproduction or the environment,
including without limitation, ACM's.
"HYSE" means Harbor Yards Sports and Entertainment, LLC, a Delaware limited
liability company.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations promulgated thereunder.
"Iceworks Facility" means that certain arena located at 175 Underhill Blvd., Syosset, NY
11791 and commonly referred to as Iceworks.
"ICF NP" means The Islanders Children's Foundation, a New York nonprofit
corporation.
"Immediate Family Member" means, with respect to any individual, such individual's
child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law.
"Indebtedness" means the aggregate amount (including the current portion thereto),
without duplication, of one or more of the Acquired Companies': (a) indebtedness for borrowed
money, including any prepayment penalties associated with any such indebtedness, including
any such indebtedness of one or more Acquired Companies to one or more employees, directors,
managers, members or shareholders of any Acquired Company; (b) all obligations for the
deferred purchase price of property, goods or services (including any unpaid purchase price
obligations relating to acquisitions); (c) all obligations evidenced by bonds, debentures, notes,
letters of credit, or similar instruments; (d) obligations to pay amounts under any lease which
obligation is required to be classified and accounted for as a capital lease on the balance sheet of
the Acquired Companies as of such date as determined in accordance with GAAP; ( e) accrued
but unpaid interest expense and unpaid penalties, fees, charges and prepayment premiums that
52
are payable, in each case with respect to any of the indebtedness or obligations described in this
definition; (f) all obligations to purchase, redeem, retire, defease or otherwise acquire for value
any equity interests or securities of one or more Acquired Companies; (g) all obligations in
respect of any interest rate swap, hedge or cap agreement; (h) all other financial obligations that
would be considered debt in accordance with GAAP; (i) all management fees or similar fees (and
related expenses) accrued and payable by one or more Acquired Companies; G) any outstanding
severance obligations payable by one or more Acquired Company; (k) any bank overdrafts; and
(1) any of the foregoing of any other third party that is guaranteed, directly or indirectly, by one
or more Acquired Companies.
"Indemnified Person" means any Buyer Indemnified Person or Seller Indemnified
Person, as applicable.
"Indemnifying Person" means any Person(s) against whom a claim for indemnification is
being asserted under any provision of ARTICLE VI herein.
"Indemnity Provision" has the meaning set forth in Section 5.18.
"Intellectual Property Rights" means all (i) patents and patent applications, as well as any
reissues, continuations, divisions, extensions or reexaminations thereof ("Patents"),
(ii) trademarks, service marks, trade dress, trade names, brand names, corporate and fictitious
names and registrations and applications for registration thereof, together with all of the goodwill
associated therewith ("Marks"), (iii) copyrights and applications and registrations thereof
("Copyrights"), (iv) Software, (v) any or all of the following and all worldwide rights in, arising
out of, or associated therewith: domain names, uniform resource locators and other names and
locators associated with the Internet ("Domain Names"), and (vi) know-how, inventions,
methods, processes, technical data, databases and data collections, specifications, research and
development information, technology, product roadmaps, customer lists and any other
information, in each case to the extent any of the foregoing derives economic value from not
being generally known to other Persons who can obtain economic value from its disclosure or
use, excluding any copyrights or patents that may cover or protect any of the foregoing ("Trade
Secrets").
"Interests" has the meaning set forth in the Recitals.
"IRS" means the Internal Revenue Service.
"Latest Balance Sheet" means the audited consolidated balance sheet of NYIHC as of
June 30, 2013.
"Law" means any law, statute, rule, regulation, ordinance, regulation, code, directive, and
other pronouncement having the effect of law of the United States of America, any foreign
country or any domestic or foreign state, county, city or other political subdivision or of any
Government Entity.
"League Approvals" means all Consents or other permits, licenses, grants or certificates,
required by or issued by the NHL, the AHL or any other professional or minor league sports
53
league or any Affiliate thereof, including NHL Enterprises Canada, Inc. and NHL Enterprises
Canada, L.P., to operate the Business.
"Liability" or "Liabilities" means any and all debts, liabilities and obligations of any
nature whatsoever, whether accrued or fixed, absolute or contingent, mature or unmatured or
determined or indeterminable.
"Licensed Intellectual Property Rights" shall mean all Intellectual Property Rights
licensed to the Acquired Companies and used in connection with the Business as currently
conducted.
"Lien" means any mortgage, lien, pledge, charge, security interest, claim, contractual
restriction, easement, right-of-way, option, conditional sale or other title retention agreement or
encumbrance of any kind.
"Loan Documents" has the meaning set forth in Section 1.2(a).
"Loss" means all out-of-pocket losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable attorneys' fees and expenses provided,
however, Loss shall not include punitive, consequential, indirect, incidental, exemplary, special
or similar damages, lost profits, opportunity costs, or any diminution of value, and shall not be
calculated by using or taking into account any multiple of earnings, cash flow, revenue or other
similar measure except to the extent that any ofthe foregoing is asserted in a Third Party Claim.
"Material Contract" and "Material Contracts" have the meanings set forth in
Section 4. 17(a).
"Member Club" means a professional hockey club that is designated as being a member
club of the NHL under the NHL Constitution and holding a franchise from the NHL for the
operation of a hockey club in a specified city.
"Multiemployer Plan" has the meaning set forth in Section 4. 14(d).
"Multiple Employer Plan" has the meaning set forth in Section 4. 14(d).
"Nassau Coliseum" means that certain arena located at 1255 Hempstead Turnpike,
Uniondale, NY 11553 and commonly referred to as the Nassau Veterans Memorial Coliseum.
"Nassau Coliseum Sublease" means collectively: (i) that certain Sublease Agreement
dated as of January 28, 2010, by and among Nassau Coliseum Sublessor, NYIHC, and, for
certain purposes, the Lighthouse Group Companies, comprised of Lighthouse Development
Group LLC, CBW Hotel, LLC and Renaissance Property Associates, LLC, (the "January 28,
2010 Sublease") as amended by that certain Settlement Agreement and Amendment to Sublease,
entered into as of May 20, 2011, by and among the parties to the January 28, 2010 Sublease and
Arenaco SPE, LLC, which entity was added to the Lighthouse Group; and (ii) that certain
Advertising Rights Agreement, dated as of November 15, 2007, between Nassau Coliseum
Sublessor and NYIHC.
54
6IgS3456... 1 7 . d } ~
"Nassau Coliseum Sublessor" means SMG, a Pennsylvania general partnership,
successor in interest to Coliseum Management Corporation of New York, Inc., flkIa Hyatt
Management Corporation of New York, Inc., a New York corporation.
"New York Islanders" means the NHL hockey team known as the New York Islanders.
"NHL" means the National Hockey League, a joint venture organized as an
unincorporated association not for profit, and any successor thereto.
"NHL Affiliated Party" has the meaning set forth in Section 5.10.
"NHL Board of Governors" means the Board of Governors of the NHL, as established
under the NHL Constitution, and any successor chief governing body of the NHL that may be
later established.
"NHL By Laws" means the By Laws of the NHL, as adopted under the NHL
Constitution, as the same may be amended from time to time, and any and all actions taken
thereunder, including bulletins, guidelines, policies, directives, interpretations, opinions, rulings
and decisions by the NHL Commissioner.
"NHL Commissioner" means the person designated as Commissioner of the NHL from
time to time or, in the absence of an NHL Commissioner, any person or entity succeeding to the
powers and duties of the NHL Commissioner under the NHL Constitution.
"NHL Consent Agreement" means all required written consents of the NHL for the
approval of the transfer of the New York Islanders to Buyer pursuant to the NHL Rules. "NHL
Constitution" means the Constitution of the NHL, as adopted by the Member Clubs, as the same
may be amended from time to time, and any and all actions taken thereunder, including all
bulletins, guidelines, policies, directives, interpretations, opinions, rulings and decisions issued
by the NHL Commissioner.
"NHL Rules" means (A) the NHL Constitution, (B) the NHL By Laws, (C) the governing
documents of each of the NHL, NHL Enterprises, L.P., NHL Enterprises Canada, L.P., NHL
Enterprises, Inc., National Hockey League Enterprises Canada, Inc., NHL Enterprises B.V.,
Intra-Continental Ensurers, Limited, NHL Interactive CyberEnterprises, LLC, NHL Network
US, L.P., NHL Network US, Inc., NHL Network, Inc., 3918939 Canada Inc., 3918921 Canada
Inc., any entity that may be formed by the Member Clubs generally after the date of this
Agreement, and each of their respective subsidiaries and other affiliates (all of the foregoing
entities, including the NHL but excluding the Member Clubs, the ''NHL Entities"), (D) all other
existing or future rules, regulations, interpretations, memoranda, procedures, directives, policies,
guidelines, positions, and resolutions of, including positions taken with, and covenants,
representations and warranties made to, any court or governmental or quasi-governmental
agency by, each ofthe NHL Entities, the NHL Board of Governors and the NHL Commissioner,
(E) Owner Consent Agreements, (F) the current and future Collective Bargaining Agreements
between the NHL and the National Hockey League Players' Association and between the NHL
and the National Hockey League Officials' Association and all other agreements, consent
agreements, decrees, cooperation agreements and settlement agreements presently or hereafter in
55
effect or entered into between or among any NHL Entity or Entities, on the one hand, and the
Member Clubs generally, on the other hand, or any NHL Entity or Entities or the Member Clubs
generally, on the one hand, and other persons, on the other hand, in furtherance ofthe NHL's (or
any other NHL Entity's) business or interests or as otherwise authorized, directly or indirectly,
by the NHL Board of Governors, the NHL Commissioner, the applicable NHL Entity, the NHL
Constitution or the NHL By Laws, and (G) the NHL Commissioner's interpretation of, opinions
concerning, and the custom and practice under, any of the foregoing, all as may be amended
from time to time.
"Non-Party Affiliates" has the meaning set forth in Section 10.18.
"Note" has the meaning set forth in Section 1.2.
"NYIEC" means New York Islanders Enterprise Company, a Nova Scotia unlimited
liability company.
"NYIHC" means The New York Islanders Hockey Club, L.P., a New York limited
partnership.
"Off-The-Shelf Software" means any shrinkwrap, clickwrap or other commercially
available, ready-made (non-custom developed) software licenses granted to any Acquired
Company for third party software used by any Acquired Company that (i) is generally available
to be licensed by any Person, in the quantities licensed by the Acquired Company and for the
same usage and license restrictions applicable to the Acquired Company, on standard terms for
more than $1 and less than $1,000 per copy, and (ii) was licensed by the Acquired Company for
more than $1 and less than $1,000 per copy for the Acquired Company's or its Affiliates' use for
the Business.
"Order" means any writ, judgment, decree, injunction or similar order of any
Government Entity, in each case whether preliminary or final.
"Organizational Documents" means (a) with respect to any corporation, its certificate or
articles of incorporation and its bylaws, (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement and ( c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its formation or
organization with the applicable Government Entity in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or organization of such
entity.
"Other Securities Laws" has the meaning set forth in Section 2.3.
"Outside Date" has the meaning set forth in Section 9.l(e).
"Owners" has the meaning set forth in Section 2.5.
56
"Parking Lot" means the parking lot adjacent to 175 Underhill Boulevard, Syosset, New
York.
"Per Claim Basket" has the meaning set forth in Section 6.6.
and "Parties" have the meanings set forth in the Preamble.
"Permits" means all permits, licenses, grants, easements, clearances, variances, orders,
certificates, exemptions, registrations, authorizations, certificates of occupancy and other
permits, consents and approvals required by any Government Entity to lawfully operate the
Business or the lceworks Facility and, to the extent required pursuant to the Nassau Coliseum
Sublease, the Nassau Coliseum (including any pending applications for such licenses,
certificates, permits, consents or approvals).
"Permitted Liens" means (a) Liens for Taxes or assessments and similar charges, which
either are (i) not delinquent or (ii) being contested in good faith and by any appropriate Action or
Proceeding, and adequate reserves (as determined in accordance with GAAP) have been
established on the Acquired Companies' books with respect thereto, (b) Liens to secure,
landlords, sublandlords, licensors, sub licensors or licensees under real estate leases, licenses or
other rental or lease agreements, (c) deposits or pledges made in connection with, or to secure
payment of, utilities or similar services, workers' compensation, unemployment insurance,
pension or other social security, governmental insurance and governmental benefits mandated
under applicable Laws, or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and return of money bonds and
similar obligations, (d) mechanics', materialmen's or contractors' Liens or any similar statutory
Lien for amounts not yet due and payable and incurred in the usual and ordinary course of
business consistent with past practice, (e) zoning, entitlement, building and other similar
restrictions which are not materially violated by the current conduct ofthe Business, (f) purchase
money Liens in any property acquired by any Acquired Company in the usual and ordinary
course of business consistent with past practice, (g) minor irregularities in title easements,
covenants, rights of way or other encumbrances or restrictions, if any, that do not materially
impair the use of the assets to which they relate, (h) any other Liens set forth in Section 8 of the
Company Disclosure Schedule, (i) any Lien granted in favor of or imposed by the NHL, other
than any such Lien that is unique to the Acquired Companies as compared to other Member
Clubs and their Affiliates, in each case, that will not be released on or prior to Closing and
G) Liens relating to (A) the Credit Agreement and/or Loan Documents to the extent such
documents are assumed by Buyer or (B) any Alternative Financing entered into by Buyer.
"Person" means any individual, partnership, corporation, association, limited liability
company, joint stock company, a trust, joint venture, firm, association, unincorporated
organization, union or labor organization, professional or minor league sports league (including
the NHL), Government Entity or other entity.
"Player" means an individual who is a player employee of any Member Club.
"Player Contract" means the NHL Standard Player's Contract or AHL Standard Player's
Contract, as applicable, for the employment of Team Players.
57
(, I8S3456... i 7.dDc
"Pre-Closing Tax Period" has the meaning set forth in Section 5.7(a}.
"Pre-Closing Taxes" shall mean any (i) Taxes of the Acquired Companies attributable to
any Pre-Closing Tax Period, or portion of any Straddle Tax Period ending on the Closing Date,
that are not yet paid (including such Taxes that are not yet due and payable) as of the Closing
Date, allocated in accordance with Section 5.7; (U) any Taxes of any other Person as a result of
the Acquired Companies being or having been a member of an Affiliated Group with respect to
any Pre-Closing Tax Period; (iii) any Taxes attributable to or arising from the transactions
contemplated by this Agreement, including any Transaction Payroll Taxes; and, (iv) any Taxes
relating to the disposition of assets as required in, or other transactions contemplated pursuant to,
Section 5.7 above.
"Purchase Price Allocation" has the meaning set forth in Section 5.7.
"Receivables" has the meaning set forth in Section 4.4(c).
"Related Parties" has the meaning set forth in Section 4.15.
"Representatives" 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.
"Restraints" has the meaning set forth in Section 7.1 ( c).
"Seller" and "Sellers" have the meanings set forth in the Preamble.
"Seller Disclosure Schedule" means the disclosure schedule constituting exceptions to
and applicable disclosures associated with each of the representations and warranties set forth in
ARTICLE III hereof, prepared and delivered by Sellers concurrently with the execution of this
Agreement.
"Seller Indemnified Persons" has the meaning set forth in Section 6.2.
"Seller Material Adverse Change" means, with respect to any Seller, any change, event,
circumstance, condition or effect that is or is reasonably likely to be, individually or in the
aggregate, a material impairment in the ability of such Seller to perform such Seller's obligations
under this Agreement and the Transaction Documents to which such Seller is a party or on the
ability of such Seller to consummate the Transactions.
"Seller Related Parties" has the meaning set forth in Section 5.10.
"Seller Releasing Parties" has the meaning set forth in Section 5.10.
"Sellers' Knowledge" means, as it applies to the representations, warranties and
covenants made by Sellers in this Agreement, the actual knowledge of Charles Wang, Art
McCarthy or Roy Reichbach following inquiry ofany employees that are their direct reports who
would reasonably be expected to have knowledge of the matter in question.
58
6!8Kl4So... !7.doc ----_ .. __ ... _ .. _._-----
CL
"Software" means any computer program, operating or other system, application,
firmware or software of any nature, whether operational, active, under development or design,
non-operational, or inactive (including all object code, source code, comment code, algorithms,
processes, formulae, interfaces, navigational devices, menu structures or arrangements, icons,
operational instructions, scripts, commands, syntax, screen designs, reports, designs, concepts,
and visual expressions), technical manuals, test scripts, user manuals and other documentation
therefor, whether in machine-readable form, programming language or any other language or
symbols, and whether stored, encoded, recorded or written on disk, tape, film, memory device,
paper or other media of any nature and any and all databases necessary or appropriate to operate
or in the use of any such computer program, operating or other system, application, firmware or
software.
"Straddle Tax Period" has the meaning set forth in Section 5.7(b).
"Subscription Agreement" has the meaning set forth in Section 7.1.
"Tax" or means (a) all federal, state, county, local, municipal, foreign and other
taxes, assessments, duties or similar charges of any kind whatsoever, including all corporate
franchise, income, sales, use, ad valorem, receipts, value added, profits, license, withholding,
payroll, employment, excise, premium, property, customs, net worth, capital gains, transfer,
stamp, documentary, social security, employment, withholding, workers' compensation,
unemployment compensation, environmental, alternative minimum, occupation, recapture,
estimated, escheat, unclaimed property and other taxes, and including all interest, charges,
surcharges, penalties and additions imposed with respect to such amounts, and all amounts
payable pursuant to any agreement or arrangement with respect to Taxes; (b) any Liability for
the payment of any amount ofa type described in clause (a) arising as a result of being or having
been a member of any consolidated, combined, unitary or other group or being or having been
included or required to be included in any Tax Return related thereto; and (c) any Liability for
the payment of any amount of a type described in clause (a) or clause (b) as a result of any
Liability to indemnify or otherwise assume or succeed to the Liability of any other Person.
"Tax Authority" means any Government Entity with regulatory authority to assess, assert
or otherwise impose Tax adjustments or collect unpaid Taxes of any Person.
"Tax Dispute Accountant" has the meaning set forth in Section 5.7.
"Tax Return" means all returns and reports, amended returns, information returns,
statements, declarations, estimates, schedules, notices, notifications, forms, elections, certificates
or other documents required to be filed or submitted to any Government Entity with respect to
the determination, assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of, or compliance with, any Tax.
"Team Players" means a player on any of the Teams or a player employed by NYIHC or
"Teams" means the New York Islanders and the Bridgeport Sound Tigers.
59
"Third-Party Claim" has the meaning set forth in Section 6.4(b).
"Transaction Bonuses" means any amounts required to be paid to current or former
officers, directors, employees, consultants or advisors of any Acquired Company or any other
Person as a result of the Closing occurring and the employer portion of any employment or
payroll Taxes paid with respect thereto, other than any amounts expressly contemplated by this
Agreement.
"Transaction Documents" means this Agreement and all other agreements, instruments,
certificates and other documents to be entered into or delivered by any Party, Acquired Company
or Charles Wang, pursuant to any ofthe foregoing.
"Transaction Expenses" means all fees, costs and expenses incurred, whether or not
invoiced, by any Acquired Company or any Seller in connection with the Transactions and the
transactions contemplated thereby or in connection with the proposed sale of the Interests, such
as the fees, costs and expenses of any investment bankers, lawyers, accountants, consultants and
other outside financial and other advisors, and the fees, costs and expenses of the electronic data
room.
"Transaction Payments" means the Transaction Expenses, all other legal, accounting and
other fees and expenses paid by Sellers prior to the Closing or by the Acquired Companies, in
each case, in connection with the transactions that are the subject of this Agreement and the
Closing.
"Transaction Payroll Taxes" means the employer portion of any employment or payroll
Taxes with respect to any bonuses, option exercises, option cancellation payments, severance or
other compensatory payments in connection with the transactions contemplated by this
Agreement, with respect to which the Sellers are allocated the deduction.
"Transactions" means the transactions contemplated by the Transaction Documents.
"Unaudited Balance Sheet" has the meaning set forth in Section 4.4(a).
"WARN Act" has the meaning set forth in Section 4.l3(g).
ARTICLE IX
TERMINATION
9.1. Termination. This Agreement may be terminated:
(a) at any time prior to the Closing by mutual written agreement of Buyer and
Sellers;
(b) by either Buyer, on the one part, or Sellers on the other part, if a material
Breach of any provision of this Agreement has been committed (in the case of termination by
Buyer, a material Breach by any Seller, and in the case of termination by Sellers, a material
Breach by Buyer), such material Breach results in a Closing condition becoming incapable of
being satisfied and such material Breach has not been waived in writing; provided, however, that
60
... 17 .do..:;
a material Breach described above, if such material Breach is curable, shall not give rise to a
right to terminate this Agreement under this Section 9 .1 (b) unless and until (i) the non-Breaching
Party delivers a written notice to the Breaching Party, notitying the Breaching Party of the
material Breach (including a reasonable description thereof) and (ii) the Breaching Party fails to
cure such material Breach within 10 days after delivery of such written notice;
(c) (i) by the Buyer, if satisfaction of any of the conditions in Section 7.1,
other than Section 7.1(t) or Section 7.ICe)(i), is or becomes incapable of fulfillment (other than
through the failure ofthe Buyer to comply with its obligations under this Agreement) prior to the
date set forth in Section 9.l(t) and the Buyer has not waived in writing such condition on or
before the Closing Date; or (ii) by Sellers, if satisfaction of any ofthe conditions in Section 7.2 is
or becomes incapable of fulfillment (other than through the failure of any Seller to comply with
its or their obligations under this Agreement) prior to the date set forth in Section 9.l(e) and
Sellers have not waived in writing such condition on or before the Closing Date;
(d) by either Buyer, on the one part, or Sellers, on the other part, if (i) the
Transactions shall violate any Order that shall have become final and nonappealable or (ii) there
shall be a Law which makes the Transactions illegal or otherwise prohibited;
(e) by Sellers at any time after July I, 2014 (the "Outside Date"), if the
Closing shall not have occurred by such date; provided, however, that the right to terminate this
Agreement under this subsection (e) shall not be available to Sellers if any Seller's failure to
fulfill any obligation under this Agreement shall have been the cause of, or resulted in, the failure
ofthe Closing to occur prior to such date;
(f) by Buyer at any time after the Outside Date, if the Closing shall not have
occurred by such date; provided, however, that the right to terminate this Agreement under this
subsection (f) shall not be available to Buyer if Buyer's failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure of the Closing to occur prior to
such date;
(g) by the Buyer pursuant to and in accordance with Section 5.9;
(h) by Sellers at any time after __,20141, if the Buyer has not delivered to
Sellers prior to such termination notice either (i) written evidence from the requisite lenders
pursuant to the Alternative Financing or the Assumed Financing that such lenders have entered
into a commitment letter, and substantially finalized the terms of appropriate forms of definitive
agreements, to consummate the Alternative Financing or the Assumed Financing, as applicable
and that such lenders are prepared to close such financing in accordance with the terms of the
commitment letter and forms of definitive agreement or (ii) a waiver of the financing condition
in Section 7.1 (t);
(i) by Sellers (i) at any time following receipt of notification from the NHL
that it will not grant the NHL Consent Agreement or any of the League Approvals required in
connection with the Transactions or (ii) at any time after June 30, 2014 if the NHL Consent
I Note to draft: insert date 60 days after the date of execution.
61
618SJ456 1 7 . d ) ~
- ------------
Agreement or any of the League Approvals required to be issued by the NHL in connection with
the Transactions have not been received by the Parties, as applicable, by such date; provided,
however, that the right to terminate this Agreement under this subsection (i) shall not be
available to Sellers if any Seller's failure to fulfill any obligation under this Agreement shaH
have been the cause of, or resulted in, either (A) the NHL delivering the notification
contemplated by clause (i) above or (B) the failure to obtain the NHL Consent Agreement or any
of the League Approvals as contemplated by clause (ii) above;
provided, however, that the Party seeking termination pursuant to clauses (b), (c), (d) or (g)
above is not then in material Breach of any of its representations, warranties, covenants or
agreements contained in this Agreement, provided, further that such notice of termination is
provided in writing.
9.2. Effect of Termination.
(a) Each Party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of such right of
termination will not be an election of remedies. Subject to the terms of Section 9.2(b), in the
event of termination of this Agreement pursuant to Section 9.1, all obligations of the parties
under this Agreement will terminate, except that the obligations of the parties in Section 5.4
(Public Announcements), this ARTICLE IX and ARTICLE X will survive.
(b) Notwithstanding anything to the contrary:
(i) If (A) this Agreement is terminated pursuant to Section 9.1 on or
after the Outside Date other than due to the breach or default of the Sellers, (B) at the time of
termination, the "Lender Matters" condition set forth in Section 7.1 (f) shall not have been
satisfied and (C) Sellers have complied in good faith with their obligations under Section 5.11
(Financing) then Buyer shall be obligated to pay to Sellers, within ten (10) Business Days
following termination ofthis Agreement, an amount equal to $10,000,000 (the "Break-Up Fee")
by wire transfer of immediately available funds as liquidated damages (irrespective of the actual
damages or Losses suffered by Sellers as a result of such termination);
(ii) If (A) this Agreement is terminated pursuant to Section 9.1 on or
after the Outside Date other than due to the breach or default of the Sellers, (B) at the time of
termination, the condition set forth in Section 7.1(e)(i) shall not have been satisfied and (C)
Sellers have complied in good faith with their obligations under Section 5.12(c) (Obtaining NHL
Approval) then Buyer shall be obligated to pay to Sellers, within ten (10) Business Days
following termination of this Agreement, the Break-Up Fee by wire transfer of immediately
available funds as liquidated damages (irrespective of the actual damages or Losses suffered by
Sellers as a result of such termination);
(iii) If (A) this Agreement is terminated pursuant to Section 9.1 on or
after the Outside Date other than due to the breach or default of the Sellers, (B) at the time of
termination, all of the conditions set forth in Section 7.1 and Section 7.2 have been satisfied or
waived (other than those conditions that by their terms are to be satisfied at Closing) including
the "Lender Matters" condition set forth in Section 7.1(1), and (C) prior to the termination of the
62
Agreement, Sellers shall have indicated in writing to Buyer that Sellers are ready, willing and
able to consummate the Closing and Buyer shall have failed to consummate the Closing within
two Business Days thereafter because Buyer does not have sufficient proceeds to pay the Closing
Purchase Price pursuant to Section l.2(a), then Buyer shall be obligated to pay to Sellers, within
ten (10) Business Days following termination of this Agreement, the Break-Up Fee by wire
transfer ofimmediately available funds as liquidated damages (irrespective ofthe actual damages
or Losses suffered by Sellers as a result of such termination);
(iv) If (A) this Agreement is terminated pursuant to Section 9.1 on or
after the Outside Date other than due to the breach or default of the Buyer, (B) at the time of
termination, all of the conditions set forth in Section 7.1 and Section 7.2 have been satisfied or
waived (other than those conditions that by their terms are to be satisfied at Closing) including
the "Lender Matters" condition set forth in Section 7.1(f), and (C) prior to the termination of the
Agreement, Buyer shall have indicated in writing to Sellers that Buyer is ready, willing and able
to consummate the Closing and Sellers shall have failed to consummate the Closing within two
Business Days thereafter, then Sellers shall be obligated to pay to Buyer, within ten (10)
Business Days following termination of this Agreement, the Break-Up Fee by wire transfer of
immediately available funds as liquidated damages (irrespective of the actual damages or Losses
suffered by Buyer as a result of such termination); or
(v) If any Seller enters into, or agrees to, a written definitive
agreement, term sheet, letter of intent, memorandum of understanding or other written document
with any Person relating to an Acquisition Proposal by such Person and thereafter this
Agreement is terminated pursuant to Section 9.1, then Sellers shall be obligated to pay the
Break-Up Fee to Buyer, within ten (10) Business Days following termination of this Agreement,
by wire transfer of immediately available funds as liquidated damages (irrespective of the actual
damages or Losses suffered by Buyer as a result of such termination).
(vi) For the avoidance of doubt, only one Break-up Fee shall be
payable pursuant to this Section 9.2(b}. The Parties agree that the payment of the Break-Up Fee
shall be the sole and exclusive remedy available to Sellers or Buyer, as the case may be, with
respect to the subject matter of such clause.
ARTICLE X
MISCELLANEOUS
10.1. Expenses. Whether or not the Transactions are consummated, and except as
otherwise provided in this Agreement, each Party to this Agreement will bear its respective fees,
costs and expenses incurred in connection with the preparation, negotiation, execution and
performance of this Agreement or the Transactions (including legal, accounting and other
professional fees). Each of Sellers, on the one hand, and the Buyer, on the other hand, agrees to
indemnifY and hold_the other harmless from any claim or demand for commissions or other
compensation by any broker, finder, financial consultant or similar agent employed by the other
Party.
10.2. Governing Law. This Agreement will be governed by and construed in
accordance with the internal Laws of the State of New York applicable to agreements made and
63
to be performed entirely within such State, without regard to the conflicts of Law principles that
would require the application of any other Law.
10.3. Jurisdiction; Service of Process. Any Action or Proceeding arising out of or
relating to this Agreement or any of the Transactions may be brought in the federal and state
courts located in New York, NY, and each of the Parties irrevocably submits to the exclusive
jurisdiction of such courts in any such Action or Proceeding, waives any objection it may now or
hereafter have to venue or to convenience of forum, agrees that all claims in respect of the
Action or Proceeding shall be heard and determined only in any such court and agrees not to
bring any Action or Proceeding arising out of or relating to this Agreement or any of the
Transactions in any other court. The Parties agree that any or all of them may file a copy of this
Section 10.3 with any court as written evidence of the knowing, voluntary and bargained-for
agreement among the Parties irrevocably to waive any objections to venue or to convenience of
forum. Process in any Action or Proceeding referred to in the first sentence of this Section 10.3
may be served on any Party anywhere in the world.
10.4. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM
MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE
PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY ACTION OR
PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY SHALL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
10.5. Waiver; Remedies Cumulative. The rights and remedies of the Parties to this
Agreement are cumulative and not alternative. Neither any failure nor any delay by any Party in
exercising any right, power or privilege under this Agreement or any of the other Transaction
Documents will operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or any of
the other Transaction Documents can be discharged by one Party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the other Parties; (b) no
waiver that may be given by a Party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any
obligation of that Party or of the right of the Party giving such notice or demand to take further
action without notice or demand as provided in this Agreement or any of the other Transaction
Documents.
10.6. Notices. All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be deemed given to a Party when (a) delivered by hand,
(b) one Business Day after being sent by a nationally recognized overnight courier service (costs
64
6188.1456 17d",,;
prepaid) or(c) sentby facsimile oremail with confirmationoftransmissionbythe transmitting
equipment,ineachcasetothefollowing;
iftoBuyer,to:
NYIce, LLC
280KingofPrussiaRoad
Radnor, PA19087
Attention: AndrewL. Barroway
Fax: (267)948-2501
Email: AB@MerionCap.com
withacopy(whichshallnotconstitutenotice)to:
BlankRomeLLP
OneLoganSquare
130N. 18
th
Street
Philadelphia,PA19103
Attention: GaryR. Goldenberg
Fax: (215)832-5733
Email: goldenberg@blankrome.com
if toanySeller,to:
NeuLion,Inc.
1600OldCountryRoad
Plainview,NY11803
Attention: RoyReichbach
Fax: (516)622-7510
Email:roy.reichbach@neulion.com
withacopy(whichshallnotconstitutenotice)to:
KayeScholerLLP
425ParkAvenue
NewYork,NY10022
Attention: EmanuelCherneyandMarkKingsley
Fax: (212)836-6561
Email: emanuel.cherney@kayescholer.comandmark.kingsleY@kayescholer.com
Any Party may change its contact information for notices and othercommunications hereunder
bywrittennoticetotheotherPartiesheretoinaccordancewiththis Section 10.6.
10.7. Assignment. This Agreementshall be binding upon, andshall beenforceable by
andinuresolelytothe benefitofthe Partiesheretoandtheirrespective successors andpermitted
assigns;provided, however, that this Agreement and the rights and obligations hereunder shall
not be assignable or transferable by any Party without the prior written consent ofthe other
Parties heretoandanyassignmentortransfernotin compliancewiththeaboveshallbe null and
65
6188J4SfJ ... ! 7.du",;
void; and, provided,further, that Buyer may assign this Agreement to Buyer's financing sources
for collateral purposes to the extent approved by the NHL.
10.8. No Third-Party Beneficiaries. Except as expressly provided otherwise in this
Agreement, this Agreement is for the sole benefit of the Parties hereto and their respective
successors and permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the Parties hereto and such successors and permitted
assigns, any legal or equitable rights, remedy or claim hereunder.
10.9. Amendments. No amendment to this Agreement shall be effective unless it shall
be in writing and signed by the Parties hereto.
10.10. Specific Performance. Each of the Parties acknowledges and agrees that
irreparable injury to the other Party hereto may occur if any provision ofthis Agreement was not
performed in accordance with its specific terms or was otherwise Breached and that such injury
would not be adequately compensable in damages because of the difficulty of ascertaining the
amount of damages that will be suffered if this Agreement was Breached. It is accordingly
agreed that each ofthe Parties shall be entitled, in addition to any other remedy to which they are
entitled at law or in equity, to specific enforcement of, and injunctive relief, without proof of
actual damages, to prevent any violation of the terms hereof, and the other Party hereto will not
take action, directly or indirectly, in opposition to the Party seeking such relief on the grounds
that any other remedy or relief is available at law or in equity. Any requirements for the securing
or posting of any bond with such remedy are hereby waived. Notwithstanding anything to the
contrary contained in this Section 10.10, Sellers shall not be entitled to specific performance of
Buyer's obligations to consummate the Transactions in the event that the requisite lenders under
the Loan Documents have not consented to the Credit Agreement Assumption and will not
consent thereto at or prior to the Closing, unless Buyer has been able to obtain Alternative
Financing.
10.11. Construction. In construing this Agreement, including the Exhibits and Schedules
and hereto, the following principles shall be followed: (a) the terms "herein," "hereof,"
"hereby," "hereunder" and other similar terms refer to this Agreement as a whole and not only to
the particular Article, Section or other subdivision in which any such terms may be employed;
(b) except as otherwise set forth herein, references to Articles, Sections, Schedules and Exhibits
refer to the Articles, Sections, Schedules and Exhibits of this Agreement, which are incorporated
in and made a part of this Agreement; (c) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP; (d) no consideration shall be given to
the headings of the Articles, Sections, Schedules, Exhibits, subdivisions, subsections or clauses,
which are inserted for convenience in locating the provisions of this Agreement and not as an aid
in its construction; ( e) the word "includes" and "including" and their syntactical variants mean
"includes, but is not limited to" and "including, without limitation," and corresponding
syntactical variant expressions; (t) a defined term has its defined meaning throughout this
Agreement, regardless of whether it appears before or after the place in this Agreement where it
is defined, including in any Schedule or Exhibit; (g) the word "dollar" and the symbol "$" refer
to the lawful currency of the United States of America; and (h) the plural shall be deemed to
include the singular and vice versa.
66
10.12. Entire Agreement. This Agreement (including any Exhibit or Schedule attached
hereto) and the Transaction Documents contain the entire agreement and understanding among
the Parties hereto with respect to the subject matter hereof and, except as explicitly set forth
herein, supersede all prior and contemporaneous oral and written agreements and understandings
relating to such subject matter.
10.13. Severability. If any provision of this Agreement or the application of any such
provision to any Person or circumstance shall be held invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision hereof.
10.14. Mutual Drafting. The Parties hereto are sophisticated and have been represented
by counsel who have carefully negotiated the provisions hereof. As a consequence, the Parties
do not intend that the presumptions of any Laws or other rules relating to the interpretation of
contracts against the drafter of any particular clause should be applied to this Agreement and
therefore waive their effects.
10.15. Counterparts; Facsimile. This Agreement may be executed in one or more
counterparts, including by facsimile or email, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have been signed by
each ofthe Parties and delivered to the other Party.
10.16. No Third-Party Rights. All claims, obligations, liabilities or causes of action
(whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon,
in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this
Agreement, or the negotiation, execution or performance of this Agreement (including any
representation or warranty made in, in connection with or as an inducement to, this Agreement),
may be made only against (and are those solely of) the Persons that are expressly identified as
Parties hereto. No Person who is not a Party, including without limitation (a) any director,
officer, employee, incorporator, member, partner, manager, stockholder, affiliate, agent, attorney
or Representative of, and any financial advisor or lender to, any Party, or (b) any director,
officer, employee, incorporator, member, partner, manager, stockholder, affiliate, agent, attorney
or Representative of, and any financial advisor or lender to, any of the foregoing (collectively,
"Non-Party Affiliates"), shall have any liability (whether in contract or in tort, in law or in
equity, or granted by statute) for any claims, causes of action, obligations, or liabilities arising
under, out of, in connection with, or related in any manner to this Agreement or based on, in
respect of, or by reason of this Agreement or its negotiation, execution, performance or breach;
and, to the maximum extent permitted by law, each Party hereby waives and releases all such
liabilities, claims, causes of action and obligations against any such Non-Party Affiliates.
Without limiting the foregoing, to the maximum extent permitted by law, (a) each Party hereby
waives and releases any and all rights, claims, demands or causes of action that may otherwise be
available at law or in equity, or granted by statute, to avoid or disregard the entity form ofa Party
or otherwise impose liability of a Party or any Non-Party Affiliate, whether granted by statute or
based on theories of equity, agency, control, instrumentality, alter ego, domination, sham, single
business enterprise, piercing the veil, unfairness, undercapitalization, or otherwise; and (b) each
Party disclaims any reliance upon any Non-Party Affiliates with respect to the performance of
67
this Agreement or any representation or warranty made in, in connection with, or as an
inducementtothisAgreement.
10.17. Conflictsand Privilege. Buyerherebywaivesandagreesnotto assert, andagrees
to causeeachofits subsidiariesto waive andto not assert, anyconflictofinterest arisingoutof
orrelatingtotherepresentation,aftertheClosing,ofSellersoranyofficer,employee,directoror
Affiliate ofthe Sellers or the Acquired Companies in any matter involvingthisAgreement, the
TransactionDocumentsoranyotheragreementsortransactions contemplatedhereby(including
any litigation, arbitration, mediation or other proceeding), by Kaye Scholer LLP. Buyer and
Sellers further agree that, astoall communications between Kaye Scholer LLP, Sellersand the
Acquired Companies thatrelateinanywaytothe transactionscontemplatedbythisAgreement,
theattorney/clientprivilegeand theexpectationofclientconfidence belongsto Sellersandmay
be controlled by Sellers, and shall not pass to or be claimed or controlled by the Acquired
Companies;prOVided thatSellersshallnotwaive such attorney/clientprivilegeotherthanto the
extent appropriate in connection with the enforcement or defense oftheir respective rights or
obligations existing under this Agreement and the other agreements referred to herein.
Notwithstanding the foregoing, in the event a dispute arises between Buyer or an Acquired
Companyanda Personotherthana Sellerafterthe Closing, the AcquiredCompany may assert
the attorney/client privilege to prevent disclosure of confidential communications by Kaye
ScholerLLPtosuchPerson.
(SIGNATURESONNEXTPAGE]
68
INTENDING TO BE LEGALLY BOUND, the undersigned Parties have executed this
SecuritiesPurchaseAgreementasofthedatefirstwrittenabove.
BUYER:
NY ICE,LLC
By: ________________
Name: AndrewBarroway
Title: Manager
SELLERS:
CBW/SK SPORTS VENTURES II, INC.
By: _______________
Name: CharlesWang
Title:
CBW/SK SPORTS VENTURES, LP
By: _______________
Name: CharlesWang
Title:
CBWINL SPORTS VENTURES, LLC
By: _______________
Name: CharlesWang
Title:
p,\OETOTill'S,ClRiTlF;;P!!lin!A;;,,"